7 ways service providers drive lasting transformation success
Attention to people, process, organizational culture and reward systems preserve digital change over the long haul. Here are seven approaches to keep in mind.
Launching a digital transformation journey, charting a roadmap and navigating the obstacles along the way is a difficult endeavor.
An initiative may reach a few impactful milestones and begin producing quantifiable business results. But that's no time to declare victory. Organizations should take steps to ensure the hard-fought victories take hold and resist falling back into the old ways of doing business. Glitches, from internecine warfare to unexpected events, can push back on new modes of doing business.
IT services executives have a front-row seat for such struggles as they work with clients to make digital transformation success last. They suggest that a combination organizational changes, top-management commitment and techniques for greater transparency can maintain the momentum for change.
"We've been helping our customers realize that it's not just technology," said David Chou, director of cloud capabilities at Leidos, a technology, engineering and science solutions and services provider based in Reston, Va.
Yet some organizations still emphasize the tech aspect of transformation. They run the risk of backsliding on digital gains in doing so.
"When I change all these technologies and update all the work processes and workflows, how do I make it stick?" Chou asked. "People have a certain way of working that they're used to, the status quo. If you don't focus on 'how do I change the way people interact with work?' they'll go back to their mental playbook on how they used to do things."
Glenn Landmesser, vice president of digital transformation at RiseNow -- a supply chain management consulting firm based in Leawood, Kan. -- also cautioned against dwelling on technology at the expense of people. In his experience, businesses become focused on technology adoption instead of extending the capacity for change across people and processes.
"The technology becomes the 800-pound gorilla," Landmesser said. "'We digitally transformed. We've got all these new tools.' But people didn't learn how to be agile and adopt change."
Chunking "big bang" digital transformation initiatives into smaller pieces gives people and process equal billing with technology, Landmesser noted. Instead of embarking on a massive order-to-cash supply chain overhaul, a business could create a succession of smaller efforts, starting with improving master data management, for instance, and moving on from there. But an organization could begin with any area across a value stream, he noted. A business planning a supply chain-finance transformation could potentially start with accounts payable.
Whatever the value-stream starting point, agile teams pursue each component in the sequence, constantly iterating and looking for improvement opportunities before moving on to the next component, Landmesser said. Along the way, they are building transformation muscles.
Addressing people and process, in addition to technology, is precisely what makes digital change stick, according to Landmesser. People, following an established iterative process, end up making this transformation approach an essential strand of corporate culture.
"How you make transformation durable is there are teams building the competency to change and become more agile," he said. "It becomes part of the organization's DNA."
The challenges of lasting transformation
2. Revamp the organizational hierarchy
Customers approaching digital transformation from a cultural and organizational perspective tend to have the most success, Chou observed. When customers focus on those aspects of transformation, the task becomes building digital change into the way people do their jobs.
But accomplishing that task may require a shift in traditional hierarchies: Organizations adhering to command-and-control as their sole management style should consider adopting a network-centric model for transformation, Chou said. The idea: Educate employee teams on the organization's transformation vision and then empower them to collaborate with each other and make decisions.
"Because they understand the overall digital transformation strategy, you can rely on them to make the correct decision, because they're the closest to the problem," Chou said.
Legacy command-and-control environments are ill suited for keeping up with the complexity of life in a digital ecosystem, he said. Directives from top management get lost in translation as they filter down the hierarchy to employees. "The leaders don't have the full context to make the decision," Chou added.
Bob Dutile, chief commercial officer at UST, a digital transformation solutions provider, said change can disrupt the organization chart. For example, revamped business process may render moot the need for three assistant vice presidents in a middle-management tier. Those affected by transformation, in his experience, will likely offer resistance. In such cases, strong commitment from top managers prevents backsliding.
"If you are not driving change from above, people will drag their feet and end up reverting to old behavior," Dutile said.
Active management also underscores transformation as a priority, not a passing fancy.
"Leaders rolling up their sleeves and really getting involved is a credibility and integrity thing," said Ricardo Madan, senior vice president of global technology services at TEKsystems, a business and technology solutions provider based in Hanover, Md.
"Transformation requires individual change and organizational change," Madan said. "People and institutions are more likely to change -- more willing to embrace change -- if they see their leaders as speaking from a place of more than just platitudes."
Management must also shape and sign off on the overarching digital transformation strategy. That means developing a plan, or charter, with the necessary guardrails and principles to sustain organizational change
"The plan needs to be sanctioned by the highest level of the organization," Landmesser said.
The C-suite, however, must solicit employee feedback. The plan is unlikely to include every stakeholder suggestion. But it's important to listen, Landmesser noted. "If you don't ask, your program is doomed from the beginning because there won't be any frontline buy-in," he said.
4. Change reward systems, metrics
IT service providers may be called upon to help organizations revise their reward systems and metrics for evaluating of a project.
Companies traditionally based rewards on doing the same thing as before with only incremental improvements. But with digital transformation, a business could instead reward project teams for making "more interesting bets on the future," Dutile said. That could mean seeking and achieving results such as generating a higher percentage of revenue from new and innovative products.
How you make transformation durable is there are teams building the competency to change and become more agile. It becomes part of the organization's DNA.
Glenn LandmesserVice president of digital transformation at RiseNow
As for performance metrics, those might shift from "making budget" -- spending the allocated funds as planned -- to achieving an outcome. For example, a higher conversion rate based on a new form of customer segmentation could be one outcome, Dutile noted.
Redefining success makes transformation a long-term strategy rather than a perfunctory, box-ticking exercise. But to make such a fundamental shift, organizations might need more of a venture capital mindset.
"I have found that getting the organization in a portfolio mindset that accepts wins and losses is often needed," Dutile said. "If you have to succeed at everything you do, then there tends to be conservatism and sandbagging."
Obtaining commitment to a major change pivots on a couple of factors, he said. First, the customer tends to face a strong need, such as dissatisfaction with its performance versus peer companies or declining market share. As a consultant, the ability to demonstrate that a proposed change has worked elsewhere helps with getting a green light. Dutile recalled one engagement that involved a year of analysis and presentations that ultimately hinged on arranging a CEO-to-CEO meeting with a company that succeeded with a similar transformation.
"That built the confidence it was worth trying," he said.
5. Pursue transformation transparency
Transparency on transformation progress, or the lack thereof, is also critical for longevity. Leadership must honestly examine the effects of change, from new features to new platforms. That means assessing the "productivity, performance and efficacy of what digital transformation is driving back to the organization," Madan said.
Periodic health checks are one way to track transformation. Those can take the form of monthly or quarterly business reviews, Madan noted. In Agile language, they can become "ceremonies" -- meetings that promote communication across teams. Those meetings, whatever they are called, build consensus and reaffirm commitment to stay in the transformation game. A big part of keeping digital transformation on track is ensuring stakeholders are continuously bought in, he said.
Continuous feedback loops built around customer, user and power user surveys also contribute to transparency, according to Madan. Feedback on what worked and what didn't, coupled with the health assessments, makes digital transformation a cultural touchstone, "not just a neat thing we did and it made sense for a time," he noted.
Assessment, discussion and feedback, in turn, inspire a cycle of continuous improvement. With this approach, teams can identify problems and correct them through refactoring, according to Madan. "That keeps all the goodness of transformation going."
Dutile also cited Agile as promoting transparency and visibility. Adopting an Agile/sprint approach lets organizations demonstrate meaningful and measurable output that can be verified or validated in a short time period, he explained. A transformation team can conclude a sprint in a matter of weeks versus months for larger, monolithic projects. This ability to quickly show "completeness" -- even with a small goal -- makes progress visible, he said.
Failure to reach a short-term goal also surfaces quickly. A corporate board can assess a series of sprint-based deliverables and decide which ones to support and which ones to defund, Dutile said. Here, dashboards provide a data visualization tool for keeping tabs on progress and making investment choices, industry executives noted.
6. Plan to accommodate change
A digital transformation initiative can also slip away if something in the business environment changes significantly -- the arrival of a disruptive competitor, for example. An organization will likely need to reset the overarching goal, which means the smaller pieces of the transformation must change as well.
In such cases, modeling new optimum outcomes can help, Dutile said. "You have to show that you are not reacting out of fear, nor continuing regardless, but that the repositioning shows a better outcome," he explained.
Businesses can set up a governance process that revisits performance models when new developments emerge and new data becomes available.
"It's good to be doing this right along before you reach a crisis so that the habits are developed," Dutile said.
7. Prepare to make tough calls
Digital transformation sometimes unravels because companies lose their nerve when it comes to enacting change across the people and process dimensions.
"Leaders will have to be ready to make some difficult decisions," Landmesser said. "Do we have the right skills here? Do we need to supplement with other people?"
It's far easier for organizations -- and their consulting partners -- to focus strictly on technology implementation because people and processes are complicated to evaluate and re-engineer, he said.
"This is very difficult work," Landmesser said, noting that attempting to transform an entire value stream all at once is overwhelming.
But chunking out the work across the value stream gives organizations enough time to take a balanced look at people, process and technology, he added.
