Digital transformation is a piece of cake!

First of all I want to thank everyone who connected with me over the new year and asked questions on my previous blog post “2020 predictions”. The blog stirred up hundreds of messages, insightful discussion especially around transformation. So on the 652 on this cold frosty morning I am writing this, enjoy. :)

 I recently visited the natural history museum with my kids and read Darwins quote:

 ‘It is not the strongest of the species that survives, nor the most intelligent that survives. It is the one that is the most adaptable to change’

This quote got me thinking of how this can be applied to digital transformation and survival of organisations. In large organisations, startups and everything in between, I don’t believe long term survival will be determined by those that are the the biggest or strongest, I believe long term survival will be determined by organisations ability to adapt, outperform their rivals and continually transform with the ever changing environment. If transformation was a cake the sponge would be technology the filling would be the people, processes and culture and the icing would be the experiences and services the customer get to see, hear and feel. 

So what is the purpose of digital transformation? Digital transformation purpose is beyond implementing a new expensive tech stacks. It’s not an architectural ‘wet dream’, it is beyond moving everything to the cloud with Kafa queues and Casandra databases gluing things together and it is definitely not a destination! Digital transformation purpose is about long term survival, that’s it, nothing more nothing less! It’s about building  resilience and adaptability into the organisation so that it can continually stay relevant. There are many reasons for the need to transform, ranging from ‘diva’ customers who are hyper connected and expect an useful, realtime service at a time that suits them. Regulation such as PSD2 and open banking forcing change, revenue pool margins depleting as macro economic trends push prices down and products and services become commoditised. Technological advancements and marketplace ecosystems maturity making it easier to just plug and play services and finally competition from within and outside of industry. 

In its essence I believe transformation can be broken into 3 steps.

1. Be clear on your purpose
2. Make / remake your cake 
3. Create experiences

Be clear on your purpose. It can feel like a maze what is the right path? When you talk to people about digital transformation you get to hear war stories or situations that seemed impossible to navigate. However if you ask them if it was worth it, most will say “Yes”. So where do you start?  I’ll let you into a little secret there is no right path just many paths. There is however a general right direction and small bets to take along the way. The organisations general right direction can be defined by their purpose or North Star. When the purpose is clear many things become easy from prioritisation of initiatives and how the organisation needs can navigate the maze. A well defined purpose also helps organisations stop doing things that may sounds like a good idea but not aligned to their purpose. This is super important to prevent an overload of work in progress entering the system. Conversely having a loose purpose such as giving customers magical experience does sound great however meaningless if its not rooted with deeper meaning. I am yet to find a organisation (maybe some airlines!) thats active purpose is to provide customers with a shitty experience. Making sure the purpose is clearly rooted in values and understood across the organisation is a challenge and critical to ensure everyone pulls in the right direction.

 Over Christmas I read Simon Sinek book, The Infinite Game, in it Simon talks about 5 infinite rules to long term success.  

1. Advance a just cause

2. Build a trusted team 

3. Study rivals 

4. Be flexible 

5. Prepare to be brave

When you read the list above it does sound pretty obvious and that exactly the point, its the obvious things that are often overlooked. Organisations can loose sight in day to day activities and not focus on one or many obvious things and end up in a null state. There are plenty of examples where one or many of the above have been missed. Polaroid for example, had a digital camera ready in 1991 but could not convince the organisation to release till 1996, by then it was too late as more than 22 competitors had entered the digital camera market. Polaroid in this example missed out on all the points above. 

Lets get back to cakes. The sponge is the technology, building firm foundations of technology and architecting the technology stack so that it has agility. Feedback and learning is everything here, boiling the ocean approach to technology transformation can be expensive and problematic. Big Bang approach seldom works, I have had first hand experience of this and believe me its not a great place to be when the poope hits the fan. The better approach is to prove capability in a controlled environment with a low risk experiences. Allowing the customer to take advantage of innovative new services, while the organisation gains feedback on how the technology will react in the wild, its important to also learn how to maintain the service and build out the run processes. Once things have settled in, then scale your findings to other experiences in the customer journey. The age old question of build vs buy is always one to answer. Do you want to build the sponge yourself or outsource it? The easy pill to swallow is when you outsource the hard stuff however be careful you don’t outsource your core competences. It’s hard to have long term value in an organisation if everything is outsourced and the organisations just manages suppliers. It’s important to be clear on what services you outsource or partner with and be sure to check long term operating costs and licensing cost. Either way having well defined interfaces will prevent lock in and ensure flexibility to hot swap providers so you are not held to ransom when it comes to contract renewals this also helps from an agility perspective.

The filling of the cake consists of processes, people and culture. To reduce operating cost organisations try to automate processes. In the book Goal Dr Goldrat talks about theory of constraints and inventory. Its important to see processes as a end to end system and ensure you automate the right things first. Essentially remove complexity consider flow within the system and avoid inventory where possible.  Remember the value chain of most processes are realised at the output of the process not during. The people and culture, I would argue toughest nut to crack! Forget technology, forget money and forget big ideas, the critical thing that will make or break the organisation is people and culture.  Transformation does not work if you do not have the right people with the right culture and people pulling in the right direction. Define the why for your organisation make sure everyone knows this why. Hire some awesome people and create a ‘hunger team’ that are brought into your values have diversity of thinking and will do what ever it takes to deliver success. 

Building out experiences: This is about building personalised experiences that the customer want, may have not asked for but cant live without.  As I said before products and services are now commoditised, the way to differentiate can be in the experience and service space. The elephant in the room is always what to delivery with limited resources and resource. You could get lucky and dream up an idea and strike gold first time. Striking gold first time in experience and service rarely happens when customers have not been involved in evolution. So we need something better than luck, as with technology feedback and inclusion of customer feedback is critical. If you haven't read Competing Against Luck, make sure you add it to your 2020 reading list. There is a concept of Jobs To Be Done (JTBD). JTBD is a framework pioneered by Clayton Christensen and is a process a consumer goes through whenever she evolves herself through searching for, buying, and using a product or service. JTBD changed the way I look at products, roadmaps and customer involvement. The framework forces you to look at other perspectives and through the lens of the customer and for many people JTBD involves a serious a mindset shift. Plenty has been written about JTBD I will write more in a follow up blog. You want to study customers and find out what they are trying to accomplish, especially under circumstances that leave them with insufficient solutions relative to available processes and technologies. What jobs have ad hoc solutions or no good solutions? When you see customers piecing together solutions themselves, these are great clues for innovation.

I have been on many transformation programs over the last 15 years. I have learnt a lot from feedback along the way especially when things go wrong! Transformation is survival and it is about doing whatever it takes to drive business agility so that the organisation can quickly adapt to customers needs and stay ahead or even pivot to a new customer dimension before its competition. Use the common sense approach of defining key deliverables, defining minimal viable products (MVP), starting small and ensuring organisational WIP limits will go along way to prevent delivery inertia. The main thing for transformation is leave things better than you found them. I am sure some of you may have questions, so feel free to connect with me to continue the discussion.

Thanks for reading. 

Bhavesh Vaghela

Digital Craftsman 

My views are my own, delightfully dyslexic so please forgive the typos!