Talk about digital transformation around you and you’re bound to hear more or less the same thing: “It’s about change management!” well, as a matter of fact, it’s not. It’s a very different kettle of fish.
What is a transformation (digital or not)? It’s about jumping into the unknown
In this piece by my good friend Karima Goundiam, one will start to understand why transformation doesn’t equate to change and why it matters.
For a start, what is a transformation? As Ron Ashkenas once put it, people still can’t tell the difference between transformation and change. When you come to think of it, dictionaries are also doing a poor job at defining this concept.
First and foremost, a transformation isn’t a change, it’s a collection of changes.
Secondly, a transformation is a collection of changes that leads you or your business through unknown paths to an unknown result.
Now you understand why people hate transformations even more than they hate change. Change is about altering people’s habits and ways of working. In other words, change is about telling people — even so subconsciously — “I don’t like the way you work; you should do it this way!” This is why change management techniques have been introduced, so that implementers would not be turned down and that a win-win result could be achieved (well, in best-case scenarios i.e. when change implementers are well-intentioned).
With digital transformation, it’s a wee different. You’re not just sending a signal that methods had better change. You are also hinting that the business, in its entirety, will evolve into something nobody knows everything about if anything at all.
Transformation is about jumping into the unknown.
Now you really understand why there is so much resistance to change (and even more, to transformation).
Karima Goundiam has written a great piece for our customer iRevolution [disclosure] on its digital transformation Horror Museum blog. Read more here to understand everything about digital transformation. The Horror museum having unfortunately closed its door like all other museums due to the COVID-19 pandemic, I have reproduced Karima’s piece per below.
What is digital transformation?
Digital Transformation is more than change management
Whereas change management is about identifying specific processes to be digitized and implementing them, digital transformation is about using new technologies to solve existing problems, even long-standing ones. Between the two there is a radical shift of emphasis. In this piece, I will redefine those terms and provide examples to make my point and ensure that you, and your business, don’t end up in the digital transformation horror museum.
The first robin is the first sign of spring. In Canada, that red-breasted vision often heralds the first spring snowfall the next day. In business, as in the cycle of seasons, the arrival of digital tools—doesn’t necessary herald innovation. For that, you need a clear vision. Some call the first thaw a “false spring,” which is an apt metaphor for discussing the differences between change management and true digital transformation. Read on for some hints on how to embrace the potential of digital transformation by thinking about digital differently, and how to keep even a large enterprise innovative and flexible by opening the channels for fresh ideas to come from every level.
Change management is about identifying specific processes to be digitized and implementing them. In a change management process, staff are trained to use specific tools and to monitor performance outcomes compared to earlier models they have worked with. In best-case scenarios, change management is seen as an evolutionary process in which workers can build upon their earlier practices and knowledge.
In contrast, digital transformation is about using new technologies to solve existing problems, even long-standing ones. The emphasis is on generating solutions. Processes are examined to determine where they fail to solve problems, or even contribute to them. Staff are consulted and their knowledge, experience and creativity are integrated into generating a vision. An ideal solution is constructed and tools—often in new combinations and configurations—are used to make that vision into reality.
Understanding the difference between change management and digital transformation prevents confusion between a false spring and the true hold of the season. Integrating digital tools into your business, without anticipating and planning for the expected changes and benefits, is like putting new seedlings in the garden before the danger of frost has passed. Buds of ideas will be frozen before they can bloom.
Digital transformation does not simply mean equipping employees with tablets. It means creating new services that would not have existed without the new tools. It means supporting the business to stand out from the Market definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined.... And it means better serving clients.
In other words, digital tools should not only optimize processes. They should radically change the way work is done.
Digital tools: more of a process optimization than a revolution
Contrary to conventional belief, computer science has not revolutionized anything. Once a process is defined, it can be automated. Whether that process has led to the creation of a steam-powered loom, or a tabulation system for entering receipts to generate an expense report, the process itself remains the same. In general, computerization has kept the same silos intact and we see the same systems in place at most companies that were there before.
“Legacy thinking,” not legacy systems, is cited as a barrier to digital transformation in one review of the issue. “Difficulties working across silos,” says another overview of consulting reports that identified barriers to digital transformation. “The lack of a risk-taking innovation-driven organizational culture” is mentioned in an article about yet another study.
A new enterprise system might bring all your business processes into one sharable format, but unless there is a philosophy governing what that sharability means to the organization, then innovation will be stunted. The issue is an emphasis on automation over innovation that fails to acknowledge that, for the most part, IT represents a toolbox, not a collection of business goals to be achieved. Digital transformation changes the nature of IT to instead represent a curation of tools chosen or re-purposed to solve a defined and fully understood problem or business issue; this is what enables innovation. The robins of spring must not only build a new nest. They must attract a mate and lay eggs to hatch.
Digital transformation introduces alternative ways of thinking.
When we talk about disruption, we fail to talk about opportunities for reinvention. Digital transformation demands that business models can and should be opened up to an in-depth examination. In this way, digital transformation is neither a luxury nor a gadget. It demands that companies articulate what they are doing, why and how. More importantly, it seeks to discover what is missing. If businesses limit themselves to change management, they’re not setting themselves apart. After all, the competition can adopt a new tool, too; they can benefit from the same optimization and leave you behind.
Digital transformation allows you to do something new, offer something new and to look at your products and services in a completely new way.
The rise of the Internet of Things (IoT) represents one example of the signs of true spring brought about by digital transformation. The IoT enables an object to be connected to the internet and communicate information about its location, its operational state, and its environmental condition, among other kinds of data. As a result of IoT implementation in industry, companies have been able to create value-added services to enhance their products and offer their clients better risk management.
Industrial machine operations data, for example, is communicated back to the manufacturer through the IoT (and its subset, the Industrial Internet of Things, or IIOT) on cloud-based servers. The machinery manufacturer can then monitor the functional health of the equipment it produced (according to a subscription or service warranty model) and ensure preventative maintenance issues are addressed before a breakdown that would cause their clients an unscheduled shutdown, employee downtime or other costly issues.
Do startups have a monopoly on innovation?
The application of IoT to industrial equipment to inform preventative maintenance illustrates how existing industries can embrace digital transformation, but it is not the norm. It’s a fact that smaller and more agile structures are able to disrupt a market with relatively smaller means.
Startups may represent the ideal environment for innovation. Once a company reaches a certain size, it will naturally move towards a logic of industrialization and the optimization of automation at the expense of innovation. That doesn’t mean a return to a culture of innovation is impossible. For instance, Nintendo took a dive after Game Boy when it was out-innovated by both the PlayStation and the X-Box. But the company has since been resurrected with the DS, the Wii and now the Nintendo Switch.
How can we innovate in a large group?
The fear of change is understandable. The leaders of startups that have gained a foothold in the marketplace and become established brands generally do not want to return to their early days. Those days were full of low salaries, 18-hour workdays, a fierce competition for talent and the constant pressure to fulfill the demands of investors who took huge risks. There is reason for fear in other corporate scenarios as well. Leaders who joined established companies at the beginning of their careers are loyal to the structures, operations, talent and clients who have provided stability for so many.
We cannot transform everything overnight. It must be done in small steps. Here are two to consider:
- Make it easy for employees to communicate ideas.
What opportunities do your employees have to communicate their ideas for the company? How are those opportunities normalized and incentivized? Employees should maintain ownership over how their ideas are examined and discussed by others and they should be involved in decisions about if and how to proceed. We’ve all heard anecdotes about the intern or new graduate who was critical of a website or mobile app and brought it up with the CEO in an inappropriate way. We’ve heard less about the companies that actively solicit feedback from their workers at every level, take that feedback seriously and engage their employees in improvement. Those companies are quieter about their practices because those practices are competitive advantages.
- Make it easy to experiment.
Digital transformation supports experimentation, testing and trial runs. These are learning experiences that require low investment, champion talent resilience and support the development of flexibility. Small-scale experimentation is a low-risk, low-cost way to test new ideas, equipment and services.
Carefully thought-out and designed studies can result in new products and services that can increase revenues and provide further insight into future opportunities. There are other benefits as well. Building a culture of innovation requires two things: collaboration and communication. Sharing ideas and creating a plan for studying the feasibility of those ideas in the company provides exciting opportunities for team members to bond, develop and grow both as members of the team and as individual professionals.
Communication and experimentation are the seeds that, if planted during the true spring, will bloom into a culture that embraces innovation and change. Digital transformation is key to creating that season of success.