My first post on the Human Factors in Digital Transformation discussed how technology alone cannot achieve digital transformation. Digital leaders focus on an additional critical factor – the human connection. I’ve identfied eight human factors that can help us successfully transform our organizations. In this part 2 of the 3 post series, we dive deeper into the first four human factors.
- Establishing a clear vision
- Setting and measuring shared, courageous goals
- Embracing open culture
- Making it personal
1. Establish a clear vision
It is often said to start with the end in mind. With digital transformation, this is absolutely true. Everyone in the organization needs to understand, and ideally agree with, the destination.
Digital leaders first define and declare the vision.
“Without a clear digital vision, companies can’t design a coherent, executable business strategy,” says Jeanne Ross, a principal research scientist at the MIT Sloan Center for Information Systems Research.
For example, Barclays Bank set a vision of becoming the digital bank of the future. BMW, already known for its superior engineering, declared it is a technology company. Its vision further states that technology is becoming human.
We are seeing strong digital visions even in industries often slow to adopt new technologies, like healthcare. One organization leading the way to digital health is USC Center for Body Computing in Southern California. It set a vision for how to create a better future of virtual patient care. That vision is becoming a digital reality with its Virtual Care Clinic.
These visions are not just words at these organizations. They are driving the priorities, investments, and decisions made by every team and employee.
Why is vision so important?
Humans want to believe in amazing things. We want to be part of something bigger than ourselves. To work for great organizations and people.
A vision that declares a future more amazing than the current state does that. It also brings everyone in the company closer together.
To transform any organization takes teamwork. A vision becomes the rallying cry and unifying concept – that cuts across roles and jobs.
Not long ago, I met with a group of government ministry CIOs. Each of the ministries is pursuing a digital agenda. Yet, it was clear to me that their pursuits were not collaborative or consistent. I asked the CIOs if they had a shared vision for their digital transformation. They responded with a group blank stare.
Not only did they not have a shared vision, they saw the other ministries as competition for resources and attention.
I challenged them with a question. “What incredible achievements could you accomplish together if you worked toward a single, shared goal for the government’s digital future?” To their credit, they nodded. It’s yet to be seen if they will accept that challenge. That will take hard work and a level of collaboration and humility they may or may not be able to achieve.
Visions are simple, aspirational statements
Another example from a completely different industry. Recently, I was chatting with the CEO of a pizza franchise. Its vision and mission are simple: “Be Awesome.” That’s it.
This is also part of their digital transformation vision. For example, their mobile application can’t just be okay. Its user experience must Be Awesome. The franchise marketing portal can’t be half baked. It, too, must Be Awesome.
Across the board, employees are encouraged to ask each other and their leaders, “is this awesome?” Might sound silly, but it’s working. The company has risen to become a top west coast pizza franchise.
Visions can evolve over time
Digital leaders set a clear vision, but also know when that vision needs to evolve based on the company’s direction and the market.
Case in point: Amazon.
When Amazon first started, CEO Jeff Bezos set a vision of being the world’s greatest bookstore. It then evolved in the early 2000’s to be the place to discover and buy anything. The vision evolved again to being the leading e-commerce platform, as Amazon moved from being its own online store to being the platform for a global marketplace.
This experience as a platform and the infrastructure behind it led to its vision and success around Amazon Web Services, which is now the leading public cloud service.
2. Set and measure shared, courageous goals
Of course, words alone don’t lead to success. A digital vision must be accompanied with a plan to achieve that vision across all areas of the organization. The business strategy, technology strategy, human resources strategy, and investments across all of it must align with the vision.
Digital transformation is not business as usual. Thus, the accompanying metrics should not be either. It requires transformational ways of thinking, doing, and measuring success.
According to McKinsey’s roadmap for digital transformation, there must be clear, ambitious targets. In other words, stretch goals that everyone is working towards.
“Without targets, people who find it hard to accept that the old ways of doing things were massively inefficient might be content to sign up for a 10 percent improvement in cycle time, for example. When 100 percent is possible,” the McKinsey report validates.
The metrics that matter in digital transformation are not specific to IT or any one division. These are metrics that matter to the business overall. Everyone should be driving to key performance indicators that align with the shared vision of success.
“CIOs need to shift from using operational efficiency metrics to measures that executive decision makers care about,” says Paul Proctor, a distinguished VP and analyst at Gartner. Proctor further advises having 5 to 7 metrics that are leading indicators of where you want to go, not where you are today.
As one of my former bosses at Microsoft loved to say, “Show me where the puck is going, not where it’s been!”
Stretch your organization to new heights
Digital leaders push the boundaries, reach those goals, and then push further again.
There is a lot of advice out there on what to measure. Simply, you should measure areas that show clear progress in your digital transformation. Hint – it’s not operational efficiencies or cost reduction.
It is all about the digital experience.
Therefore, develop and measure indicators that show an improved customer experience or inspire customer delight. For example, customer stickiness or retention. Revenue growth, especially long-term contracts. Employee retention and growth, especially in key areas like application development. Partnerships. Rate of innovation. You get the idea.
Many organizations are turning to a tech industry standard for measuring results known as OKRs (objectives key results). OKRs were first introduced by Andy Grove, then CEO of Intel Corporation. However, OKRs are used today by many firms, including digital natives like Google.
In fact, Larry Page, the CEO of Alphabet and co-founder of Google, says, “OKRs have helped lead us to 10x growth, many times over. They’ve helped make our crazily bold mission of ‘organizing the world’s information’ perhaps even achievable.”
Set bold and courageous goals
Again, digital transformation is going beyond what you’ve done before. Google could have easily grown by average rates. But it did not. The organization set incredible, bold, and perhaps unimaginable goals. And then surpassed those goals.
This is why I added the word “courageous”. It takes such incredible courage to truly transform and grow an organization. To take it to a new place that perhaps was not even imaginable a few months or years prior.
Don’t set metrics that tell your employees you are okay with mediocrity. Establish goals everyone sees as being truly transformative. And then reward everyone and celebrate when you reach them.
3. Embrace open culture
A vision and accompanying metrics alone do not guarantee success. Everyone at the company, across all roles, geographies, and levels must believe in and executive against them. Here is where culture comes in.
The biggest challenge I see as companies embark on a digital transformation is in the needed cultural changes.
Top-down mandates don’t work. Digital leaders evolve their cultures to be more open, transparent, and meritocratic.
In fact, companies who declare a vision but don’t change their internal culture will fail. Their employees will not see the value of the vision, because they aren’t part of it.
Take General Electric. They declared a clear vision of becoming the digital-industrial company and invested heavily in robotics and the Internet of Things (IoT). GE set metrics of success for this multi-billion-dollar digital strategy under the new arm of GE Digital.
Unfortunately, since establishing this vision and strategy, GE has struggled to fulfill its dreams. This inability to fulfill the vision or hit its targets resulted in multiple refocuses and massive layoffs.
Some analysts believe GE underestimated the challenges of developing next-generation software to drive industrial IoT. I believe that to be true. However, I would suggest they missed a more important element. Cultural change. The company remained a mostly hierarchical, top-down organization.
Use an open decision-making process
A company on the opposite end of the spectrum is Red Hat (full disclosure that I currently work at Red Hat).
The organization decided to develop a new vision or what it calls their “Why” statement a couple of years ago. Much of this was inspired by Simon Sinek’s “Start with Why” book and concept. While Sinek is not specifically talking about digital transformation, the concept still applies.
To get to their why statement, Red Hat undertook a several-month process involving literally thousands of its employees. A process it calls the Open Decision Framework (ODF).
First, employees shared their personal stories of why they work at Red Hat or why they love Red Hat and open source. Using a machine learning algorithm, they analyzed all of these personal stores to find patterns or common words and phrases. A cross-organizational advisory committee then put together several proposals. Those were narrowed down by a company-wide vote. More work was done to fine tune, and then a final company-wide vote was held again.
The resulting Red Hat why is: Open Unlocks the World’s Potential
Could the CEO or a small group of leaders come up with something close to this on their own? Maybe. But a mandated why statement does not have the impact of one co-created, socialized, and agreed to by the entire organization.
While it took months to finalize, in the end, everyone felt part of the process. This means they believed it and lived it.
Borrow from open source communities
Red Hat’s “Why” statement brings together the company’s focus on the open source development model and its open organizational culture. To work at Red Hat means not only believing in the business mission but in the open culture and the open source “way”.
Digital leaders also embrace open principles.
If you looked inside most digital disruptors, they behave differently. Great ideas can come from anywhere in the organization. Developers are coveted and given freedom to build amazing software. Individuals and teams feel empowered to pursue new ideas.
If this sounds a lot like open source communities, it’s because it is. Digital leaders look at their organization more like a community of individuals, all contributing to something bigger than themselves. Anyone can participate, lead, and suggest a change or improvement.
By embracing open source values, leaders can successfully create “a rebooted, redesigned, reinvented organization, suitable for the decentralized, empowered, digital age,” says Jim Whitehurst, Red Hat CEO and author of The Open Organization.
In open organizations, the CEO and leaders throughout the company become coaches, cheerleaders, and evangelists of the vision. Not dictators.
Be an engaged, compassionate leader
When I meet with customers, I am increasingly asked about our culture. Enterprises and governments worldwide want to understand how to be an open organization.
The technology decisions, while daunting, are an easier change compared to the cultural shift organizations must undertake to truly become digital leaders. It starts with the leaders themselves letting go of the structure and ladder that brought them to leadership.
“The big task for management is, therefore, to create a culture and leadership style to support autonomy, empowerment, and active engagement,” says Kai Grunwitz, Senior Vice President, EMEA at NTT Security.
The one way digital leaders must behave differently than most open source communities is by using compassion. Open source projects are not known for their inclusiveness or empathy, and don’t usually care whether everyone is keeping up with the race.
Open organizations combine the best of a meritocratic process with a compassionate culture.
4. Make it personal
One of the downsides of the digital era is we don’t have enough face time. We believe video conferences provide the same benefits as face-to-face meetings. Often, we assume emails are communicating our true meaning. Or at least think people open and read our emails. How often to you send messages via text about topics that should be a personal conversation, where you look someone in the eye?
To succeed at a company-wide digital transformation, you can’t rely on digital communication alone. Ironic, right?
This takes face time. And a lot of it. Especially by the leadership.
Get out there. If you’re a worldwide organization, then hit the road. Travel around the world. Communicate the vision. Answer the hard questions. Listen. And then listen some more. Show how you are changing based on the feedback you receive.
Everyone must be on board this journey, from literally your board of directors to the custodian. They all have a role to play.
In fact, your CEO and leadership must do more than sign up for the transformation and metrics accompanying it. They must evangelize.
“It’s not enough just to have CEO sponsorship. It needs to be provocative, disruptive, ambitious, and often uncomfortable sponsorship to be successful,” says McKinsey in their roadmap to digital transformation report.
Cultural and Digital Transformation take TRUST
One key reason for making face time is building trust. As humans, we need to see someone. Shake their hand. See them in person. All of this helps us trust the other person.
To put your organization through a major transformation takes trust – across the organization, but especially, of the leadership.
“In a climate that combines uncertainty with aggressive innovation and the need to learn or relearn a new trend, trust is one of the only stable principles we can count on,” says Daniel Newman, principal analyst of Futurum Research and CEO of Broadsuite Media Group.
Note: This is the 2nd post in a 3 part series on The Human Factors in Digital Transformation, by Margaret Dawson. Read part 1 here, and part 3 here. Please comment, share, and follow @snortoutloud and @seattledawson on Twitter and Instagram. Interested in guest blogging for SNOL? We’d love to hear from you. Please contact us with your suggested topic.