Digital Transformation: 7 principles for success
Calling something a “digital” transformation is arguably a misnomer. Having been deeply involved in a number of digital transformation programmes as sponsor, lead, subject matter expert and architect to name but a few, I firmly believe looking at such efforts through the lens of talent is vital to their optimal delivery and, below, set out the Top 7 core principles supporting their success, writes experienced CPO Dr David Loseby.
The following draws on an academic case study I wrote in the wake of a multi-year programme delivered in Rolls-Royce Group for which I was owner and de facto behavioural science lead. The late 2019/early 2020 project was to implement a new digital platform to cover all the direct spend for Rolls-Royce worldwide – approximately £8 Billion annually and spanning over 2,000 vendors. Covid meant the way design and delivery had to be achieved was virtual and so was the engagement model for stakeholders, implementers, and adopters; facilitating a new way to approach the non-technology related aspects of the programme. Namely, Change, communication, engagement, adoption and ownership of the end solution across the solution provider, programme team, support partners, stakeholders, end users and our supply chain partners (Tier 1 to Tier 4).
Getting this right was an important challenge because there are continued obstacles to success in the digital transformation space. Some 70% of digital transformations fail, most often due to resistance from employees. Only 16% of employees say their company’s digital transformations have improved performance and are sustainable in the long term, as McKinsey notes. Companies report digital transformation is still often perceived as a cost centre, and data to prove ROI is hard to come by. Cultural issues also pose notable difficulty, with entrenched viewpoints, resistance to change, and legal and compliance concerns stymieing progress.
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In my experience digital transformation, like a good cake, will need multiple ingredients:
- Governance: without the right level of governance, you will not be able to manage scope, valid change, resource allocation, compliance to regulatory standards, be that cyber security, data handling/storage/collection/retention, budgets and ethical considerations.
- Strategy: that addresses the link between the over arching organisational need and addresses the true “why are we doing this” without bias, chasing sunk costs or another false intent.
- Digital roadmap: this should address the (truthful) maturity level for the organisation in terms of core (those that probably won’t change such as a finance backbone, etc.) and secondary/tertiary systems, capability and change readiness. Further, a realistic point as to where you need to be to derive competitive advantage (this is not the same as “top right in the XYZ quadrant”).
- Organisational construct (to be and as is): a clear mapping of how the organisation is structured today and how it will need to structured in the future, along with all the key phases and stages along that path (including stages to pause and validate the operating model for refinement).
- (proactive) Sponsorship: it will be necessary to reprioritise and signal to the organisation that the digital transformation programme is a top strategic priority and has the focus of the most senior and highest levels of decision makers.
- Communication & benefits tracking: Without clearly articulating both the fiscal and non-fiscal benefits at the outset and then regularly communicating them focus will be lost and be “drowned” by all the other things happening in the organisation.
- People & Talent: In the end it doesn’t matter how well documented things are, processes mapped and programmes built if you don’t have the people and talent in the three phases of i) pre business case, ii) implementation, & iii) post “go live” and steady state you will fail!
Caption: Mapping the people and talent for a digital transformation (©David L. Loseby, 2022)
The issue of people and talent is all the more a key issue when we look at other recent reports, such as Management Today’s recent article “Where have all the people gone?” While the article is focused on the UK, I believe the underlying findings of the report are equally true for many geographies and cultures too. In essence the article cites that there are more people looking for work than there are positions so theoretically there isn’t a problem! However, digging deeper into this some interesting factoids appear:
- The number of people working beyond retirement age dropped by 11% last year
- 1.3 million foreign born nationals returned home during the pandemic
- Early retirements are contributing to skill shortages
- Unskilled talent is price sensitive, creating high levels of churn
- Skills gaps in the older population who are unprepared for the digital workforce of the future
- A need for businesses to change business models to adapt to the talent that is out there.
Organisations need to continue to drive competitive advantage and therefore digital will be a part of this. Which led me to two quotes from Peter F. Drucker (The Practice of Management 1954);
“If you want something new, you have to stop doing something old” and;
“Innovation creates differentiation between organisations, which in turn creates competitive advantage”
In short, we need to do things differently, but we need to ensure we have the talent to do it and furthermore we must ensure as leaders that we can create the right environment to motivate people and create a culture of support and authenticity. Recognise that no two digital transformations are or will be the same and demand a tailored approach not a “one size” fits all approach to all three phases of delivery.
The digital implementation at Rolls Royce has an adoption rate of more than double the industry average. That has reaffirmed my belief in using behavioural science in a tailored and structured way to truly understand the “how” and “what” and “when” and “who” in a people-centred approach. The design and approach we took recognised that the Individual versus Enterprise (Common purpose) approach was more powerful and by and large delivered the adoption through the way we framed our communications, messages, language, guides and prompts. In behavioural science terms we refer to this as cognitive framing.
combining the right technology with effective behavioural analysis, in short, can be a hugely powerful way to ensure digital transformation doesn’t fall prey to some common traps alluded to above. By elevating the conversation around change and adoption to senior executives and sponsors on the programme and making that a very individually-focussed process, we could develop a series of interconnected interventions in a language that was salient to the business and create a change designed to counter the cognitive load effect exacerbated by the pandemic – and ensure learners across the business could have more cognitive resources available to solve problems.