In recent discussions with several large organizations on their digital strategies and activities, the overwhelming impression I get from them is the same. They are running out of steam. The energy and excitement of digital delivery that sparked digital transformation over the past couple of years is quickly disappearing. To be replaced by a kind of digital malaise.
Perhaps this is no surprise. Expectations for digital disruption are ramping up with every news article and press release that comes out. Pundits and futurists online now predict that AI advances such as ChatGPT and Bard will revolutionize work in all industries. Data analytics is being introduced across a vast array of data sources that must be gathered, cleaned, managed, and shared. These are weighty concerns. And their impact on digital strategies and delivery models will be dramatic.
Yet, at the same time we are reminded daily of the need to make progress on a long list of legacy digital upgrade projects while increasing the resilience of the digital technology infrastructure to provide security against increasing numbers of threats and attacks. There’s a lot still to be done.
Look Back in Anger
However, not only are many of these organizations overwhelmed by an avalanche of new digital technologies as they look forward. They also need to look back to the major changes in digital delivery approaches of the past few years to assess their impact and consolidate activities to make them consistent, coordinated, and complete. So much change over the past few years, often carried out in rather chaotic circumstances, has left its mark on people and processes. Inevitably, there is much to be sorted out as the dust settles. Whenever that is.
The past few years have offered many sobering lessons to organizations on how to refocus investment, effort, and impact in times of crisis. Over a long period, constant adjustments to all aspects of business operations have been needed to cope with the global pandemic and its consequences. This forced a painful, but necessary, digital transformation acceleration as organizations quickly green-lighted projects to move employees online, upgrade their back office systems, introduce remote monitoring and management capabilities, integrate supply chains, and many more digital initiatives. In many cases, these were essential to success, and now form the heart of future plans as organizations look to move from surviving to thriving in whatever post-covid world that emerges. But they came at some cost.
The drive to solve immediate problems and deliver quickly created a burst of energy that brought impetus to digital efforts. For many, it was results that mattered. Even if the path to arriving at the right solution was uncoordinated and the outcome unevenly distributed across the wider teams. We got there. We made it happen.
Now comes the hard part. Rather than getting too carried away with congratulating ourselves on delivering these changes, we now must face the broader effects of this rapid and disruptive set of changes. This might require revisions across the board, from renegotiating supplied contracts and rewiring offices to refreshing skills and adjusting compensations models.
These observations are at the root of an important question all organizations face in today’s complex circumstances: How can we make digital transformation sustainable?
A Fresh Look at Sustainability
Of course, sustainability is a theme that is often raised in discussions today. Typically, it focuses exclusively on environmental concerns. Sustainability is defined in terms of the critical issues the world faces in managing resources and reducing the impact of our actions on the environment.
Without diminishing the importance of that viewpoint, I’d like to suggest a different perspective on sustainability related to how organizations survive and thrive in a digital world. In particular, it is this focus on sustainability that will have a critical effect on the health and wellbeing of organizations as they adjust to operate in the current context. Seen through this lens, three aspects of this view of sustainability can be highlighted: People, Processes, and Organizational Structures.
The first thing that breaks when sustaining digital transformation is the people. Many recognize this challenge and point to addressing human issues as critical in digital change. They emphasize the role of leadership in guiding change, and extoll the virtual of all workers adopting a more digital attitude. Various approaches can be adopted to create a “change-ready workforce”.
Yet, what they often underplay is the stress and fatigue that this can cause as individuals and teams continually adjust to the on-going changes. Issues such as “Zoom fatigue” and “technostress” are sometimes discussed, though often in a half-joking way. However, there are real concerns to be managed here as we become more aware of mental health challenges, absenteeism and employee churn increase, and engagement levels at work continue to drop.
Sustaining the workforce through digital transformation takes a major effort. That will require a different role, attitude, and approach for HR teams within organizations. For many, such discussions end up focusing on digital transformation in HR (“hey, we’re rolling out Workday!”). However, digital transformation of HR is a much different task requiring redesign of employment practices, revisions to management skills, improved performance measures, and much, much more. Discussions and action on these activities is absent in many organizations. Urgent attention is needed to increase the role of HR in leading digital transformation rather then being a reluctant passenger.
Agile practices and process are now synonymous with digital transformation. However, in practice the well-meaning key principles of agility are too often misinterpreted and even demonized in slogans such as “fail fast” or “move fast and break things”. Such simplistic interpretations lead to destructive tensions in many organizations as so-called “agilists” and “traditionalists” are pitted against each other in a battle between “flexibility vs. stagnation” or “anarchy vs. order”, depending on your stance.
Moving quickly and adapting to changing needs is essential. This requires discipline and repeatability to ensure practices can scale, they can be managed and assessed, and they can be adopted across the whole organization. Agile proponents argue that such concerns are well addressed in the empiricism and feedback loops at the heart of their activities. However, the reality in practice is that for many large complex organizations, agile does not scale. Certainly not without a lot of effort.
In the end, it must often be accepted that slowing down change and focusing on robust delivery approaches toward well-defined target outcomes can have important benefits over rapid fire, “shoot from the hip” agility. This is highlighted in Amazon’s lessons from “working backwards” in product delivery by starting with the product press release and using it to guide the steps taken toward delivery. They prescribe fast learning approaches with a clear delivery framework as essential to how they move quickly without creating chaos. A mixture of agile delivery within the guiderails of a structured framework. Perhaps this, and other such combinations to create scaled agile approaches point to the way forward.
The biggest obstacle to sustaining digital transformation in most large organizations is the way that they are structured to manage individuals and teams, make decisions, control investment, and deliver value to stakeholders. Tightly bound to the organization’s culture, these structures determine many aspects of how they operate. Creating a sustainable organization fit for a digital world is impossible without addressing the structural and cultural challenges that constrain its activities.
Let’s consider one aspect of these organizational issues: Decision making. As organizations seek to improve their management flexibility in adopting digital technologies, they frequently look to radical management principles tuned to rapid decision-making. Such an adoption requires individuals and teams to evolve within their existing organizational culture and context. This clash destabilizes many aspects of digital transformation.
Leading industry experts such as Steve Denning and Gary Hamel view the drive for organizational agility as a major challenge to traditional management practices. In fact, they believe it requires quite a different approach to how organizations set goals, support managers in achieving them, coordinate their organizational supply chain, set incentives for individuals and teams, and create alignment within and across the organization and the extended partner ecosystem. Denning and Hamel’s experiences in advising major corporations undergoing digital transformation emphasize that top-down autocratic management styles must be replaced by more radical approaches based on peer-driven meritocracy and emphasizing shared responsibilities across multi-disciplinary teams.
Such radical management approaches highlight a shift in an organization’s high-level focus in several significant ways. The objectives of a radical management approach include placing emphasis on the outcomes being achieved, and measures impact through frequent direct feedback from clients and broader stakeholders. Client-driven iterations are executed to deliver a stream of incremental value to clients via teams that self-organize around the opportunities being addressed. Flexibility is enhanced by flattening management hierarchies and adopting a more open, transparent culture.
This way of working fundamentally challenges many aspects of how organizations are defined and introduces several risks for those used to operating through more top-down bureaucratic approaches. Hence, despite the shockwaves of the global pandemic, most large organizations remain structurally the same as before. The acceleration in digital transformation experienced during that time has been swamped by more traditional concerns regarding reporting, auditing, management, and responsible planning. Indeed, the latest report by the National Audit Office (NAO) on government digital transformation concluded that “its previous attempts at large-scale digital change have had little success” and “government does not yet fully understand the depth of change required for this”. A charge that could be placed at the door of many large complex organizations.
One More for the Road
The biggest problem facing most large complex organizations is not getting started on digital transformation, it is sustaining momentum throughout the journey. So, while we should celebrate breakthroughs over the past few years, and be excited by the digital opportunities we see opening up, the hard yards to maintain progress remain. Sustainability of your digital transformation will require a renewed focus in three areas: People, Processes, and Organizational Culture.