Are you applying the right approach for digital transformation?
The recent outbreak of the measles in the US has produced a lot of interesting learning. For some people that’s included lessons on the importance of understanding the true problem (i.e. the risk of a larger epidemic), and using the right tools (oh, let's see, how about vaccination) to address it.
(Gimme a moment - I need to take a deep breath and refrain from diverging into a rant on our modern tendency to equate scientific facts with “Facebook facts” :-). OK - I’m good now - ready to proceed).
Interestingly, measles has had a history of confusion when it comes to right-diagnosis and right-fix. For centuries, it was thought to be related to smallpox. Both were highly contagious and caused fever and rash. And though Persian physician Rhazes Ar-Raz Abmiz was able to distinguish between the two in AD 700, European physicians kept confusing the two until relatively recently. Between 1855 and 2005 measles killed 200 million while smallpox wiped out 300 million in the 20th century.
The two are caused by totally different viruses, which eventually led to their treatments being different. Smallpox was eradicated, and measles was eliminated from the US in 2000, but measles continued to exist in a contained manner in parts of the world. Until now, that is - thanks to some people incorrectly defining the problem as an autism risk.
Alright, you say, this is all very interesting, but how’s this related to Digital Transformation?
I’m convinced that the similar to the measles confusion, the reason why 70% of Digital Transformations fail is that we’re often defining the problem incorrectly and using the wrong tools. The thinking in companies attempting digital transformation is that they need more “digital” or more “innovation”. That’s the wrong diagnosis. They need more “transformation”. This isn’t semantics - the former focuses on the edge of the organization for innovation, whereas the latter transforms the core of the operation itself.
Worse, against this incorrectly defined problem, the tools used to execute work are incorrect too i.e. more related to managing innovation rather than managing scaled change.
What are we doing wrong?
Historically, most disruptions have crashed and failed at the stage called the “innovation valley of death”. That’s after the time when an idea is proved to have merit via a small pilot test, and before it is embraced and used by the core organization. And yet, digital transformations spend too much effort in generating disruptive ideas, and not enough on organization change management.
What can you do?
Digital Strategies must emphasize the outcome metrics that ultimately matter. In most cases the organization happens to be operating on a business model that’s vulnerable. The best measure of success in this situation is how much of the new model is in place within a given time period. That implies focusing on applied and scaled disruption.
How to successfully scale disruption?
Here are three ways to do this.
a) Focus on the organization and culture, not technology
b) Kill ideas fast and have a portfolio of ideas
c) Use outcome metrics for tracking success.
1. Focus on the organization, not the technology: The HBR article below makes the case that digital technologies only provide “possibilities”. It’s up to people to translate these into results. Despite claims from software companies, there is no software that can deliver “speed” and “innovation”. Every organization needs to piece these together to tailor technology to their specific business model.
2. Kill ideas fast and have a sufficient portfolio of ideas
The most useful tools for managing digital transformation are neither ideation nor project management tools. They are financial portfolio management tools. The key in digital transformation is not to pick 2-3 big ideas and project manage them for success. It’s to pick a large number of ideas to invest in, and rapidly kill the ones that don’t hit financial metrics. In other words, failing faster leads to transforming faster.
3. Use outcome metrics for tracking progress.
Drucker was absolutely right - you get what you measure. On Digital Transformation you need to be funding and tracking business outcomes, not projects or technologies. Your investors and customers aren’t interested in capability building or in-process metrics; they are looking for outcomes.
The urgency of disruption means that we have to make our transformation effort count the first time. Defining the digital transformation problem correctly and using the correct tools can spell the difference between market leadership and painful consequences. Just as it has done in the case of the painful measles episode.
Go forth and transform.