CIO upfront: Digital transformation is like panning for gold

Digital transformation is the new gold rush for businesses. It promises great returns; increased customer engagement and delight, and better ability to pivot to market needs. However, if you pan for gold in the wrong place, or the wrong way, you’ll go broke, writes Matt Mansell.

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There are various kinds of digital transformation an organisation can pursue; regardless of the exact kind of transformation desired, it is often left to the CIO to lead the charge. This means the CIO is often on the hook regarding success of the transformation. Fundamentally, the goal of any transformation is for the whole organisation to adopt a new business model.

In my work, I have seen many transformation efforts started and almost as many fail. Forewarned is forearmed, so here are common transformation traps and how to avoid them.

Forgetting it’s all about the people

Change management professionals have numerous techniques they like to advise on when trying to help leaders change organisations. One of the underlying assumptions of some of these techniques is essentially that: “If you go through these steps you will successfully transform to your new business model.” Unfortunately, this is not true of complex systems.

David Snowden’s Cynefin framework (there’s a great video about it here) highlights that in a complex system there is no obvious link between causes and effects. Humans are inherently unpredictable.. When they come to work they bring their whole life experience to the table. This makes human systems inherently complex in the way that Snowden defines complexity.

When a CIO stands up and talks about transformation an employee may be enthusiastic because they’ve been through a good transformation somewhere else. The person sitting next to them may be filled with panic and fear, because for them transformation is a euphemism for cutting the workforce.

This means that a specifically engineered step in a transformation plan can have a wildly unpredictable result. It may be that the change you plan could turn parts, or all, of the organisation against you. Faced with this prospect some leaders feel they should bulldoze on anyway, others become paralysed by indecision.

Ignoring that people are at the heart of every organisation and critical to the success of your transformation is the most fundamental trap any leader can fall into. The gestalt of a group of individuals is culture. You ignore your team and corporate culture at your peril.

Many IT leaders have seen genuine efforts to change hindered, undermined and halted by other parts of the organisation not willing to change the way they work to support the transformation. Stepping up to lead a digital transformation without expecting considerable resistance and opposition from the rest of the organisation is like stepping up to bat without a bat.

Matt Mansell, IntegrationQA

Equating a restructure with transformation

I saw an organisation go through nine restructures in 10 years. Some imposed from outside by mergers, some imposed by new leaders wanting to stamp their mark on the organisation.

When these restructures were talked about they were sold on the benefit of transforming the organisation in various ways; improving collaboration, creating synergies to help optimise service delivery, enabling better governance, increasing employee engagement and more. In all but one of these restructures the culture of the organisation become more fractured and the intangible benefits of the restructure were not wholly achieved.

In all but one of the restructures there seemed to be an idea that the restructure was the transformation. But this is never the case. I was talking with one IT leader who was contemplating transformation and whether to start with a restructure. They were concerned that their part of the organisation was not arranged in a way that would promote the kind of cross functional collaboration they needed. To be frank, they were right.

I discussed this with them for some time and eventually left them with this analogy. “You will need to incrementally evolve to your transformation goal regardless of what you do. If you start with a restructure it’s like taking off and nuking the site from orbit because it’s the only way to be sure. Once your restructure is done, the first part of your transformation will be cleaning up the fallout to bring your organisational culture to a place where you can move forward.”

Restructures can lead to employee disengagement, distrust of leadership, and unwillingness get involved in transformation activities. Never mistake the restructure for the transformation. It may be a necessary event, but is far from sufficient.

The leader not changing

Many of the benefits of digital transformation are accrued when technical delivery teams fundamentally change the way they work. By changing their culture, processes and the supporting technologies, they can deliver higher quality outcomes that are targeted at actual customer need more quickly.

I was in a large government department in Australia consulting on a digital transformation. When we talked to the technical practitioners we found they had made considerable changes and had realised significant benefit, but the change was stalled. Why? Because the leaders hadn’t changed.

Effectively, the leaders stood in their old world, pointed at the technical practitioners and said: “You, change the way you work” without ever considering they may also need to reshape (?).

This is common in government departments where leaders are taught to be very risk averse and to punish failure. Every kind of digital transformation I know of has, as a core principle, learn from failure. To really learn from failure, you must be free to make mistakes. And, once you make a mistake you should be able to trust your leaders not to punish you for it, but to coach you through a learning process. When leaders refuse to change their ways transformation will stall.

Organisational resistance

As I highlighted at the beginning of the article, the goal of digital transformation is to allow the organisation to adopt new business models. One often overlooked consequence of this is that the rest of the organisation must change too. Much like leaders sometimes point at technical practitioners and say “transform” without transforming themselves, I’ve seen business leaders point at IT and say “transform” without being willing to change themselves or their business.

True digital transformation changes the whole organisation; IT might be the enabler and engine room for change, but everything ends up having to change. And this leads to organisational resistance because people tend to resist being changed. Many IT leaders have seen genuine efforts to change hindered, undermined and halted by other parts of the organisation not willing to change the way they work to support the transformation. Stepping up to lead a digital transformation without expecting considerable resistance and opposition from the rest of the organisation is like stepping up to bat without a bat.

So how can you avoid the traps?

One of my favourite parts of my job is helping leaders implement flexible transformation strategies that can help them navigate the perils of panning for transformation gold in an often hostile organisation and market. There are several key principles that CIOs can embody in their transformation leadership.

Co-creation of change

A key element of digital transformation is devolving decision making to the people on the ground who are best placed to make the decision. When you are leading a digital transformation, you can embody this principle by involving the people who must change, as co-creators of the change. This means your job is to set vision, to agree outcomes, to coach and mentor, to promote and facilitate learning and, at times, to take bullets for your team so they don’t have to. This models the culture you want.

Transparency/visibility of change

Too many transformation decisions and activities occur behind closed doors. Then the outcomes are presented to the people who should change as a fait accompli. There is little that undermines the credibility of a transformation faster than doing it in secret.

Rather you should look for ways to radiate information into the organisation; for ways to make it visible to anyone who cares to look. The good, the bad, the ugly should be plain to see and discuss and, most importantly, learn from.

Implement change iteratively and seek feedback

In the Cynefin model the way to enact change in a complex domain is through ‘safe to fail experiments’. These are actions you can implement that have one or more amplification strategies to use if it goes well and dampening strategies if it is failing. And, crucially, appropriate ways to measure if it is achieving the desired outcome or not. The concept is simple, do something, get feedback, then use that to learn what to do next. Experiment your way forward.

These principles are at the heart of Lean Change Management, a way of transforming organisations that models the culture you want to achieve.

Matt Mansell is Chief Strategy Officer at IntegrationQA. He is an organisational transformation strategist who works to coach and challenge leaders to enable them to successfully transform their organisations. Reach him at Matt.Mansell@integrationQA.com.