December 1, 2021 by Jason Contant
Enlisting digital transformation enthusiasts and starting with a keystone change are key to successfully implementing a digital transformation strategy, according to a new blog from Harvard Business Review.
“The first thing that every transformation must confront is resistance,” said the blog, 4 Principles to Guide Your Digital Transformation, published Tuesday. “The status quo always has inertia on its side and never yields its power gracefully.”
But organizations always have “pockets of enthusiasm that can be identified and leveraged,” and companies should start in an area where enthusiasts are in the majority, wrote Greg Satell, Andrea Kates and Todd McLees.
Satell is a transformation and change expert, international keynote speaker and bestselling author; Kates is a Silicon Valley-based expert at moving innovation to revenue, a bestselling author and has spearheaded significant transformations for organizations in the Fortune 500 and beyond; McLees is an international keynote speaker and partner at Innovation Outpost, which focuses on digital transformation and industrial innovation.
The authors used the example of consumer credit reporting company Experian, which has offices in dozens of locations, including Canada, the United States, United Kingdom. When the company’s chief information officer sought to shift from traditional technology to a cloud-based architecture to offer its customers real-time access to date, he knew that some within the firm wouldn’t like it. “However, because he started with product managers already excited about the cloud, he was able to sidestep early resistance.”
A Japanese bank had a similar issue with blockchain-related technologies. Senior leaders were enthusiastic about the possibilities but knew that many middle managers would see it as a distraction from more proven lines of business. “So instead of focusing their efforts on existing customers, they shifted toward a new segment of younger, tech-savvy entrepreneurs who would be attracted to the novelty of the offering,” the blog said.
In essence, to overcome their innate bias for loss aversion, many people will need to see an idea achieve some success before they are willing to buy in. That’s why it’s a good idea to start with a keystone change that can pave the way for greater transformation.
For example, Experian didn’t shift to the cloud all at once, but instead started with implementing internal application programming interfaces (APIs). “Once the transformation team could demonstrate the business value of improved access to data within the confines of the organization, it was much easier to build a case for full deployment of cloud technologies.”
Another thing to remember is that digital transformation is not just about technology. “These initiatives can no longer be left solely at the feet of technology leaders and IT staff, but must involve a diverse set of ecosystem stakeholders,” wrote Satell, Kates and McLees. “We’re desperately in need of a shift in focus. We need to do more than just implement technology. Basic objectives such as cost optimization and process improvement can no longer be the ultimate aim. Leaders must inspire and empower their entire organization to boldly reimagine their work environment, customer needs, product offering, and even the purpose of the enterprise.”
And when it comes to digital transformation, the risk is no longer merely being left behind, it’s being eliminated altogether. It’s almost not about innovation, it’s about achieving better business outcomes, the authors wrote. Satell, Kates and McLees advise clients to start by asking business-related questions, such as, “How could we better serve our customers through faster, more flexible technology?” or “How might we leverage artificial intelligence to improve employee experiences and retain top talent?” Once business goals are identified, you can work your way back to the technology decisions.
Experian’s cloud transformation led to a platform that allows customers to make credit decisions based on near real-time data and is now one of the company’s most profitable products, the blog reported.
“In the final analysis, the most powerful use of digital tools is not to cut costs, create efficiencies, or even move faster and with greater agility, but to ask fundamentally different questions,” the blog concluded. “It is through exploring these new possibilities that we can solve complex problems and make more meaningful impacts for customers, employees, and the communities we serve.”
Feature image by iStock.com/onurdongel