Friday, January 6, 2017

The Three Differences between Digital Masters and Laggards

Digital Transformation requires a mind shift.

Digital makes a significant impact on every aspect of the business from people, communication to process and capability both horizontally and vertically. The purpose of such radical digitalization is to make a significant difference in the overall levels of customer delight and achieve high performing business result and build a people-centric organization. But what are the fundamental difference between digital masters and laggards, how can companies fine-tune the important business elements such as people, process, and technology to unclog the bottleneck, accelerate digital transformation and improve the overall business maturity?

Transformation requires mind shift: Many organizations are doing digital - applying digital gadgets or taking a few business initiatives. But very few are being digital - move to the high level of digital maturity with a cohesive strategy and a holistic approach. The fundamental difference is the digital mind shift. In addition to the set point changing, transformation requires first shifting mindsets and then building new skills, capabilities, and reinforcing and embedding new practices/reflexes. More specifically, it is about the understanding psychology behind the changes, and diagnose the problems from the mindset level, in order to dig through the root cause, and fix the real issues, not just the symptoms came on the surface. It is about building a culture (the collective mindset) of creativity because being digital and innovative is also the state of mind. For the digital laggards, the business management teams try to force change “manually,” but it can only change behaviors for the short term, and the change cannot be sustained without shifting the collective mind (culture) for the long-term success; or the business only modifies a few working processes to improve efficiency, without building the differentiated capabilities for improving the overall business competency. For the “digital masters,” transformation goes a step further and involves internalization of the outside the box thinking and digital conceptual model so that the newly required behaviors don't require the same kind of effort and vigilance. The change happens more smoothly. When people are comfortable with the changes with a set of digital minds, processes are robust, not overly rigid, digital technologies are efficient and convenient, and change mechanism is embedded into every aspect of the businesses, the transformation will happen naturally, and the organization as a whole will become high-responsive to leapfrog the digital transformation.

IT as a differentiator vs. IT as a commodity: For many digital laggards, they are still running in the “industrial mode,” even the business world is already stepping into the digital reality with the increasing speed of changes. In these organizations, IT is only perceived as a commodity and cost center with a controller’s mentality to focus on keeping the bottom line efficiency. In these IT organizations, they want to transform IT but have no strategy, practice, or mechanism to articulate the costs or value of these systems. What's missing in many of these organizations is the CIO's ability to question the business' requirements and justifications used for IT-based projects. But for the digital masters, the focus of IT and the CIO are business-centric and tightly integrated into the decision process. CIOs can free more time to learn about real business from the business strategist’s perspective. These digital CIOs are the internal consultant and Chief Innovation Officer, trusted experts who understand a lot about the performance dynamics of the tech sector to be seen as value added participants in business-driven conversations. So they can do better on IT-enabled business capability mappings which allow for an understanding of the impact of strategic changes, and to open discussions across business lines on the steps that need to be taken to reach strategic goals timely. Innovation is more about true knowledge acquisition first, with in-depth business understanding, these digital masters can also use less than that 80% to achieve more than what it has today. It is about improving the top-line business growth by maximizing ROIs to add up the overall business performance and unleash the full digital potential on the second dimension. IT needs to build both strategy and practices to transform into digitalization. Information technology should be seen by any business as a “digital transformer” and innovation engine.

Talent investment: In the digital laggards, businesses still treat their people as cost or resource only, with the goal to improve productivity and efficiency only. Thus, the overall employee engagement is very low in these organizations, and people fear to step out of the comfort zone and adapt to changes. They are not motivated to be innovators or change agents. Therefore, they often have a static mindset with the “We always do things like that” mentality, which become the very obstacle for the digital transformation. These organizations perhaps can survive in the industrial age with the considerably slow-to-change environment, but it is very challenging for them to strive and thrive in the digital dynamic. For the digital masters, people are empowered to change, inspired to be creative, and motivated to keep learning and think the better way to do things. Learning agility is particularly crucial for today’s digital professionals and IT staff due to the changing nature of technology and overwhelming information growth. Hence, modern CIOs need to work closely with talent/performance management, to leverage the powerful digital platforms or tools in creating a more open, creative and productive working environment and to strengthen the weakest link of strategy execution - their people, make wise talent investment and unleash the collective human potential and therefore, the overall business potential.

Often, the digital laggards try to approach digital via a single dimension or a few IT or business initiatives. However, the best technology can’t ensure digital transformation victory. Digital Masters understand it and take a more structured approach to expand digital to all important dimensions with a set of well-defined digital principles, the strong business disciplines and a series of digital practices. Digital leaders will act more as conductors than constructors, with the ability to map the modular business capabilities to the business strategy, focus on integration and orchestration, look for productivity, cost efficiency, and effectiveness, to capture business growth opportunities and significantly improve the business competency and maturity.


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