Thoughts on Effective Digital Transformation Strategies

Why do so many digital transformation initiatives stall or fail? The answer might lie at the bottom of this iceberg…

What is Digital Transformation?

Some authors describe Digital Transformation in terms of certain types of new technology and trends (big data, cloud, etc.) being applied to an existing business, and the subsequent change in business operations, such as the switch to subscription-based services versus the ownership of particular hardware and software.

While these characteristics can be found in Digital Transformation initiatives, I would like to offer an alternative, more general definition:

Digital Transformation is a type of change through which an organization seeks to become a technology-based business.

This definition implies that at a cultural level, the organization must accept that:

  • its goal might be to deliver value to humans, and
  • its principal value delivery mechanism is technology-based.

Take, for example, retail, non-digital banks. Virtually all of its operations are supported by software, yet most banks don’t identify themselves as software or even technology companies.

Systems Thinking

The following model can help explain why this happens:

Events & Patterns

At the events level, things merely happen to you, and you react to them. For organizations, that’s all their users see – some savvy users might infer some of the patterns behind an experience, but this is not very common.

Underlying Structures

The patterns we see in an experience are heavily influenced by the organizational design, structures, tools, and technology, the practices implemented. In a way, this is a more general version of Conway’s law:

Organizations which design systems (…) are constrained to produce designs which are copies of the communication structures of these organizations. — M. Conway

At this level is where organizations invest much of the effort in Digital Transformation. Converting the organization to agile, acquiring new technology, training teams in continuous delivery, etc.

The old structures tend to be preserved and resist change. Many transformation programs find this out too late in the game. With millions of dollars spent the usual scapegoat is that the current business and loyal customers would suffer if the org transformed completely, cold turkey. Why does this happen? The answer lies one level down.

Mental Models

Enter Mental Models, the level at which transformation happens. One cannot develop new structures with outdated thinking. I like to characterize this level as “the way we do things around here”. It permeates everything in the organization; it is pure culture.

There are no fads at this level, and I would argue that instead of changing it, we have to aspire to influence it. In some organizations, the culture will be intertwined with its members’ personal values, and these are some times impossible to change.

Does all this mean that successful Digital Transformation cannot be achieved without changing everyone’s mind first?

No.

A More Effective Transformation Strategy

I propose that we first raise awareness of the need to influence change at the cultural level of any organization that’s considering or undergoing Digital Transformation, and

  • that we measure and iterate on cultural change at the same rate we do with technology,
  • that we create links between all the layers in the organizational model that help the organization transform in sync.

With this mindset, we are better equipped to assess the organization we’re part of and, create better structures and strategies for sustainable change.

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