Digital Economy Dispatch #134 -- Don't Confuse Digital Means with Digital Ends

Digital Economy Dispatch #134 -- Don't Confuse Digital Means with Digital Ends
4th June 2023

Working with a large established organization recently, I was asked by one of the senior leadership team to take a look at their on-going digital transformation programme. They had been investing heavily over several years to upgrade back-office systems to migrate services to the cloud, introduced a range of new technologies to improve their digital channels to market, and partnered with a large education provider to create an ambitious programme to upskill existing staff to more agile practices. The team were quite rightly proud of what they had in flight.

I spent some time reviewing their actions and talking to different people in the organization. My initial assessment was that I was impressed with their progress. A lot had been achieved in a relatively short time. Going through the usual list of activities, they had several well-managed initiatives and plans in place for additional activities over the next 5 years. Yet, the more I learned about their situation and context, the more uncomfortable I became about the progress they had made, and the way I was going about my task. And I couldn’t quite put my finger on why.

To try to understand their situation, I had essentially initiated a review of their digital maturity. Much like the digital maturity assessment models developed by Deloitte, BCG, Gartner, and many others, I had embarked on a fairly standard review of capabilities and features. It was at best an overview of the digital landscape, and at worst a static inventory and tick-list exercise. Perhaps a useful starting point, but not particularly insightful or inspiring. I needed to take a fresh approach.

Digital Means vs Digital Ends

My investigations changed gear, however, when I adopted a different perspective on how to view their digital maturity. It was based on a recognition that most efforts at understanding digital maturity focus on measuring “digital means” and not “digital ends”. I’d fallen into the trap of looking at the mechanisms of delivering digital transformation rather than focusing on the digital change impact that was required. The distinction is crucial:

Digital Means: Digital transformation considers “how” something is done by measuring characteristics of the technologies and processes being adopted in terms of their speed, level of automation, consistency, and pervasiveness.

Digital Ends: Digital transformation addresses the important question “why” it is being done by measuring digital technology and behaviour change in terms of their impact, effectiveness, and outcome against those needs.

Both have value, but offer different insights. In the first case, by cataloguing capabilities and characteristics we can obtain a view of the progress by focusing on its activities and actions. We are able to manage an ordered rollout of features and functions across the organization to understand where barriers exist in providing access to new services, and how to prioritize the use of scarce support resources.

In the second case, a specific set of business-based goals must be defined related to the context for the individuals and teams involved. Progress can only be viewed in relation to those goals. The objectives for digital change drive activity. A baseline review of current circumstances is used to guide and direct efforts. Then, specific targets can be set for improvements that are expected as the new digital technologies and behaviours are adopted.

Having the Means

A useful illustration of traditional digital maturity assessment can be seen with Deloitte’s Digital Maturity Model. Using a framework of 5 key dimensions (customer, strategy, technology, operations, organization & culture), they define 179 “digital criteria” that can be reviewed, assessed, and debated. This is a well-considered set of criteria that provides a broad perspective on many elements of an organization and its operation. It can be used as the basis of a scorecard for describing the scope and progress of a digital transformation initiative.

Associated with this framework is an implied set of change activities that form a criteria-based assessment to identify potential actions. The ambitions and aspirations of the organization are used to prioritize where to place effort and how to align longer term activities.

Such an approach has value. For large, complex organizations, frameworks such as the Deloitte Digital Maturity Model provide a structure to create a well-managed roadmap for digital change. However, by taking this means-first approach, it is easy to argue that digital transformation programmes become exercises in accounting for actions and end up being overly bureaucratic, inflexible, and expensive. A trap we’ve all been guilty of falling into from time to time.

Delivering the Ends

In contrast, by adopting an ends-first approach, the goal of a digital transformation programme is explicitly and unambiguously defined to achieve a specific goal. This may vary considerably from one organization to another, and even across different business units within a single organization. However, it offers a clear context for evaluating activities directly in terms of results.

The challenge here is is ensure that the focus on outcome does not become too ethereal and disconnected from the organizations current reality. It is not enough to issue well meaning edicts to be “agile” and “customer centric”. A much more operational approach is required to not only offer long term inspiration, but also guide short term action.

One way I have found useful to initiate an ends-first approach is to adopt a “moving the needle” focus. This identifies a small number (ideally, one) of business metrics on which to focus the digital transformation activities. Any action is constantly and purposefully assessed against how it helps to “move the needle”  Every new digital initiative is assessed in terms of three questions:

• Which needle are you moving for the business?

• What is the current baseline for that business measure?

• How and when will this digital activity impact that business measure?

If these questions cannot be answered and there is no direct business effect defined, the action must be very carefully justified before you proceed.

Of course, delivery of the intended outcomes from an ends-first approach is not independent of delivery approach and requires a well-managed set of means. Frameworks such as the Deloitte Digital Maturity Model may well be used to provide the perspective required to identify specific tasks to be carried out. However, this is always in the context of the desired outcome.

Corollary

Returning to my client’s digital transformation assessment request, my investigations became much more purposeful once I had established the “digital ends” for their activities. In this case, having suffered major market and financial disruptions in the past 3 years, the firm had established “organizational resilience” as its main focus. Exploring this theme, we were able to create a set of clear goals and associated business measures that provided a context for digital improvements intended to stabilize the IT infrastructure, add flexibility to operational processes, and speed up leadership’s decision making. Armed with this renewed focus, the on-going digital transformation programme was more meaningfully assessed and re-prioritized in support of these needs.