Investments in digital transformation are growing and according to ICD worldwide spending on digital transformation technologies will grow to more than $2.1 trillion in 2019. Brian Solis in his report on the state of Digital transformation 2016 mentions that one of the top three digital transformation initiatives for 80% of the sample organisations include a Modernized IT infrastructure with increased agility, flexibility, management, and security.
Neverless, a report by Capgemini highlighted that since 2000, 52% of companies in the Fortune 500 have either gone bankrupt, been acquired or ceased to exist. This is not the symptom of an economical crisis, but the symptom of an organisational system that is not fit for purpose and a management that is unable to cope with change.
The growth of technology investments is an indicator of the current confusion and the inability to identify the root causes that are shaking organisations. Many companies are buying the latest technology with the hope that it will magically digitally transformthe whole organisation and business. But things are not so simple. The assumption that Digital Transformation is about technology, is a dangerous and erroneous one. Digital Transformation, as I have said here, is much more about changing perspectives and transforming society and organizations through new ways of thinking and doing enhanced by the technological and digital literacy we have achieved. Digital transformation is about applying a holistic and systems-thinking driven approach to access and see the world, people, and relationships under a brand new light.
Digital transformation is not about adding the latest tool to the organisation’s technological and digital ecosystem. It’s about analyzing how the organization operates at every level, understanding what are the obsolete practices, acknowledging which processes are hindering the organizations (and more importantly) people’s potential, and admitting that we are well beyond the post — post-industrial era.
Organisations cannot operate efficiently with industrial or post-industrial processes, because the values and our society have changed. Technology revolutionised how we operate, and the evolution from a product to a service and experience based economy deeply changed the rules of the game.
And in such a transformed society obsolete industrial manufactory organizational models totally show their weaknesses, because those models emerged to support factories to efficiently produce goods, but today we produce services and experiences. The first symptom of this inertia is reflected in structural tensions that often emerge between departments, employees, and customers. This is because producingexperiences and services requires different management approaches than the production of goods, because the most valuable asset for service production, are people, ideas, and collaboration.
Applying the same manufactory or production oriented metrics to assess and manage organizations and to develop visions and strategies leads to slow and unpractical ways of managing people and projects, ineffective processes, and increased inefficiencies. Nevertheless, many organizations are still implementing industrial manufactory models to their experience and service oriented organisations.
This management inertia is what causes the confusion about digital transformation practices and the reduction of digital transformation into magic digital tools to be implemented, leaving people’s management, internal processes, and organizations untouched and unchanged. In the worse cases, the new tools that are sold as “the digital transformation magic wound” simply add a layer of complexity to an already inadequate and inefficient management process, combining innovative technologies with a transformational potential with old models and processes.
But transformation is a process, not a product. Tools can help, but they are part of the solution, not the solution. If we want to “digitally transform” our kitchen, we cannot just swap the old electric oven for a microwave one, without acknowledging that the processes and functionalities of the two ovens are not interchangeable. We need to learn the new processes to cook with the new oven or we’ll be disappointed if we apply the same process to make a roast with the microwave oven.
Many organisations are considering or engaging in Digital transformation initiatives, and many fail. This is because often the change is expected to be delivered and lead by organisations that still implement the old paradigm and are not familiar with how a digitally transformed organisation looks like. Change, to really happen, should be lead by people who experience and know the new management models. Because these new models exists, are emerging, and are available. Models like sociocracy and holocracy, flat models that prioritize people, skills, and results over production, are emerging and are proving that different ways to manage organisations can exist and thrive, and that in the experience economy, services and experiences require a management approach that values ideas, soft skills, people, and collaboration.
What does this mean to organization looking for a change and to really transform their organization inner and outer value generating processes?
It requires knowledge and awareness: before deciding to go for a digital transformation process that really defeats the management inertia, organisation should invest and learn what digital transformation is and focus on learning the organizational models that can deliver the processes and values that better align with their business model.
And the best digital transformation partner today is that who knows that transformation means change, and has gone through the process first hand.
After all, would you ask a vegetarian who never ever tried meat, to cook the perfect steak for you? If the expectations are to have a special meal, and to enjoy the dining experience, chances are, a vegetarian by birth chef would not be the first choice.
But when it comes to management, most companies willing to test and try innovative models still rely on companies who sell digital transformation without having ever even tried the best practices they praise and suggest.
Digital transformation can never be reduced to a magic technology: there’s no magic technology that can solve deep management issues overnight. Transformation is a process that requires rethinking people, trust, relationships, and what is value for the organization and its future.