Few organizations would challenge the need to move more quickly in the market, innovate faster, and hire and retain more skilled and energized employees. And yet, the rate of successful transformation initiatives across organizations is frighteningly low - around 13% (3 Stages of a Successful Digital Transformation ). While the high-level benefits of digital transformation are obvious, the execution is where most initiatives struggle. In a previous article, we discussed common causes for why digital transformations fail, and how to avoid common traps. In this article, we will explore a design pattern for successful transformation, and the recipe to make successful transformation a repeatable process.
In general terms, here are the common steps in the process of establishing a transformation initiative and some of the criteria we have seen lead to positive outcomes.
Step 1: Develop Strategy: Why must we transform?
Although definitions and interpretations may vary, Digital Transformation is fundamentally changing an organization’s processes by leveraging technology to improve the realization of value. Digital transformation is undertaken to change how organizations behave in order to achieve specific outcomes. Usually, the outcomes involve financial metrics improvement (such as margin improvement or increased revenue), product or service improvement (increased innovation, faster time to market), and improved engagement (improved customer experience, better employee engagement). While the process of transformation is iterative and progressively elaborated, the key objectives, or the "why" of the transformation, should always be the guiding North Star to follow and measure along the journey. One of the most common roadblocks to a successful transformation initiative is the lack of clearly defined, measurable outcomes with specific targeted timeframes. Once these are established, they should be revisited at every key decision point to ensure that the program is streamlined to prioritize these specific outcomes.
The outputs of this step should be the top one or two outcomes that will become the priority drivers for the transformation. They should answer questions like, "Why are we undertaking this transformation? What will be the outcome if we are successful?" These answers will be the rallying cry across the organization for the transformation initiative. The high-level outcome should be broken down into multiple metrics that measure incremental progress, and can be rolled up cleanly into the overall success criteria for the program. Keep in mind that one of the biggest obstacles along the transformation journey is cultural resistance, and the best way to fight it is through data and objective decision-making, sprinkled with constant communication.
The key stakeholders will be the leader(s) in charge of an organizational or functional unit that is undergoing the transformation, along with stakeholders from teams which impact the function and are part of their functional processes. For cross-functional initiatives, you will need senior executive leaders who can make decisions and remove obstacles across teams. What organizational units will own driving the change? Which teams will be the ones that will work differently as a result of this program? Identifying these teams, as well as the leader of each team and business owners who will be responsible for propagating the initiative down their organization, is critical.
There should also be a named sponsor for the program: someone who will own the success of the program, remove roadblocks across different teams, secure funding, and be the ultimate decision maker on key issues.
Step 2: Establish Framework: Agree on a common language
With so many frameworks, programs, and methodologies in the market, it is easy for larger organizations to struggle aligning on common definitions, much less methodologies. For example, everyone these days "works Agile"; however, different organizations will run Agile programs very differently. It is critical to establish a common framework that the entire organization buys into, and upon which the transformation is built. A common framework will include standardized definitions of work items, nomenclature, and team structure. OIC recommends aligning with the Scaled Agile Framework (SAFe ®), which will bring a common set of definitions, processes, and decision making capabilities that are proven and repeatable. This should propagate up to the executive levels as well, to ensure they are able to consume standardized reports and act quickly to overcome obstacles. OIC provides both training and certifications in SAFe to our clients, because we have used it successfully for complex transformation initiatives and know how well it works.
Step 3: Implement Program Structure: Break it down
Now that the key outcomes and stakeholders are defined, the program can be structured to optimize the success of the initiative. How you organize your teams, how they communicate, and how they resolve problems will be critical to achieving your goals quickly. In the past, a traditional Program Management Office would be created or called upon to run such a program. However, as we discussed in a previous article, the PMO Office is quickly being replaced with the concept of a Value Management Office. The VMO focuses on speed and reducing the Time to Value (TTV), by having teams focus on activities that quickly derive value for the organization.
The final program structure must include defining the Development Value Streams that deliver the ultimate solutions for stakeholders. Development value streams will include the individual, autonomous team chartered with meeting specific transformation objectives, as well as the tools for measuring progress in the form of Key Performance Indicators (KPI's) and Objectives and Key Results (OKR's). Another requirement is a solid communications plan, including reporting templates and frequency, which enables rapid flow of information and informed decision making.
Step 4: Execute and Iterate: Get it done at speed
Having adopted the structure for the program, now you execute at speed. Just like any other Agile program, the key is to deliver results iteratively, learn what is working well and what isn't, and adjust. Quick wins are more important than long, marathon initiatives, because team members need to build on successes and keep the momentum going. Each Development Value Stream will run independently in terms of obtaining its objectives and delivering value through a Continuous Delivery Pipeline, but you need frequent touchpoints across teams that align with the established Communications Plan, reporting on progress and obstacles so that leaders can remove those obstacles.
End-to-End workflow and tooling: Every organization has its preferred toolsets and technologies. However, over time, these tend to grow, with different users utilizing multiple tools to do the same tasks, or teams building silos of toolsets that slow down rapid progress. It is necessary to have a standardized platform built on tools that are scalable, interoperable, and easy to use, so that innovation, knowledge sharing, and collaboration are natural outcomes. If there is "tools sprawl" in an organization, it is both expensive and inefficient. It is imperative that specific toolsets are identified and communicated, including which data sets and processes are associated with each tool. Because this is such a common issue, and sometimes politically hard to resolve, OIC provides an objective analysis of tools for use in managing large scale transformation programs, and industry-standard SaaS solutions aligned with the SAFe framework for clients that are lacking effective tools.
Solution Accelerators: Wherever possible, leverage proven solutions and tools to get to speed results. Sometimes, it is fastest to include an objective third-party to find root causes to slow execution, flawed strategies, or cognitive blind spots that may be slowing down the team. If you have people who have done successful digital transformations before, ask them to develop Solution Accelerators by group (Product Management, Sales, Professional Services). They can include validated templates, workflows, and workshops that allow these teams to isolate problems and address gaps due to organizational, communications, or other structural issues. Here is an example of the deliverables that an accelerator can bring to improve time to value realization:
Step 5: Constant Reflection
Just as in any Agile software development process, it is important to continually assess what is working well and what can be improved. Allow frequent retrospectives across the program; each development value stream should assess itself frequently and strive to improve, while executive champions and stakeholders should bring together cross-functional teams together to do the same — with a focus on speed and business agility. The more open and constructive these sessions are, the better the results will be, and over time it will become part of the operating culture. As lessons are learned, continue to refine your strategy and set new targets to reinforce the mindset of continuous improvement throughout your organization.
Starting down the path of a true digital transformation is both tricky and risky. You want to make sure you are learning from mistakes other organizations have made, establishing processes that enable continued improvement, and using tools that are readily available to speed up the time to realizing the value you seek from the transformation. Let us know what has worked (or hasn’t worked) for your organization in the comments below!