Is digital transformation a misnomer?

By Aidan Dunphy, Chief Product Officer, Esuasive

Fact: 99.5% of instances of the term “Digital Transformation” are misnomers (source: me).

Don’t get me wrong: DT is a very good thing. It’s just very hard to do. It requires people to change and the more senior they are, the harder it is. Joke: the first thing to do in any transformation is sack the leadership team. Unsurprisingly, this doesn’t sell well.

McKinsey claims 70% of transformations fail due to under-ambitious vision, disengaged teams and lack of investment in capabilities. In my experience it’s due mainly to failure to understand the ‘transformation’ bit, and to assume it’s about adding digital technologies - ‘digital paint’, so to speak.

“Transformation” really means changing the way you deliver value, not simply updating the toolset. Digital technology is an enabler, not the transformation itself. In practice “digital” means “software”, which is pervasive in our lives, whether or not we acknowledge it. It controls communication, power, commerce, logistics and pretty much everything we need daily.

Digital Transformation implies agility

For decades it’s been standard practice in the software industry to use agile working practices. In essence this means the ability to respond rapidly to changes in your business environment. Software developers can do this relatively easily because they use modular platforms which enable changes to be broken down into small, swappable components. Changes can be made without a large number of dependencies in the broader architecture.

Sadly, agile is often misinterpreted as a magic makeover that speeds up delivery teams. Leadership embarks on a transformation programme expecting everyone else in the organisation to do the same things as before, but faster, cheaper and cooler. They’ve heard about Scrum, sprints and points etc., which leads them to think of agility as something to be delivered by the IT team. The diagram below illustrates this process. A red highlight shows the progression of agility through the organisation, because digital is blue, but transformation is red[1].

Firstly, rebadge things with cool-sounding terms like “Product Approach”, “UX” or “DevOps”. Secondly, select a technology platform and identify ‘quick win’ processes to digitise. Despite these taking much longer than expected, eventually they go live. Thirdly, once all the low-hanging fruit have been picked and assuming some enthusiasm remains, grasp the nettle and try to engage the more intransigent business teams. Unfortunately everyone is too busy doing things the way they’ve always done them, there’s a deadline next week, everyone is on holiday etc.

You keep your tech delivery team busy by delivering unstrategic nice-to-haves. Soon, you find yourself supporting a new legacy IT system of your own making, and everyone wonders what all that transformation stuff was supposed to be about. Leadership becomes increasingly disengaged, moving onto other priorities. The exec that was leading the charge leaves the organisation to try again somewhere else.

It’s the organisation that transforms, not the Digital

It’s easy to poke fun at the ‘agile theatre’ described above. Seriously, transforming an organisation is difficult because it’s counter-intuitive. Most of us go to work motivated to deliver something worthwhile, and improving our performance means doing it faster, cheaper and with less waste. We can’t visualise a completely different way of working. Consultants and transformation-enabling suppliers are needed, because they bring an outside perspective, so here’s mine.

Transformation is highly risky. Done badly, it could seriously damage the organisation’s performance. It’s inadvisable to adopt a ‘big bang’ approach involving lots of change all at once. A classic trope of agility is to change things iteratively in small increments, to create short feedback loops and enable course correction should you misstep. The mistake in the approach illustrated above is to see the iterations as incremental delivery of new technology to the business, but constrained by traditional project thinking (big scope and a deadline), now with added Scrum meetings.

A practical approach to transformation requires incremental changes affecting the entire value chain. Inspired by Jussi Pasanen’s famous illustration of how (and how not) to do an MVP[2], the diagram below shows transformation as a vertical stripe through the business hierarchy, not simply a new technology platform.

Your Mission will be  unchanged, e.g. “To provide the people of Someshire with affordable, decent places to live in a safe, supportive community”. However you will need to come up with a new Vision, an aspirational and inspirational statement of your North Star, an unattainable but alluring destination providing unwavering orientation. This describes a future that may look very unlike your existing operating model, acknowledging the changing needs and expectations of your customers and leveraging emerging resources and opportunities.

Your strategic goals may outline new ways of financing, developing and acquiring property, more flexible delivery models and customer-centric engagement patterns. However this is far as it should go; to avoid becoming yet another failed public sector IT project, the details of execution should be delegated to digital delivery teams, measured against outcomes.

This is the bit that most Housing organisations struggle with. They fall back into demanding a timebound roadmap of delivery commitments (AKA a project plan), despite having not a scooby as to the challenges and risks involved. At the Housing Technology conference last March, a Housing IT leader told me that their Dynamics supplier had promised a delivery from a one-month ‘sprint’, but that this was now in its tenth month. They had promised an outcome without actively managing the clients’ expectations and their role in the delivery. Scope didn’t creep, it leapt.

This is what’s behind my provocative joke at the top of this article. To transform an organisation, you need a vision of the future, clear but leaving room for strategic and tactical decisions on how to get there, because no organisation ever knows precisely how it will do so. Commitments must be made only in terms of measurable benefit, not specific deliverables (outcome not output). Delivery requires participation from the whole value chain, with the ability to course correct. Embracing this uncertainty requires strong, visionary leadership and a move away from top-down, command-and-control management towards leadership of empowered teams by vision, inspiration, example and outcomes.

This article first appeared in Housing Technology November 2023




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