In the previous five posts on digital transformation (DX) I’ve looked at some of the significant challenges for enterprise IT to overcome, but these challenges may be less important than what I see as the real impediment to going digital – virtually all large enterprises have become efficiency-driven machine bureaucracies where you don’t get rewarded for taking risks, trying new things or for being different. Reward and recognition systems get in the way of the changes and innovations that are needed to rapidly move the digital transformation forward. It doesn’t matter what the senior executives and managers say – what matters is what they do – and what they generally do is try to apply familiar machine bureaucracy patterns to a dynamic, fluid, evolving environment.
It’s as if a failure you understand is better than a success that you don’t.
What’s needed (somehow) is a way to become a smart experimenter; to perpetually try out a range of new digitally-focused ideas (preferably with credible value propositions attached – but be prepared to take a flyer now and again) in partnership with your employees, suppliers and customers; select those that work; and then adopt and scale them quickly. Think big; start small; learn fast.
You can try to do this in-house (which has turned out to be very tough for most large businesses) or via the market, which has often been easier. But successes generally cost more to buy than build and you need a way to track what’s being tried and identify what’s succeeding. However, if you can’t successfully build internally, buying others who have managed to do so may be your only option – if you understand what made them successful and can incorporate that success into your business without diluting or destroying it.
Whatever route you choose, you’ll still need to become very good at integrating the stream of new ideas into a consistent operational framework, so that they’re not just new, they’re operationally efficient right from the start and potentially able to make a profit contribution as early as possible. If the business services framework that every business idea needs is already in place and ready to go, you’ll be in the market faster and able to evaluate success quickly. Just by itself that’s a huge advantage.
Getting to digital is a journey, already decades long and probably never completely over – there’s no limit yet to the potential for a fully digital business to innovate and grow. It’s not going to be an easy or even an obvious transformation, but it’s going to happen to everyone, everywhere to some degree sooner or later. So you do need a strategy, but not one that assumes that anyone knows what the outcome will finally look like. Better get ready.
How’s your evolution to digital going?