Challenges faced by digital transformation leaders
At Friday, we have developed a model for assessing the digital maturity of large organisations with high-touch service propositions.
Our framework is based on patterns we identified during in-depth conversations and roundtable discussions with people who bear responsibility for driving strategic change in large organisations. Here some key discussion points from one of our recent sessions.
The meaning of “digital”
Attendees of our roundtable events always discuss the dangers of fetishising “digital”. There’s enormous hype around “digital” and very fragmentary understanding of what the term actually means.
We use the word “digital” a lot, especially at senior levels. It’s used ten a penny. It’s talked about, but not defined or understood in a coherent way. – Director of Digital, UK Insurance Group
But the realisation that “digital” refers to more than just the surfaces is starting to sink in. “Digital” is making its way through the inner workings of businesses, leaving an exhaust of unintended transformation behind. Digital technology plays a key role in organisations — as enabler, lubricant, catalyst for achieving a business vision or strategy. And digital culture is becoming a shorthand for a variety of desirable attitudes, behaviours and ways of working — customer centricity, agility, transparency, rapid creation through progressive iteration.
The barriers to velocity in large organisations
The ability to make changes to the customer-facing experience quickly and iteratively is a simple necessity today. But it is often impossible for large organisations to achieve, because a range of barriers make surface changes painfully slow. The barriers that stand out, when talking to executives working in digital roles across sectors, are always the human ones — mandatory workflows, legal or compliance sign-off loops, or approval protocols, mostly from a different era.
People want to see the change happen that digital brings, but not to them. – Head of Digital, European Energy Provider
Some organisations respond with the creation of nimble digital enclaves — ring-fenced groups of design, engineering and commercial people with a different culture and different ways of working to that of their host. The freedom has been created for them, or claimed by them, to practise agile customer-centric innovation, in pursuit of faster, cheaper value creation. But at almost every point that these enclaves brush against the rest of the organisation, there is friction. The fundamental changes that are needed to build a digitally mature organisation are slowed down by resistance on all levels. A very human response to change.
The struggle with IT
Friction between “technology” and “the business” is almost a constant. By owning the infrastructure and most of the development capability in an organisation, technology departments hold enormous power. This power can be applied as a catalyst for organisational agility and transparency. Or, it can be an inhibitor — “the department of NO”. In many cases, it is both, simultaneously.
Technological capabilities and budgets are growing significantly outside IT — particularly in marketing. And technical demands from marketing are growing, so this conflict pattern, where it exists, is rising up the organisational agenda. Blaming this clash on legacy technology is a red herring. Everyone has legacy technology — including digital natives, like Google or Amazon or MoneySupermarket.
The organisation made the decision that IT is a thing you can buy, outsource, not a strategic function. – Head of Digital, European Energy Provider
But it seems the worst situation of all is when IT capability has been almost entirely outsourced — and there’s no one to even have the conflict with, let alone technical troops to re-deploy. In this situation, the organisation may be helplessly held in a negative symbiotic lock with technology service providers, and ill equipped to make the right technology-decisions-as-strategy-decisions. The impact of this on the quality of the customer experience is material.
Organising around the customer means change
In our discussion everyone agreed that focusing on a “fast-follow” strategy doesn’t allow organisations to move swiftly enough to keep pace with customer behaviour and expectations, which are highly dynamic. Digitally mature organisations need to be organised around the customer, work hard to uncover and anticipate their unmet needs and be geared to respond to this uncertainty at speed.
We try to put the customer at the heart of what we do. What they want is to interact anytime, anywhere, anyhow, any way. It’s not only about digital, it actually covers every touchpoint in our business. – Customer and Digital Intelligence Director, Global Beauty Retailer
There are huge challenges in achieving strategic agility-at-scale to keep pace with changing customer behaviour. The conventional control mechanism in large organisations is the Target Operating Model (TOM) — designed to achieve predictable and controlled outcomes. But TOMs, by their very nature, inhibit innovation, creativity and change. They’re designed to prevent agility.
The needed kind of change often comes naturally to those working in “digital”, but isn’t instinctively supported outside of “digital”. Today getting things done means changing how the business works.
The willingness to experiment
Increased speed of change in customer expectations brought on by “digital” fuels the need for organisations to embrace agility — speeding up processes, accelerating iteration cycles and continuous development. This appetite for velocity creates haste for action, not chatter.
The market demands are changing and in response the structure of the organisation needs to change. This cultural change is our biggest problem. – Customer and Digital Intelligence Director, Global Beauty Retailer
To move fast organisations need to trust their employees and loosen their top-down approval processes and start embracing total transparency. But while it’s challenging to establish the trust needed for agility within the existing digital enclaves it’s a huge leap for the rest of the organisation — it seems that it’s as hard to transfer knowledge, culture and practice internally as it is to learn from outside. For those looking to bring digital culture to the rest of the organisation there’s a frustration that if only the rest of the organisation could embrace more digital experimentation, it would ironically bring more control and create better processes to develop the much needed organisational agility.
Interested in how we assess digital maturity? Read the post by our CEO Alex Wright, which explains Friday’s framework. We run regular roundtable sessions, get in touch if you'd like to join one of our upcoming events.