Digital Transformation in 2018: Sustainably Delivering on the Promise at Scale

In 2017, we witnessed organizations take up the mantle of digital transformation with more conviction and effort than any time before. Funding, commitment, and leadership support was at its highest level ever and only showed signs of increased dedication. Ongoing success stories from many leading organizations showed that large scale technological and business transition was also possible for the typical company, not just industry leaders. Perhaps most vitally, the imperative itself became even clearer to leaders as disruption began to penetrate even into long resistant industries like healthcare, finance, and even insurance.

Yet it was also evident that last year was another major learning year, because through our efforts many of us gained an even fuller appreciation of the sheer size and scope of the required journey ahead of us. Combined this with the steady proliferation of new and important technologies last year and we gained both fresh urgency and a better understanding of the true challenges facing us. In 2017, the Internet of Things and artificial intelligence were felt particularly profoundly on the transformation agenda in the industry, along with data science, analytics, and other forms of capitalizing on the vast and invaluable streams of new information that better digitized businesses generate. 2018 will see the same, but with much more focus on reaching the market effectively and seizing network effect, and less on experimentation.

Of all the many lessons learned on digital transformation last year, perhaps the most important was that the complexity and pervasiveness of the necessary changes — organizational, cultural, and especially mindset — as well as the new technologies themselves require powerful new tools and techniques that simply didn’t exist a couple of years ago.

The Two Dimensions of Digital Transformation in 2018: Upside and Oversight for Opportunity, Governance, and Risk Management

The Twin Digital Transformation Lessons of 2017

Two of these new tools and techniques — culled from the hard won experience of the early movers in digital transformation — are particularly worthy of calling out.

The first was a result of the realization that a single, overly centralized change entity like the IT department, the digital line of business (usually led by the chief digital officer), or tech incubator was not sufficient in realizing the profound rethinking and realization of the entire organization in more digital terms. In fact, these entities might not even be that helpful in that they are overly focused on technology and may not have the requisite experience in applying to the redesign and transformation of the business itself. Instead, more decentralized yet highly engaged entities like empowered groups of change agents or networks of transformation teams seem to be more effective are driving long-term change both deeply and widely across the organization. This evidence is backed up by careful research last year by Professor Gerald Kane and his colleagues that digitally mature companies are more likely to have impactful enterprise-wide transformation efforts.

The second insight was that the raw building blocks for digital transformation that existed were simply too primitive, not situated for business use, too little informed by the vital patterns and practices now known to be necessary, and not designed to rapidly incorporate new technology and additional lessons learned as they emerged. In the past, we would have said we needed frameworks for digital transformation, and while those emerged as well, what we really needed was much more operational constructs that had these vital ingredients: A relatively complete cloud tech stack, workable blueprints for specific industries, architectures designed for high leverage that support rapid change, and business solutions crafted to a 40-60% level of completeness and waiting for the details of your business to fill in the rest. While Amazon Web Services, Microsoft Azure, and Google Cloud provided some of these building blocks, they simply weren’t complete on their own. Organizations such as SAP (with its Leonardo offering), Accenture, and others have thus created what I’ve called digital transformation target platforms, which are more mature, complete, and business-focused transformation vehicles and operational capabilities. Note: For more details, you can find a fuller explanation and list of such enabling target platforms on my recent shortlist.

Combined, these two lessons learned — which are equally balanced between the people equation and the technology challenges — are vital in my analysis to successfully tackle the digital change obstacles and opportunities at sufficient speed and scale. That’s because there are very significant competitive implications — that would be irrelevance and/or outright disruption — to moving too slowly or tackling digital change too narrowly and in silos.

The good news in my experience over the last year: More and more organizations are now indeed staring to find these onramps to the superhighway of much more rapid and effective digital transformation. Enough now so that it’s led to a second major — and steadily growing — issue that must itself now be managed as a top priority new purview. This quickly accumulating new tech and business portfolio which comes from achieving a higher change velocity must be well-managed and governed. We simply must keep our new digital businesses secure in an age of Meltdown and Spectre as well as complying with GDPR and all the other rapidly emerging digital regulations that threaten to impede our efforts.

The Two Dimensions of Digital Transformation in 2018

As we’ve emerged from the very early days of digitization, there is now a clearer sense of how to tie emerging technologies to specific outcomes. A generic example of such a map is shown above, depicting how technologies can combine and reinforce key desired outcomes ranging from data-driven management of the business and better employee engagement to satisfied customers and higher growth and revenue, while also optimizing the results, governing it all, and keeping everything running safely and securely. These outcomes can be broken down today into two different key dimensions.

The first dimension of digital transformation outcomes, what I call the upside objectives, is what most organizations have been mostly focused on until now, as they try to get out of the gate to create initial wins. You can see from the accompanying visual above, that technology does indeed define the art-of-the-possible when it comes to disruptive new products and services (blue circles, center.) While lightweight IT integration, cloud, analytics, architectures of participation, and smart mobility have been technology approaches we’ve had for a while, the modern focus on digital transformation tends to be today on building and wielding customer-facing experiences infused with digital business models, interconnected ecosystems, services built on top of the Internet of Things, and with many flavors of artificial intelligence to make it personal and differentiated. Even the digital workplace is seeing fairly comprehensive overhauls in many organizations precisely to provide the tools and environment for workers en masse to be more effective at transforming their part of the organization. As a result, low code tools, citizen developer, personalized digital workplaces, hackathons, and other ways of spreading out the hands-on transformation process to the edges of the organization to move more quickly are a focus here.

The second dimension of digital transformation outcomes, let’s call it oversight objectives, is a newer one that hasn’t had nearly as much focus so far but is about to become very important as organizations digitally innovate faster and create far more complex ecosystems and stakeholder-facing experiences. Otherwise known as operations, governance, performance optimization, risk management, and cybersecurity, these oversight capabilities must get better and scale just as much as the upside portion of the portfolio. To ensure these capabilities are funded and resourced just as well as the other side of the digital transformation coin is going to be one of the next big challenges.

The reality is that most legacy organizations are not structured or funded for delivering on continuous change as the norm, to do it sustainably, or at the scale required today. While we’re seeing next-generation organization models that will help, we’re all still learning a great deal about how to design the contemporary digital organization. That we simply have to figure it out is the reality for most of us, but the good news going into 2018 is that we have some promising avenues to explore for more successful results.

Additional Reading

In Digital Transformation, The Art-of-the-Possible and Average Practice Are Diverging

Digital Transformation and the Leadership Quandary

What’s really holding back today’s CIO from digital transformation?


Connecting Agile Business with Social Business

When Jim Highsmith graciously invited me to give the opening keynote at the inaugural Agile Executive Forum in Salt Lake City this week, I had to really sit down and think about what I’ve been working on the last few years, namely social business, as compared the conference theme, agility and business. While agile methods have had many separate and distinct threads within the business and technical worlds over the last 20 years, one of the most active areas has been in software development. For its part, social business is a much newer phenomenon that’s become a top priority for many business leaders in the last couple of years. So, while I’ll cover the details of my presentation — in which I connected agility and social business as drivers of innovation, in another post — I will attempt to more formally to capture the specific similarities here.

In recent years, as agile development has been increasingly borne out as a fundamentally better, more efficient, lower risk, and more cost effective way of doing things, there has been significant and growing effort apply agile lessons to business in general. And, as it turns out, agility and social business, as two major new ways of connecting and organizing people in directed activity, have plenty in common. Perhaps even more importantly, they have key things to learn from each other.

I’ve had quite bit of experience with agile methods personally, having led extreme programming project teams and been closely involved in large, distributed SCRUM projects in years past. I’ve seen agile methods work significantly better than classical processes. This is probably why it’s now the most common development process in software that developers identify with in my experience. Consequently, I’m in a position to see some of the connections between business agility and social business, in all their many flavors. The connection isn’t trivial either. There are hard won lessons learned from agility that social business initiatives could certainly benefit from. Just as there are innovative new approaches to scale, transparency, process, and tooling that social business brings to the table, as extreme and radical as they may appear to agile folks, who are more used to being the harbingers of change.

Comparing Agile Business and Social Business

What’s the point of connecting these two approaches? Because they can learn a great deal from each other. Agile methods can be updated and modernized from what social business brings to the table, and social business can apply some maturity and rigor to what it does, as appropriate. This I believe is a fruitful exercise for both disciplines and is one I summarize below.

Agile Business and Social Business: Side-by-Side

Keeping in mind that some agile process purists are still on the fence about applying the methods more broadly, the focus here is on agile processes of any kind as applied to general people-based business activities. Some processes are more amenable to agility, just as some are more amenable to social business. In general, however, the less collaborative, more rigid, and user-isolated a business activity is, the less applicable either agile or social media methods will be to it. However, if you have a complex, open-ended, and outcome-oriented business process involving many people, especially including those that it most directly affected (typically, the customer, internal or external), then both approaches represent the very best ways that we know of today to deliver successfully on them.

As you’ll see, agility and social have much more in common than they have differences. Here’s my take on how they break down:

  • Coordination Instead of Control. Both agility and social eschew using centralized hierarchies to achieve control. Instead, as Brad Appleton has long recommended, they both work best with autonomous, adaptive, and accountable actors. The first two are something that applies very much to social business, while the latter is something inherent in any social environment that has a strong identity system (which, unfortunately, not all do.) The lesson here is that emergence (an important and prized aspect of Enterprise 2.0) and self-organization are very similar and are shared as core values in both disciplines.
  • Designing for Change/Loss of Control. This is something in which agile is inherently stronger than nascent social business methods, which are just wrapping their heads around this. Not killing emergence requires the acceptance that external change is a desired constant and should be responded to productively to get the right results with the resources at hand. Ignoring that requirements aren’t what the customers need, that the planned outcome of a business process won’t be very useful, and other denying of reality is anathema to both disciplines, but is more formal and well-defined in agile methods. Social business does recognize that the majority of productive output is on the edge of the network and largely outside of formal control, but other than measuring community sentiment, that’s often as far as it goes in terms of responding to new ground truths. The best results in both approaches are when there are tight feedback loops to all stakeholders and that a planned response to that feedback is the central factor in re-engagement with the project or online community in the next cycle. For additional insight, read Tim Leberecht’s great overview of this issue, titled Openness or How Do You Design For the Loss Of Control.
  • Frequent Work Cycles. Agilists call work cycles iterations. Social business doesn’t have as strong a notion of discrete work cycles because it’s essentially continuous and itself emergent, a more extreme version of agile when you look at collaborative work in social media environments such as crowdsourcing efforts or Social CRM. In either case, the project and/or community must assess and respond to change at the end of each iteration, or do it continuously which is more common in the case of social business processes.
  • Open Contribution. Social business works best when the broadest possible invitation is made for stakeholders to get involved and contribute. Agile processes tend to define valid contributors to a smaller audience, though it’s entirely up to the project and varies widely. Social business realizes that the “anyone can contribute” default stance is one of the most powerful concepts in recent business history (as only those that care about the outcome will get involved, yet that’s almost always many more people than you thought.) Agile methods could learn from the extreme openness and fewer contribution boundaries and barriers in social media. I made the point in my speech that open source software has proven this in the real-world better than any a priori speculation about what works best ever could.
  • Working Results. It’s long been the mantra that agile processes value working software as soon and often as possible at any given time in the project. When the requirements are right and/or the budget runs out, you have the best possible output, ready to use. Social business is not yet so disciplined in its directed outcomes, yet by its very nature is always up-to-date with the latest revisions, contributions, or updates.
  • Continuous Processes. While agile business typically recommends iterations, milestones, review steps, and other processes to happen as often as they provide useful course corrections (typically every few days, or weeks at most), social business is even higher velocity and larger scale. Consider real-time processes that run around the clock globally involving tens of thousands and sometimes a million or more simultaneous contributors. This means the scale and velocity of social business often outpaces agile by two to four orders of magnitude. Social business could learn a lot about continuous in the small (builds, releases, work product iterations, etc) while agile can perhaps learn to scale and go even faster in a way it never could before.

This comparison just scratches the surface but is a useful start. I’m happy to be called out on any details anyone feels like I may have gotten wrong. I do believe that agility and social business go hand-in-hand and that we can cross pollinate the two to create far stronger results that either can by themselves today. Put simply, agile business and social business are two sides of the same coin. That may be a controversial statement to some but I believe that as far along as these two disciplines have come in parallel, they will do better with more explicit and effective connection. Our organizations (businesses, organizations, government, etc.) will almost certainly benefit.

What do you see as the commonalities and differences between agility and social?