"Digital transformation," while not a new term, is still a burning issue for business leaders. As digital technologies become more sophisticated, as organizations continue to adapt to shifting market needs, and as social trends demand new ways of doing work, we are faced with an ever-increasing need to transform our organization and cultural norms.
Arguably, the greatest chasm we see in our organizational work today is the actual transformation before, during, or after the implementation of a digital technology—because technology invariably crosses through and impacts people, processes, and culture. What are we transforming from? What are we transforming into? These are "people issues" as much as they are "technology issues," but we too rarely acknowledge this.
Learn about open organizations
Operating our organizations on open principles promises to spark new ways of thinking that can help us address this gap. Over the course of this three-part series, we’ll take a look at how the principle foundations of open play a major role in addressing the "people part" of digital transformation—and closing that gap before and during implementations.
The impact of digital transformation
The meaning of the term "digital transformation" has changed considerably in the last decade. For example, if you look at where organizations were in 2007, you’d watch them grapple with the first iPhone. Focus here was more on search engines, data mining, and methods of virtual collaboration.
A decade later in 2017, however, we’re investing in artificial intelligence, machine learning, and the Internet of Things. Our technologies have matured—but our organizational and cultural structures have not kept pace with them.
Value Co-creation In The Organizations of the Future, a recent research report from Aalto University, states that digital transformation has created opportunities to revolutionize and change existing business models, socioeconomic structures, legal and policy measures, organizational patterns, and cultural barriers. But we can only realize this potential if we address both the technological and the organizational aspects of digital transformation.
Four critical areas of digital transformation
Let’s examine four crucial elements involved in any digital transformation effort:
- change management
- the needs of the ecosystem
Any organization must address these four elements in advance of (ideally) or in conjunction with the implementation of a new technology if that organization is going to realize success and sustainability.
Change initiatives have been clocking a 70% failure rate since the 1970s. This tells us that both our models and our approach to doing business need to change.
Change management is really about a human element: the attitudes and behaviors of internal and external stakeholders, as well and the ecosystems within which they operate. So a more inclusive (that is, "people-focused") approach to change management promises to increases our success rates. Embedding open organization principles in our change models can ultimately help us create empowered people who adapt quickly to business needs. Transparency and inclusivity allow for opportunities for open discourse and feedback from often underrepresented voices. Collaboration and co-creation allow us to have fresh perspective and more innovative solutions. We begin to identify gaps and roadblocks at a faster rate—which ultimately creates better processes, policies, and solutions.
Bottom line: Open principles reduce your headaches and the cost of change.
Needs of an ecosystem
What is your ecosystem? It is the living, breathing network of people and organizational frameworks that interconnect to form the system in which your organization operates. The actors in any ecosystem—employees, partners, external stakeholders, customers, vendors, etc.—are mutually dependent on each other for our business health, growth, and success. And much like the ecosystems we see in nature, the poor health of one component affects the others over time.
This mutual interdependency crucially affects everyone’s success and happiness, and organizational leaders must understand the needs of each actor’s role so they can meet the goal the organization wants to meet by introducing a new technology in the first place. Implementing advanced and emerging technologies often create an even greater need for leaders to evaluate and align to the needs of an ecosystem in advance of implementation. Every business has different needs. There is not a one-size solution. Yet the commonality here is that ecosystems are interdependent on all actors within.
Know your goals and understand how implementations will affect the whole of an ecosystem so you can create an appropriate and inclusive strategy. It may require a plan for competency training, a re-organization of work and process, creating new initiatives, and other ways of meeting the needs of your people.
Any time we use the word "transformation," we must really understand what that word means. Transformation is radical change. And any change, no matter its scale, requires us to review our processes to evaluate what needs adjusting to fit within the new change.
Processes beyond the technological, however, are those we often overlook. Yet digital transformation affects the front of the house as much as the back of the house. When we add something new to, or even adjust, our workflow, we frequently forget to think about the layers upon layers of processes that already exist. We inadvertently create workflow redundancies that slow down productivity and can even cross through other connected areas of an ecosystem.
When you change a business model or implement a streamlined approach with technology, your leadership must look at what processes or policies are touched. These redundancies (or additional touches from departments) in business processes costs you in lost productivity, delayed responses, and more.
Organizations that leverage open principles remove barriers to collaboration and co-creation. They create processes that are inclusive and that allow for cross-training for their employees. Knowledge sharing and communication is transparent, accessible, and useful.
During periods of intense digital transformation, breaking down the silos that exist in our organizations is imperative to business (and, more broadly, societal) success. Leaders can leverage new ways of thinking by seeking feedback from underrepresented voices and diversity of thought in your project teams. They can create opportunities for people to learn and become more versatile in their competencies.
Your opportunity to disrupt
Any digital transformation effort presents organizational leaders with opportunities to decrease fears surrounding new technologies (like AI or automation). By taking them seriously, we can disrupt old ways of thinking and doing to create new opportunities for our people and customers. Being on the edge involves being responsible for developing the right type of change for our future, one that that goes well beyond technological matters.
In the next article, we'll examine the impact of a change management strategy that embeds open principles throughout the organization. Only then can we really address that 70% change initiative failure rate.