A technology-first approach to digital transformation is a recipe for disaster. Start instead by overhauling your organization with a customer-centric end goal in mind.
Technology, of course, is a key driver. IDC estimates $1.2 trillion will be spent on digital transformation technologies in 2017, an increase of 17.8 percent over 2016.
Yet, a significant number of organizations are not getting transformation right because of a fundamental quandary over what digital transformation really is, says Brian Solis, principal analyst and futurist at Altimeter, a Prophet company.
Altimeter’s 2017 State of Digital Transformation report finds that while organizations are investing in innovative technologies, most are lagging or failing to respond to consumers’ new expectations due to “meager digital literacy.” The report also finds many companies have cultures and that “politics, ego and fear are the main obstacles to achieving the collaboration and solidarity needed within companies to make the changes digital consumers want.”
When companies start with a tech-first approach they miss the purpose of what digital transformation is all about, maintains Solis. “I think a lot of times, companies and CIOs in particular, fall into what I call ‘the technology trap.’” Quite simply, he says, it means they are building upon a legacy foundation with new stuff.
“There’s this idea if we use the technology that our customers use or the latest apps and mobile sites or chatbots, we’re keeping up with disruption,” Solis says, “and I think none of this is bad, but it’s a common trap for the evolution of digital transformation.”
To see how it’s being done right, here are the seven habits of highly effective digital transformations.
When Shamim Mohammad became CIO and senior vice president of CarMax a few years ago, “I didn’t look at transforming technology, but how do we transform us… so all of us are moving at the right speed.”
That sentiment is echoed by James Lowey, CIO at TGen, who says that one of the largest challenges around transforming a business is keeping a workforce up to speed with current skills necessary to participate in this change.
“Having a stellar team who is always willing to embrace technologies helps … as often, the pace of technological change exceeds the ability of formal education to keep up,’’ he says. “I believe having people who are passionate, curious and motivated by the mission is the key to success in achieving a true digital transformation.”
A few years ago, Pitney Bowes began looking at where technology was headed in 10 functional areas, including mobile, data, analytics, machine learning, APIs, SaaS, and designing a user experience. “We realized for our organization to move forward in addition to a clear technical strategy, we needed to have a people strategy,’’ says James Fairweather, senior vice president of technology and ecommerce.
Curriculums were organized around all 1o areas, and everyone in the 1,200-person innovation organization was required to select one of those 10 tracks and commit to learning it for one year. Fairweather says they have made a commitment to employees to enrich their skills and enhance their personal value proposition.
This mindset shift has moved the company forward. “We were 80 acquisitions over the past 10 years but … having people swear allegiance to one of these topic areas has created a lot of cross communication and new relationships were formed as people got to know each other. We’ve seen huge benefits to doing that proactive training,” Fairweather says.
While businesses cite “evolving customer behaviors and preferences” as the top driver of digital transformation, fewer than half invest in understanding digital customers, the Altimeter report found.
“The few that are getting it right start with an outside-in approach,’’ says Solis. “They’re looking at something that is either broken or missing to solve a need,” and then tie in ROI and key performance indicators (KPIs) “to demonstrate progress and success.”
They are also focusing on the customer experience first and foremost, he adds. “They look at the customer journey or parts of the customer journey; they look at the mobile journey in particular, and they look at fixing something that could create greater opportunity so they can tie immediate opportunity to it.”
That’s what CarMax’s Mohammad found after the senior executive team took a “tech safari” trip to the West Coast and visited several successful companies to learn about technology “and the art of possibility around technology,” Mohammad says.
CarMax knew consumers wanted a better experience with the ability to buy a car from its website. To do that, officials organized employees into product teams that all have “three critical, non-negotiable roles”: a product manager, a lead developer/engineer and a user experience person. They are supplemented by other development, quality assurance, finance and operations members for anywhere from seven to nine people.
One idea officials wanted to try out was delivering a car to someone’s home. One of the product teams built a mobile app and embedded capabilities so a customer can order a car from a mobile device and have it delivered to their driveway within a couple of weeks. The team “didn’t go for a perfect solution on day one; they got the capability in the hands of a customer quickly and then worked on making it better,’’ Mohammad adds.
The first car has since been delivered in Charlotte, N. C., the only market with that capability right now.
The teams all hold two-week “open houses” to provide internal transparency and updates on how they’re meeting business objectives and customer needs.
Today, with the teams in place, the goal is to “deliver a great idea in matter of hours; try it out and see how it’s working and make it better. That’s a big shift,’’ says Mohammad.
The approach is similar at John Deere, where executives have come up with a roadmap of what the vision is for the future with the goal of developing a smart connected enterprise. A 7,000-square foot workspace dubbed the Foundry, was built in one of the company’s factories complete with lower table heights, so people can collaborate more freely. There, new teams will be brought together to learn a new agile methodology from a set of experts who walk employees through what one cycle of development will look like.
“We’ve embraced agile because we realize it helps us build a culture of learning, so we’re now going through sprint cycles” to develop a product every two months, says Ganesh Jayaram, vice president of IT at John Deere. “We’ve broken up our portfolio of projects and we’re trying to implement that in two-month increments. Then we’ll step back and say, ‘Did we meet the expectation of customers?’ as opposed to waiting for months or years to pass by before we prototype a new solution.”
The next step will be forming teams of employees who will make the leap with a series of workshops to educate them on what this journey will entail, Jayaram says. “It’s a very different way to work. Going forward, we’re trying to embrace an approach where applications, infrastructure and business [units] are all going to work together.”
Informing the strategy for the connected digital enterprise was done through external benchmarking and internal interviews to make sure IT understood what the CEO and some of Jayaram’s peers in other functional areas expect of IT.
“In the past we’ve been thought of as a cost center,’’ he says. “Going forward, we’ll be front and center. It’s the first time in John Deere’s history we’re leading what the enterprise needs. We took the mandate and said, ‘How do we make that real for us?’”
As Pitney Bowes was designing curricula around targeted technology areas, officials also formed a tech strategy team and global innovation roundtables to foster greater collaboration. “All teams were sharing practices to test continuous integration and continuous delivery so all apps moving to the cloud were benefiting,’’ says Fairweather.
With help from “trailblazing teams” the company developed a standard tool chain and a standard set of practices that were then shared by building a community around devops, he says.
