Digital Economy Dispatch #038 -- Facing the Hard Truths of Digital Transformation

Digital Economy Dispatch #03830th May 2021

Facing the Hard Truths of Digital Transformation

Over the past few months, I have delivered dozens of online webinars, panel discussions, masterclasses, and workshops to a wide variety of audiences. While they have covered many topics, at their core they all deal with issues of digital disruption and the business transformation this is enabling. Consequently, in these engagements I receive a great deal of feedback on the digital transformation journeys being undertaken across organizations large and small, the progress they are making in adopting digital technologies, and the problems they face to accelerate the move to digital ways of working.

Much of what I hear is clearly recognizable. It is representative of the issues I have seen raised over the past 20 years of working in high tech businesses. As John Kotter and many others have been telling us for years: All change is disruptive, and the challenges brought by digitally-driven change is especially hard to address.

Primarily I have focused on raising awareness in these audiences about the opportunities and challenges that organizations face as they adapt to our digital world. The provocative position I often take is that we are in the early stages of a “digital revolution”. Far from the evolutionary journey that underlies many digital strategies, I present the current situation as a discontinuity requiring new ways of planning, working, and envisioning the future.

What is the foundation for surviving and thriving in this new world? I often refer to this approach as “Agile Innovation Engineering”. From this perspective, it requires a blend of three key disciplines:

• Agility – Creating an environment that supports fast-paced experimentation to bring adaptability to the organization in the face of uncertainty and volatility in the operating domain.

• Innovation – Encouraging individuals and teams to explore new ways to solve problems and deliver value to stakeholders by taking advantage of new knowledge, technologies, and techniques.

• Engineering – Ensuring that the organization applies a rigorous discipline to the ways in which they plan, manage, measure, and report on their progress.

It is a combination of these 3 disciplines that brings the necessary balance between the adaptability necessary to deal with the volatility and uncertainty we all face today, and the rigour required to accomplish this consistently, effectively, and at scale.

Unsurprisingly, many organizations are already deeply invested in bringing many of the requisite techniques and skills into their teams to improve how they operate. However, in practice we find that progress is too often disappointingly slow. Why?

The reason may well be grounded in the hard truths nicely summarized by Gary Pisano in a recent HBR article. There, he explored the gap between many organizations’ desires to adopt what I call an “Agile Innovation Engineering” approach with the reality he finds on the ground.

His views align extraordinarily well to my own personal observations. Organizations undergoing digital transformation must face the hard truth that introducing the new skills and practices necessary for success comes with difficult behaviour changes that must be adopted. They are consequences of any successful “Agile Innovation Engineering” approach. Without them your digital transformation will flounder:

• Encouraging a “fail fast” culture typical of agile approaches requires highly skilled staff able to work effectively in situations of uncertainty and without a roadmap. Such techniques quickly expose poor performance, out-of-date skills, and incompetence. These must be addressed and dealt with.

• Moving at pace by adopting an experimental mindset is essential. But it must be balanced with rigorous discipline to ensure it does not devolve into an endless spiral of half-finished pilot initiatives that never go anywhere.

• Honesty and open feedback drive decision making and support personal development. However, creating an environment that offers the psychological safety and freedom to raise concerns also requires individuals to accept the challenge brought by differences of opinion, varied viewpoints, and well-meaning criticism.

• Teamwork is essential to bring about change. Yet a collaborative approach does not avoid the need for managing and monitoring individual performance and personal contributions.

• Traditional organizational structures and decision-making practices celebrate authoritarian top-down leaders who manage large teams of people and maintain tight control of responsibility. Agile approaches require a flattening of hierarchical decision making and encourage a different, more unfamiliar leadership style with dispersed authority.

In my experience, progress in digital transformation requires introduction of new technologies, many different changes to practices, updates to organizational structures, uplift in educations and skills, and much more. But the real measure of success will be how you face the set of hard truths raised by these activities in redefining your digital culture: demanding high performance, bringing discipline to agile at scale, establishing trust through honest open feedback, ensuring individuals take personal responsibility for performance, and supporting a devolved leadership model.

Digital Economy Tidbits

Government Digital Service: Our strategy for 2021-2024. Link.

A very interesting discussion of where the UK Government Digital Service (GDS) will focus over the next 3 years. Much to be learned here about the state of digital transformation and the current focus for digital teams in Large Established Organizations (LEOs).

For GBS it started with simplifying websites and high volume transactions (such as applying for a driving license or paying a fine).

Following Martha Lane Fox’s report into digital government in 2010, GDS was established to focus on fixing publishing, digitising high-volume transactional services, and building “wholesale” technology platforms.

But now they see themselves as a central service for building digital tech for all of government with 800 people (in 2015 it was 500) and a budget of £90M. More than 60% of this is to maintain existing software and content.

We are perfectly positioned to look at the work of digital teams across government to identify where there are common needs for products, platforms and services. By building centrally we can do the heavy lifting to allow departments to focus on building services, rather than having to reinvent the wheel.

So where should they now focus? GDS believe there are 3 areas:

• services that hide the complexity of government structures from the end user

• services that can only be delivered by the centre

• services that should be built once, and reused widely

Based on this they have defined 5 “missions” (because we are all mission-based now, yes?) with quite an extensive set of tasks behind each one.

Mission 1: GOV.UK as the single and trusted online destination for government information and services

Mission 2: Joined-up services that solve whole problems and span multiple departments

Mission 3: A simple digital identity solution that works for everyone

Mission 4: Common tools and expert services

Mission 5: Joined-up data across departments

To go about this the GDS has extended its set of principles. Beyond their existing well-crafted digital guidelines published some time ago, GDS reinforces its commitment to open approaches (both in the use of source software solutions and open access), and to moving more of its work out of London to hubs in Manchester and Bristol.

So what won’t they be doing? The answer, for many, could be interpreted as “all the hard boring stuff that makes government work”. No focus on legacy systems. No working on cyber security. No interests in ERP. No support for desktops, IT management, or personal productivity tools. I sure hope that’s being picked up elsewhere.