It seems like “Digital Transformation” of organisations is all the rage – or is it fear? – in C-suites around the world. The term implies the pursuit of new business models and, by extension, new revenue streams. I’ve been speaking recently with folks in a number of organisations attempting “Digital Transformation”, some for the fourth or fifth time. I get the impression that things are not going well, on a broad front.
What is Digital Transformation?
Even though the term is ubiquitous nowadays, what any one organisation means by the term seems to vary widely. I’ll attempt my own definition, for the sake of argument, whilst recognising that any given organisation may have in mind something rather different, or sometimes no clear idea at all. Ask ten different organisations what Digital Transformation means to them, and you’re likely to get at least ten different answers.
Digital Transformation is the creation and implementation of new business models, new organisational models and new revenue streams made possible by the use of new digital technologies and channels.
Ironically it’s proving to NOT be about technology, but rather about company culture (this, in itself, being a product of the collective assumptions and beliefs of the organisation).
“A significant number of organisations are not getting [digital] transformation right because of a fundamental quandary over what digital transformation really is.”
~ Brian Solis, principal analyst and futurist at Altimeter
So, why am I bothering to write this post? Aren’t there already reams of articles about every conceivable aspect of Digital Transformation?
Well, one aspect of Digital Transformation I see little covered is that relating to the development of “digital” products for the digitally-transformed company. And the implications this brings to the party.
Digital Transformation requires the development of new products and services to serve the new business models, new organisational models and new revenue streams. Digital products and digital services. In most cases, this means software development. And organisations, particularly untransformed organisations – which even now means most of them – are spectacularly inept at both software development and product development. Some refer to this as “a lack of digital literacy”.
Things have not changes much in this arena for the past fifty years and more. Failure rates resolutely hover around the 40% mark (and even higher for larger projects). And the much-vaunted (or is it much cargo-cullted?) Agile approach to development has hardly moved the needle at all.
For the past two decades I have been writing about the role of the collective psyche – and the impact on organisational effectiveness of the collectively-held assumptions and beliefs about how work should work. And make no mistake, effectiveness is a key issue in digital product development. Relatively ineffective organisations will fail to deliver new digital products and services at least as often as 40% of the time. Relatively effective organisations can achieve results at least an order of magnitude better than this.
The Marshall Model provides an answer to the question: what do we have to do to become more effective as an organisation? And it’s not a popular answer. By analogy, people looking to lose weight rarely like to hear they will have to eat less and exercise more. Organisations looking to become more effective rarely like to face up to the fact that they will have to completely rethink long-held and deeply-cherished beliefs about the way work should be organised, managed, directed and controlled. And remodel their organisations along entirely alien lines in order to see a successful Digital Transformation and compete effectively in the digital domain.
Successful Digital Transformations demand organisations not only come up with new business strategies, organisational models, revenue streams and digital products and services, but also that they shift their collective mindset to one which aligns with their ambitions. Personally, I see shifting the collective mindset as an essential precursor to the former. Most organisations approaching Digital Transformation fail to recognise this inevitability, this imperative. And so, most Digital Transformations are doomed to underachieve, or fail entirely.
“Ask yourself whether what you’re doing is disruptive to your business and to your industry. If you can say yes with a straight face, you may well be conducting a legitimate digital transformation.” And if you’re unable to say yes, then whatever you’re doing, it’s likely not a Digital Transformation.
If you’d like to explore this topic, understand more about the Marshall Model, its relevance and its predictive power, and save your organisation millions of Dollar/Pounds/Euros – not to mention much embarrassment and angst – I’d be delighted to chat things over with you and your executive team.
Reinventing Organizations ~ Frederic Laloux