This post was co-authored by Amy Herzog and Corinne Dubois from the Pivotal Innovation Strategy team, with collaboration from Siobhan McFeeney and Tyler Lok.
Leaders shepherding a digital transformation effort certainly don’t lack for advice. From tips to traps to “must-do” approaches, it can seem like everyone has an opinion on the right way to proceed. Our team has spent the last four years helping some of the world’s largest companies effect real change, and we’re here to say: Most digital transformation advice is well-meaning, but misleading.
Which is not to say that digital transformation isn’t worth pursuing. To the contrary: the creativity, agility, and resilience you can get from modernizing your software development and deployment practice can reap tremendous rewards and change the future of your business.
But don’t bother obsessing over “the right way” to approach your own digital transformation: There’s no such thing, because each company has different needs. Unique goals, starting points, culture, people, and leaders mean it’s silly to expect that Company A’s strategy and tactics will work just as well at Company B.
Instead, here are three general principles that we’ve seen can help turn human effort into real, lasting change.
Principle 1: It’s about outcomes
It seems like just about every new digital transformation article wants us to understand how digital transformation is really all about the people, or the culture, or the leadership style, or … well … any number of fuzzily defined topics. It’s not.
Those topics are all important, but at the end of the day (er, quarter), you’re in business to drive results. If your digital transformation effort is to succeed and persist, it needs to drive those results better than your current practice. And that means you need to clearly understand what you’re trying to achieve, and how your transformation can help. We like the Objectives, Goals, Strategies, and Measures (OGSM) framework for establishing a cascade of aligned outcomes for complex organizations, but whatever process works for you is exactly what you should do.
If you’re looking for a place to start, there are a few categories of outcomes we’ve seen time and again in our partners. While specifics within these categories change from company to company, they provide a useful focus for the particular ways people, culture, tech, or leadership style might need to change.
“We need more responsive IT capabilities at a lower cost.”
Some of our clients want to change the way IT provides services to product organizations without changing org structures or other operating-model concepts. Desired outcomes often have an element of cost/waste reduction and an element of service or responsiveness. This means transformation resources should focus on:
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Technical solutions that help automate some of the control guarantees the organization needs.
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Improving relationships and processes for the people who need to coordinate across organization boundaries.
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Instituting a culture of transparency around prioritization based on cost-value analysis.
Desired outcomes often have an element of cost/waste reduction and an element of service or responsiveness.
“Our software development practice needs to modernize.”
Clients primarily looking to modernize their software development teams often want outcomes around customer responsiveness and/or time to market. Achieving those outcomes requires a transformation effort to prioritize:
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Technical solutions that minimize barriers to releasing code, like continuous integration and delivery.
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Efforts to ensure developers have incentives (and training) to connect with the customer and deliver software in smaller sections of value.
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Culture change that focuses on moving development teams from fixed projects measured on cost/time constraints, to customer-focused products measured on objective or outcomes achievement.
“Our entire company needs to change.”
Oftentimes, clients who want to “change everything” are the furthest from actually articulating outcomes. Enthusiasm and generous resources are great, but they need to be used as capital to fund tangible, clearly defined improvements. Moving from generic "improve how we work"-type outcomes to specific business targets is difficult.
It’s completely necessary, though, since doing so helps leaders prioritize their efforts and resources. For example:
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Technology investments might center on automating a pipeline to production, on creating a new asset inventory system to streamline decommission of unused resources, or something entirely different.
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Investments in employees might focus on upskilling project managers to product managers over specific agile framework training, or vice-versa.
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Efforts to change the organization’s culture might focus on creating a culture of quick feedback cycles or cross-functional partnership (or both); it might focus on heavy use of outside consultants or a slower, internally grown set of coaches.
Which is all to say that without a crisp understanding of the specific outcomes your transformation needs to achieve, your work will be—at best—unfocused. It will be too broad for a tightly scoped set of outcomes; orthogonal to culture change that would actually drive your goals, or, worst of all, just another senior leadership fad.
With a crisp understanding of what you need to achieve, you can treat your transformation effort like a product—and ruthlessly focus your resources on changes that will get you where you need to go.
Enthusiasm and generous resources are great, but they need to be used as capital to fund tangible, clearly defined improvements.
Principle 2: It’s about continuous improvement
Getting clear about your desired outcomes is the first step. From there, your digital transformation efforts need to be a living, breathing, iterating thing. Because your initial attempts to achieve your objectives will be wrong! It’s important to have practices in place to capture those results quickly, and then iterate on them.
Here’s a flexible set of patterns you can customize to work in your own organization.
Start by setting up a framework for making decisions.
Organizational decision-making tends to be an opaque, inconsistent process with a baffling number of exceptions. Establishing transparency and consistency is an important (and difficult) first place to start.
The framework should include guidance on who makes which types of decisions (e.g., senior leadership decides market direction and sales targets, and product teams decide technical approaches); transparency around how decisions get made (e.g., portfolio leaders have full funding discretion, provided decisions are based on data); and when iteration cycles should be refreshed (e.g., products evaluate their approach every month, while portfolios evaluate every quarter).
Your initial attempts to achieve your objectives will be wrong! It’s important to have practices in place to capture those results quickly, and then iterate on them.
Make sure you’ve got mechanisms in place to gather good data.
Decisions should be based on measures that help you determine whether you’re on track or not while you can still change, rather than lagging indicators that need to be evaluated once it’s too late. If you’ve used the OGSM framework to establish outcomes already you’re in great shape, because each individual strategy is accompanied by measures designed to evaluate and redirect work on the fly.
Whatever mechanism you use, make sure the data you’re collecting can answer the question: “Am I closer to achieving my goals than I was a few weeks (or months) ago?”
Establish governance that allows you to make decisions quickly.
The majority of our clients make resourcing decisions once a year during the strategic planning process. However, it’s better to gather good data, and stop/start work much more frequently than that.
We’ve seen growth boards, with agendas fueled by strategy cascades, work really well for this. They facilitate transparent and collaborative conversations about what work will best achieve desired outcomes. But as long as your governance mechanisms let you learn from your work and adjust going forward, you’re doing things right.
Regardless of the specifics of your framework, we think well-functioning continuous improvement loops look like this at scale:
A continuous-improvement operating model.
This framework is intentionally loose; we’ve yet to find something more specific that works for all organizations. But this interconnected set of learning loops—with objectives that get more refined the closer you get to a product team, and feedback loops that ensure leadership learns from actual customer interaction—is a pattern common to the successful, long-term transformations we’ve seen.
However you approach instituting practices of learning and iteration, your outcomes will help ensure resources are actually fueling improvement.
Make sure the data you’re collecting can answer the question: “Am I closer to achieving my goals than I was a few weeks (or months) ago?”
Principle 3: It really is all about you
Finally: In our experience, more digital transformation efforts have been killed by leadership than all of the other reasons combined. The best governance mechanisms—with the most refined techniques for experimentation, against the clearest possible objectives—can mean nothing if the VP down the hall has established a private slush fund and associated fiefdom where things work differently.
The fact is that a company will follow, and establish culture around, leadership behaviors. Here are some leadership rules of engagement to remember as you move your effort forward:
- Predicting the future isn’t a thing. You cannot know what’s ahead. Instead, you need to be able to articulate the problems, validate they’re real, and laser-focus on solving them. Think what, not how.
- Being right all the time isn’t a thing. No one person can have the complete answer. Ever. Instead, cross-functional groups of decision-makers who collaborate toward an objective have the best chance of moving in the right direction.
- Perfect knowledge isn’t a thing. Sometimes we’ll be right, other times wrong, and experimentation should help us course-correct. Listen to the data you’re gathering.
- Complete freedom isn’t a thing. Shared goals give context and guide decision-making. “Autonomous teams” isn’t a coded phrase for “results don’t matter”.
- Special cases aren’t a thing. Banish the words “Of course I can! Don’t you know who I am?” from your organization.
These rules of engagement are hard to follow, but when they’re practiced, leadership can turn from an opaque, unpredictable force into an incredible force-multiplier. And that’s worth the effort.
More digital transformation efforts have been killed by leadership than all of the other reasons combined. . . . The fact is that a company will follow, and establish culture around, leadership behaviors.
So… what do you want to achieve?
As much as we wish it were different, the reality is that there’s no one topic, approach, or other “secret” to digital transformation. Instead, staying laser-focused on desired outcomes and evidence-based iteration to achieve them—whatever the exact process—is the key to success. And that looks different everywhere.
So instead of obsessing over grand visions, hidden pitfalls, or sweeping changes, start by digging deeply into what you actually want to achieve:
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How should the world look different for your company a year from now?
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What general strategies will you take to bring about those changes?
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What work needs to be done to implement those strategies? And how will you know, as you do the work, whether you’re on the right track?
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How can you, as a leader, make the objectives and strategies more transparent and effective?
Answering these questions might be harder than laying out grand visions for “culture change,” but they’ll also help you ensure your digital transformation effort isn’t a giant waste of time. Because while big ideas might buy you an extra quarter or two, results don’t lie—and 2 years of transformation with nothing to show is 2 years of capital and human resources down the drain.
More digital transformation posts from Intersect
The 5 pillars of digital transformation
4 types of employees you'll need to manage carefully during digital transformation
How CEOs can drive digital innovation without learning to code
How Liberty Mutual made a culture of constant education central to its digital transformation
Duke Energy is using data to validate corporate strategies. You can, too.
