Digital transformation
Five things all execs should know about technology (and why it matters more than ever)
If business in 2020 has a buzzword, it’s resilience. Recent events have prompted many organisations to embark on digital-led initiatives aimed at enhancing their ability to assess and respond to the next major crisis. As more businesses make resilience a goal, it’s worth examining what that term really means, and what exactly they should be striving for.
As we told the industry and technology leaders gathered at our recent Thoughtworks Live session, our sense after working with organisations tackling change for over two decades is that being resilient is typically envisioned as the corporate equivalent of battening down the hatches. Seeing the storm coming, weathering it and emerging stronger, perhaps, yet with the status quo largely intact.
But as well as risks and pain points, change always presents new learnings and opportunities. The goal should be to create an enterprise that’s nimble enough to seize these advantages when change comes, instead of standing still or sounding a retreat.
Defining digital characteristics
The ability to not just withstand, but thrive on change, is to us what really defines the resilient, modern digital business. This might seem ambitious but it comes down to cultivating some key characteristics. In the excitement, and complexity, that often accompanies change, orienting around these traits can help ensure the enterprise develops resilience in the real sense of the word.
The first is customer value focus. While almost every company claims to be customer-centric, this is actually an area where a lot of organisations fall short. There’s a tendency to concentrate on what the company delivers or does for customers, rather than customers themselves, so products or services may be ‘improved’ with little thought given to whether customer needs have shifted entirely.
Companies often look at the ‘customer’ as a monolithic entity, or certain personas, making decisions based on these abstracts while ignoring the realities of customer experience on the ground. Customer value focus means going beyond working for the customer, to really internalising the customer journey and point of view.
When the enterprise adopts this perspective, it can become an outcome aligned organisation, pursuing goals that tie back to the customer. It’s important that the organisation defines and aligns around its own vision and values, but if customer value is not factored in using clear and specific measures, no matter how well-intentioned, hard work may not deliver the right results.
An example we often use is a firm that provides housing finance. It’d be easy enough to define its main goal as selling mortgages, but its customers aren’t really after mortgages - they want homes of their own. Focusing on getting customers into the homes that are best for them could provide a broader and very different set of targets or indicators to rally around; one more conducive to developing new solutions and deepening customer relationships.
Once those critical customer-centric indicators are identified, it gets easier to establish whether the organisation’s efforts are producing the intended outcomes - and to decide when a change of direction is necessary. The connection to customers means the company will be aware of, and responsive to market shifts, willing to let go of initiatives that aren’t serving customer value and to put funding behind new projects that do. And willingness isn’t enough on its own - the work must actually be organised in “stoppable” chunks to allow this to happen.
It’s important this is supported by a test and learn culture, which recognises that the enterprise won’t always have the right answers, and that some experimentation (and failure) will be needed to figure out the best solutions to customer needs. Consistently testing out hypotheses before scaling them up is one of the best ways to condition the enterprise to change.
Data, whether on customer experience or other measures of performance, is clearly a vital part of this experimentation process. For the resilient enterprise, data becomes a strategic asset that serves as a foundation for better decision-making. Solid structures and governance are needed to ensure data is made available to the right people in a consistent and sustainable way. The importance of data is just one reason modern digital businesses need technology at the core - that is, tech is at the centre of what they do rather than relegated to a supporting role.
A journey, not a destination
These characteristics define the mindset of the modern digital business; it is through capabilities that these are expressed, how the organisation chooses to equip itself to compe
In choosing investments in capability, it’s vital that organisations consider these in the context of their own aspirations, their strategy and, fundamentally, their customers’ needs. This will ensure they invest with specific outcomes in mind, avoiding cargo cult approaches.
In a tech-at-core company, technology strategy is an integral part of overall business strategy, which means the emphasis is on developing technology capabilities that are closely linked to the business, not simply investing in the latest and greatest solutions.
Unfortunately we have seen cases where a lot of money has been burned on chasing bold but largely unnecessary technology aspirations that didn’t really address the organisation’s most pressing needs. Technology can be a game-changer - but blindly following the leaders of the technology pack is rarely the right approach.
Similarly, for all we hear about the need to transform and innovate, it’s important to remember that too often, transformation and innovation are seen as one-offs - massive, organisation-wide events that bring the company to a new plateau, after which it’s free to rest on its laurels a little.
In reality, it’s a process of constant and targeted optimisation that allows organisations to deliver innovative outcomes on a sustained basis, even in the midst of a crisis like the one we’re currently facing. Resilience, in other words, shouldn’t be viewed as a specific endpoint but a mindset toward change, in which the organisation is perpetually transforming for the better.
As we told the industry and technology leaders gathered at our recent Thoughtworks Live session, our sense after working with organisations tackling change for over two decades is that being resilient is typically envisioned as the corporate equivalent of battening down the hatches. Seeing the storm coming, weathering it and emerging stronger, perhaps, yet with the status quo largely intact.
But as well as risks and pain points, change always presents new learnings and opportunities. The goal should be to create an enterprise that’s nimble enough to seize these advantages when change comes, instead of standing still or sounding a retreat.
Defining digital characteristics
The ability to not just withstand, but thrive on change, is to us what really defines the resilient, modern digital business. This might seem ambitious but it comes down to cultivating some key characteristics. In the excitement, and complexity, that often accompanies change, orienting around these traits can help ensure the enterprise develops resilience in the real sense of the word.
The first is customer value focus. While almost every company claims to be customer-centric, this is actually an area where a lot of organisations fall short. There’s a tendency to concentrate on what the company delivers or does for customers, rather than customers themselves, so products or services may be ‘improved’ with little thought given to whether customer needs have shifted entirely.
Companies often look at the ‘customer’ as a monolithic entity, or certain personas, making decisions based on these abstracts while ignoring the realities of customer experience on the ground. Customer value focus means going beyond working for the customer, to really internalising the customer journey and point of view.
When the enterprise adopts this perspective, it can become an outcome aligned organisation, pursuing goals that tie back to the customer. It’s important that the organisation defines and aligns around its own vision and values, but if customer value is not factored in using clear and specific measures, no matter how well-intentioned, hard work may not deliver the right results.
An example we often use is a firm that provides housing finance. It’d be easy enough to define its main goal as selling mortgages, but its customers aren’t really after mortgages - they want homes of their own. Focusing on getting customers into the homes that are best for them could provide a broader and very different set of targets or indicators to rally around; one more conducive to developing new solutions and deepening customer relationships.
Once those critical customer-centric indicators are identified, it gets easier to establish whether the organisation’s efforts are producing the intended outcomes - and to decide when a change of direction is necessary. The connection to customers means the company will be aware of, and responsive to market shifts, willing to let go of initiatives that aren’t serving customer value and to put funding behind new projects that do. And willingness isn’t enough on its own - the work must actually be organised in “stoppable” chunks to allow this to happen.
It’s important this is supported by a test and learn culture, which recognises that the enterprise won’t always have the right answers, and that some experimentation (and failure) will be needed to figure out the best solutions to customer needs. Consistently testing out hypotheses before scaling them up is one of the best ways to condition the enterprise to change.
Data, whether on customer experience or other measures of performance, is clearly a vital part of this experimentation process. For the resilient enterprise, data becomes a strategic asset that serves as a foundation for better decision-making. Solid structures and governance are needed to ensure data is made available to the right people in a consistent and sustainable way. The importance of data is just one reason modern digital businesses need technology at the core - that is, tech is at the centre of what they do rather than relegated to a supporting role.
A journey, not a destination
These characteristics define the mindset of the modern digital business; it is through capabilities that these are expressed, how the organisation chooses to equip itself to compe
In choosing investments in capability, it’s vital that organisations consider these in the context of their own aspirations, their strategy and, fundamentally, their customers’ needs. This will ensure they invest with specific outcomes in mind, avoiding cargo cult approaches.
In a tech-at-core company, technology strategy is an integral part of overall business strategy, which means the emphasis is on developing technology capabilities that are closely linked to the business, not simply investing in the latest and greatest solutions.
Unfortunately we have seen cases where a lot of money has been burned on chasing bold but largely unnecessary technology aspirations that didn’t really address the organisation’s most pressing needs. Technology can be a game-changer - but blindly following the leaders of the technology pack is rarely the right approach.
Similarly, for all we hear about the need to transform and innovate, it’s important to remember that too often, transformation and innovation are seen as one-offs - massive, organisation-wide events that bring the company to a new plateau, after which it’s free to rest on its laurels a little.
In reality, it’s a process of constant and targeted optimisation that allows organisations to deliver innovative outcomes on a sustained basis, even in the midst of a crisis like the one we’re currently facing. Resilience, in other words, shouldn’t be viewed as a specific endpoint but a mindset toward change, in which the organisation is perpetually transforming for the better.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.
