Digital transformation works but does not scale

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For the third year in a row, IBM, the BCG and the EBG issued their report on the digital maturity of french businesses (document in french). Here are my takeaways.

Digital businesses refocus on the customer

Without any surprise, the customer is at the heart of digital transformation strategies. Not only in terms of attention – what is nothing new at all – but in terms of structure of value chains and operating models, what is really new. It reminds me of my conversation with Olivier Delabroy from Air Liquide when he told me that what incumbents must learn from GAFAs is that they don’t manage products or technologies but customers. The move have started even if the road will be long and full of obstacles. One of the concrete results is upstream collaboration with customers (design thinking), the importance given to the voice of the customer, the personalization and simplification of journeys.

I noticed with interest the restructuration of support functions regarding the demand, what means realigning internal operations with the experience promised to the customer. As a matter of fact doing fireworks on the front office is pointless if the back office does not follow. However I consider that either if the “irritant hunt” has started on the customer side, things does not move as fast as needed on the employee side. I see too many convoluted top-down reorganizations programs while starting with the employee whio perfectly knows what prevents him from doing his job is more efficient and drives engagement. But as usual, businesses seem to trust their customers more than their own employees when it comes to reinvent themselves.

Towards the data-driven company

Businesses have learned a lot since the dawn of the dig data era. Initiatives are becoming much more pragmatic. However the level of maturity and the appetite for data is not even. If the health industry agrees to pay for customer data, the luxury industry is not interested in such approaches. As for businesses reaching the end of the learning curve, they draw more than tangible benefits from their investments.

For the others, the road is long because becoming a data-driven business has strong technological and cultural requirements.

Unsurprisingly, one of the major challenges today is data governance, mainly regarding security and privacy.

Agile for all ?

Because digital transformation is not only a matter of technology, the real challenge is about operating models and the way work is done. In a world where success is not anymore a matter of size but of speed, the impact on organizations is huge.

The most visible change is about agile, which is becoming the default delivery model and also contributes to a continuous learning and change approach. But the cultural change it requires confines agile to project teams, small teams, and it rarely works in cross-organizational approaches. Once again we can see the gap between the rate of work on the field and at le management level. To make it short : agile does not scale. And behind agile it’s all about the acquisition of new skills and behaviors.

The other change is about innovation. Since they can follow every idea they have, businesses are getting better at selecting the projects they invest in and working in ecosystems with partners and startups. But the number of initiatives such as accelerators, labs, partnerships, internal projects may become confusing, poorly readable, with no apparent main line and which sense and added are questionable.

Already preparing for the next digital revolution

That’s a point I’ve been watching for a couple of years and that is eventually become concrete. Considering how fast changes are coming, how fast technology is evolving, it was certain that a new digital wave was coming and the challenge for businesses is to have dealt with the first one before the second arrives. As I often say, digital transformation won’t turn businesses into winners, it will only allow them to keep playing and proceed to the next test.

This point is mainly about IA which is a very trendy and discussed matter already but is still in its infancy and may look like a tsunami once adult. The main challenge is, as usual, to avoid the solutionism trap, don’t start with technology but with value. IoT will also a major trend, as well as virtual reality even if the adoption of the latter is very progressive.

Organizing for digital : a governance challenge

Becoming a digital business (or ready for a digital world) is not a matter of technology but of governance. What has different consequences.

If digital must me a shared concern, it raises issues in terms of silos and collaboration. Of course it’s up to the C-Suite to drive the move in a exemplary fashion, followed by the top management. That’s not trivial : speaking of digital is one thing, thinking digital and personifying the ambition is more difficult. It requires to reskill key functions like the CEO or CHRO who are not known to be tech-savvy populations.

Another key point : the shareholders. The example of GE mentioned in a previous post shows well that achieving a bold move requires sacrifices in terms of growths and profitability and that some shareholders are not ready to accept it. Regarding CDOs, it seems that if the role is useful, real transformation comes from the business and business units directors, not from a cross-organization rôle.

IT too must transform to enter the data age and support the transformation. What raises questions about its ability to manage the change and run the existing at the same time.

Digital transformation : mature strategies but no scale

The result of all that is rather close to the conclusions I came to a couple of weeks ago. Current approaches are mature, businesses know what to do and how even if their level of achievement is uneven. The challenge is not about starting initiatives or demonstrating their value but scaling. We have things that work on small scopes, on a given activity, but the whole organization is not aligned and consistent.

Even if it’s making his way inside organizations, digital is neither a global approach nor a global operating model. From my point of view the challenge is human and organization : some things have been successfully achieved with people who believed in digital, where it has visible value and was quite easy to implement. We picked the low-hanging fruits. Now it’s about onboarding naysayers, techno-averse people, tackling more complex issues and having cross-organization approaches. We’re getting close to the tipping point but the last steps may be the most painful.

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