Sunday, May 10, 2015

Three Roadblocks in Digital Transformation

The business will be more successful when they realize that one of their greatest strengths will be their change capability.

Transformation is to change the “nature” of something. Transformational change involves a complete end to end change, including organizational culture. It required a commitment from the senior leadership that is often lacking. More often, over and over is that very few people understand what has to change and how to go about it in driving business transformation. Others actually do not want to change; it is just lip service. So what are the key steps in identifying the kind of business transformation required?

Poor governance: Poor governance system is one of the root causes of failed business transformation. The issue is that business transformation is becoming another “tick in the box” for many organizations. People who are leading this change are often not skilled enough, or not skilled at all in driving the change. They are often financing people who were given the role in addition to their everyday job. Finance people are judged on numbers so you can't really blame them for taking that approach. There is no vision in terms of where organizations need to be and what has to change. They often change an organizational structure; implement very few processes and waste lots of resources. That is what they call “transformational change.” Board members are forced to keep out of management issues and too many executive managers have one eye on the short-term results and the other on the door. Therefore, on the journey of business transformation, the effective governance discipline shall complement business management practice, in order to navigate transformation in the right direction.

Lack of transformational leadership: Business transformation needs to start at and be led by the top of the organization. What needs to change and why? Leaders must clearly articulate that message to their organization so managers and employees can actually execute it. If you want employees to implement changes, there must be something in it for them - more time to spend with customers, more training, increased productivity, bonuses, etc. Successful business transformation must be partnered with solid change management and communication plans!  If somebody has to take accountability for poorly executed strategy or transformational change. The leadership starts and stops at the top of the organization. It takes transformational leadership, not transactional management, in order to lead the radical digital transformation.

Ineffective production system: The root cause of most problems ultimately is the way the work is designed within the production system. The production system is not designed for the workers, and the root cause of many failed transformational changes sit at the top, not the bottom of the organization. Often the middle management is the bottleneck and does not want to change. Unfortunately, these days the change is forced, and people are not often involved. The essential rules of “positioning”’ the change and taking “hearts and minds” of employees are no longer relevant. The digital transformation effort fails when change is forced. You can implement a system and process, but the organization will suffer. Nobody will be happy and productivity will decline. Unfortunately, the transformational change is becoming a “technology” change, and people side of change is completely ignored.

Digital transformation is a leapfrogging business change. The business will be more successful when they realize that one of their greatest strengths will be their change capability. That being said, it requires a plan and strategy as well and most importantly the execution. The well-planned execution will greatly reduce and practically eliminate the fear of change that derails good or even great intentions, and the success of your digital transformation will also depend on how you overcome the leadership, management and governance challenges discussed above.  

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