We at Mod Op Strategic Consulting are hardly the only ones to write about digital transformation. Some days it feels like a deluge of comments, content and hype. We’re honored that this blog ranks as a Top 25 source in this topic. Part of our value as a firm is that we come from roles as executives rather than career consultants. We’ve been there/done that. Hence, our motto: We Get Stuff Done (#WGSD).
We also like to share smart takes written by others. As a Wharton School (University of Pennsylvania) alum, I subscribe to the KNOWLEDGE@WHARTON newsletter, which recently included an article titled “Six questions that can help guide digital transformation.” It described a study by the MIT Center for Information Systems Research, whose findings align well with our experiences executing digital transformations for ourselves and for clients. The research asserts that digital transformation isn’t just adding on some technology capabilities or extra processes, nor is it a new department in your organization. It’s a daily operating culture. Below are some thoughts on parts of the article that resonated with me:
Organizations need to challenge the historical “boundaries” of their own scope
Research found numerous examples: A bank looking at itself as helping clients navigate life events instead of merely being a place for transactions. A property and casualty insurance company helping integrate the entire car buying experience, not just updating an auto policy. CarMax offering all aspects of vehicle acquisition from research, testing, trading, selling (in a negotiation-free environment), financing, taxes, warranty and delivery – where the initial customer engagement often takes place online. A health care insurance provider adding self-diagnosis tools for patients, which reduced emergency room visits. These examples involved a shift in organizational thinking from a “where do I sit in a value chain” model to a broader “how can I affect an ecosystem” perspective. In turn, the enabling tactics can vary from adding new internal functionality, acquisitions, and external partnerships – under an umbrella of integration.
Offering the unified and seamless experiences customers want will require technology to integrate today’s organizational silos
Technology strategies will vary from bridging the legacy systems (regrettably often too complex and strewn with conflicting data) to adding overlays of pre-integrated mobile-enabled cloud-delivered functions. On the human side, collaboration across the enterprise needs to be a norm, supported by purposeful adjustments to culture, mission, measurements and reward systems.
Develop new ways of working, taking evidence into account when making decisions
The technologies put into place to enable integration and perhaps enlarge boundaries (as above) will generate data. Mountains of data will yield information about customer/supplier interactions, completed/abandoned processes, searches performed, and social commentary on your products and your organization. All this gives rise to the data-driven enterprise, a theme we touch on often. But culture can be a lagging force, especially if it comes from the top. As the Wharton article states: “Leadership has to change because they can’t just go with intuition. They’ve got to be willing to look at the data…”
“If you just layer a digital business unit onto the enterprise without fundamentally changing the organization, you’re not going to succeed”
This has been illustrated repeatedly in recent business history and in personal experience. Case Study: A large media content and distribution enterprise formed a new division, XYZ Digital, and appointed a digital czar. The leader came from Finance. Consultants were hired and plans developed. But the group had no clout nor credibility with the traditional business units and was perceived as something being done TO them. Inertia and organizational resistance eventually overcame the digital group and the businesses went their own separate ways, with differing levels of success at digital transformation. Today, the original brands are visible, but scattered across multiple acquiring entities and the historical business entity no longer exists.
In the end, going digital must be pervasive and thus, yes, transformative because it can reshape your mission, scope, processes, technologies, organization and perhaps values. As the Wharton article concludes: The culture will “change in terms of cross-functional collaboration. There’s going to be a lot more of it. When you’re talking about skills that you’re trying to hire for, you’re going to have to have people who understand what digital can do for your company. If you really look at the ways of working, we’re seeing a lot more test-and-learn, a lot more experimentation. But you can’t just experiment. You actually have to listen to the data, take those experiments and then scale them up.”
What are some of the obstacles you face when trying to transform your enterprise? Write us at [email protected].