As a 21st century business leader, you’ve definitely heard of the term ‘digital transformation’ a gazillion times. Experts and practitioners across the globe have, and continue to, extensively write and speak on the topic. However, in spite of the expansive thought leadership and opinions from pundits and ‘transformation-gurus’, we still see 70% of businesses faltering on their path to digital transformation.
For legacy enterprises that are playing catch-up, it’s usually easier to develop a modern digital business strategy than execute it. For the scope of this article, I am putting together a ready reckoner of critical habits that will help organizations successfully execute their digital transformations.
The pace of technological advancement is leaving a lot of legacy enterprises behind
Today’s marketplace demands a distinct type of leadership. It calls for bold individuals who set their company’s vision and charge ahead amidst obscurity and boundless opportunity. It demands courage. It is these adaptive and courageous leaders who can steer the organization towards an outcome-driven (results) mindset versus an output (project completion) mindset.
Leadership: 4 habits that will help you become a courageous leader
As a case study, I’d like to refer to an interesting ‘Profile in Courage’ that was a part of our report; The Next Big Disruption: Courageous Executives. We had the opportunity to speak to John Marcante, Chief Information Officer at The Vanguard Group.
The Vanguard Group is an American investment management firm that started in 1975. Today, they manage more than $5.6 trillion worth of assets. John Marcante had this to say about how they have evolved to stay innovative. “Business value at startup speed is one of our key transformations. I think about it like Maslow’s Hierarchy of Needs: having a flexible, service-oriented infrastructure is food and shelter. Being able to quickly create, test, iterate and automate products and microservices is the next level. As you go up the pyramid, the rewards get bigger, but it’s more difficult. You’re challenging the culture: people, processes, budget systems, legal, compliance, and security. The pinnacle is being a truly lean and innovative organization….We experiment with products and services much earlier, testing ideas with customers while they’re still prototypes on paper. That allows us to pivot earlier, before investments have been made. We’ve moved people with experience in lean teams out of IT and into corporate strategy to help implement lean across our organization.”
Habits of a courageous leader:
- Prioritize initiatives based on business value and cost of delay, over the effort involved
- Don’t play it safe but proactively seek to create change
- Nurture an open and lean structure and a governance model that fosters innovation and creativity
- Empower the teams to operate/function with autonomy
Few businesses have been able to derive value out of experiments and uncertainties. Unsurprisingly, they’re the ones who are disrupting industries. There is an enormous need for organizational culture to embrace the indefinite nature of digital transformation itself. Because, risk aversion costs businesses high-growth opportunities. And, the need of the hour is an edgy culture that challenges the status quo and encourages risk taking by providing safety nets.
Culture: 5 habits that will help develop an appetite for risk
Let’s look at Philips for a case study. Philips was the world’s biggest supplier of radios in 1930s, invented the audio cassette in 1963, rolled out the first VCR in 1972, launched the CD in 1983 and was one of the biggest manufacturers of television sets in the last decade. The consumer electronics saga ended in January 2013 when Philips sold its audio and video business to Japan’s Funai Electric. “This completes the repositioning away from consumer electronics,” Van Houten said then.
Three years later, the global CEO pronounced a new beginning. “We have transformed Philips into a focused leader in health technology, delivering innovation to help people manage their health,” Van Houten said in the annual report of the company in 2016, alluding to the lighting business being hived off.
By 2017, almost 60% of the Philips' R&D staff was focused on software where the Philips Innovation Campus or PIC played a major role. After refocusing its strategy, the company is winning big in the healthcare space by leveraging its expertise in Artificial intelligence (AI), Machine Learning (ML) and Deep Learning. About 15% of the company’s total workforce at PIC works in the three segments.
Habits of a risk taking culture:
- Takes more effort to understand emerging technologies and ensures a more experimental approach
- Is comfortable with ambiguity
- Is open to learning along the digital transformation journey
- Strikes a balance between taking risks and creating safety nets
- Challenges complacency, especially when the business growth hits a plateau
Experimentation, innovation, speed and sustainability demand that teams carry within themselves, the knowledge and experience to plan and implement initiatives. Traditional teams that worked in siloes and relied on external capabilities, support, and monitoring fail heavily short during an organization’s digital transformation. Teams armed with capabilities across business knowledge, product thinking, technology and operations are the ones who can deliver outcomes.
Self-managed teams: 5 habits that build a value delivery capability
Spotify, the popular music player, is a great example of agile scaling teams. Well known for providing original and a limitless collection of music content, the company was launched in 2008 and has now become a large company with 4000+ employees. They owe their success to their deeply rooted agile methodologies and the utilization of the agile scaling in their own way. This method is called the Spotify Tribe.
Similar to scrum teams, Spotify has squads. In an organization, there can be multiple squads consisting of 6-12 people, each dedicated to work on one feature area. A squad is autonomous, self-organizing and self-managing. Each squad has a mission to accomplish and is free to choose an agile methodology. Multiple squads that work on the related feature area makes a tribe. A tribe may consist of 40–150 people.
The foundation of the Spotify Tribe is autonomy and trust. Where there is trust, there is ownership and accountability of the work done. Trust helps to create an environment where failure is taken as an opportunity to learn, innovate and change accordingly.
Habits of a self-managed team:
- Be self reliant and self sufficient
- Be collaborative
- Experiment more but define a threshold for when to pivot, based on the value created
- Be ready for increased accountability
- Be trustworthy and trusting of team members
Technology is an equal-opportunity disruptor. In order to survive in our rapidly changing world, it’s vital to acknowledge that antiquated mindsets, strategies and techniques won’t push businesses forward.
For every slow-moving enterprise struggling to stay relevant, there’s a lean startup about to change the landscape overnight. For every legacy brand that deepens customer loyalty through a digital transformation, there’s a hot tech brand stumbling to recover from scathing reviews and scandalous headlines.
Take note, the modern digital businesses that evolve and thrive will challenge everything: the status quo, internal silos and immovable strategies and models/techniques that no longer stand a chance. They are erasing the lines between business and technology. They are radically rethinking business models and what customer value looks like. They are hiring, empowering and growing multidisciplinary, future-ready employees. They are creating work cultures that reward curiosity and rapid experimentation.
A version of this article appeared in People Matters.
Disclaimer: The statements and opinions expressed in this article are those of the author(s) and do not necessarily reflect the positions of Thoughtworks.