Your digital transformation plan is a work of fiction

Of course, this assertion assumes you have one. For those with digitisation plans my assertion is likely baseless, though I would be concerned if that was the full extent of your digital endeavours. My aim in opening with this accusatory tone is to highlight some misunderstandings that are in danger of becoming ‘accepted wisdom’ in respect of contemporary business transformation.

Digitisation is not digital transformation

Firstly, digitisation is not digital transformation. Using new technology to drive costs out of your existing business processes, or even to smarten them up (AI) is not digital transformation. It’s simply factory ‘conveyor belt’ engineering. Not the smartest of moves, if the underpinning business model is on its last legs.

Secondly, digital transformation is more than digitisation, though the latter may be a subset of the former. Digital transformation is less about digitising the existing business model and more about ensuring your business is fit to thrive in the digital age.

Those that fail to plan….

Thirdly, planning as we have known it throughout the industrial era is no longer useful. Planning, whether that be related to strategic or digital transformation, relies on a high degree of certainty in respect of market behaviour. We enjoyed a degree of certainty in the industrial era. Such certainty gave us the confidence to build car factories knowing that the need for cars would exist for a sufficient duration to recover costs and make a healthy profit. As we enter the digital era, we are returning to the era of uncertainty, just as it was throughout all time prior to the industrial era. Thanks to connectivity technologies, what was uncertainty is now hyper-uncertainty.

Today, strategic plans mutate into a works of fiction before they even take up residence on the corporate server / bottom desk drawer.

Plans typically address the chasm in moving from A to B, from today’s situation to a desired state. In an uncertain world, we have no idea what that desired state looks like beyond staying afloat. It would be imprudent to make vision statements along the lines of – we intend to become the number one player in wellington boots or antivirus software. There is no guarantee that these, or any other, markets will exist in the not too distant future.

Fuelled by innovation

We are segueing into an era where tactics is the new strategy. Think less ‘we need to build some pyramids and it is likely to take X years, require Y people and Z materials’, ie something that lends itself to a Gantt chart, and think more fighter pilot dog fight, where if you are not fully engaged with your environment, you are in trouble.

Fortunately, there is a way forward. We might think of it as a meta-plan. A plan that accommodates the full spectrum of plans that represent each of our future possible destinies. At the heart of this meta-plan is the innovation engine. This engine, if managed carefully, will provide the propulsion to move your organisation both towards opportunity and away from threats. 

This innovation engine is fuelled by ideas.

These ideas might range from a minor improvement recommendation for an existing process (yes, it’s okay to improve the existing business model, just don’t be reliant on it) through to entering into an adjacent market with a new service underpinned by a radically new financial model. These ideas can emerge from anywhere: the shop floor, the boardroom, a business magazine or through simply picking up on a weak market signal (this assumes you are paying attention to the market).

But innovation is not enough

To make this work, you need strong governance to, amongst other things, ensure that any idea no matter how large will deliver business value within three months of being approved for implementation. Thus, big ideas need to be deconstructed into small value-rich mini-ideas.

Unfortunately, creating such an engine is not enough to ensure your organisation has tamed the future for all eternity. Again, you need good governance to drive the engine, such that it reflects the ebb and flow of the market, and the increasingly frequent perfect storms.

Imagine a future where black swan events are so frequent that you question the etymology of the term.

Again, an innovation engine is not enough. Your organisation also requires:

•  Access to the best talent.
• A work environment that is conducive to maximising the return on the collective cognitive capacity of your talent.
• Business processes that are less ‘W E Deming’ and more tribal.
• A strong focus on asset growth, rather than a near-sighted focus on profit.

Knowing is not enough

Today most CxOs know they must tackle ‘digital’, but do not know how. They would ideally prefer to deal in certainties – invest $Z and we will be at point X by date Y. A macroeconomic ‘zoom out’ view on the world is required in order to understand that success is transient, and reinvention is a business process.

Again, this is the age of hyper-uncertainty. Nobody knows the future for sure. We need to abandon the plan – execute – achieve model that is usually sprinkled across multiple quarters / years. Or at least caffeinate the clock speed. Strategy today is a real-time pursuit.

Situational awareness, and the associated tactics, is the new strategy.