Can you scale digitalization from experiments to business benefits?
November 23, 2018
I assume your organisation has already started the digitalization journey, you have gained some hands-on experience and it is time to scale results for larger benefits. For example, technical experiment on AI or IoT may have taken place. You’d like to proceed without creating an overwhelming change load or future cost chaos in the impacted organisations. Planning rules may still be a bit confusing and thus, for example, company wide and product level development projects may be partially overlapping.
Gartner’s CIO agenda 2019 estimates that 33% of organisations have reached digital scale, digital business is maturing from tentative experiment to massive scale. Scaling means that organisations are making long-lasting business model changes and improving customer experience. Accordingly, also external risks are increasing in areas of digital service performance, customer trust and cybersecurity. Internal challenges in leadership and technology remain in the agenda.
Digital experiments are fun, transformation is hard. How to avoid the trap of focusing on digital experiments only and freezing there, without capability to succeed at scale?
To make it easier for you to plan next transformation initiatives and to avoid known problems, I have combined some practical tips that a business leader should take into account when scaling digitalization. The tips can be applied at company or lower levels, for example in one product family portfolio.
Digital transformation should be seen as a journey that consists of agile experiments and programs. During the journey and as an outcome of each transformation program, you start harvesting benefits from a more digital business. Each program in the journey is organised in modern way, it combines several development sub-streams and integrates a solution that solves a business case, ensures that the new solution is fitting the existing ICT and organisational environment around it, and finally deploys the solution to market and operational use. It is important to understand that content of each program includes changes that impact in minimum people, technologies, data and way of working. In case your benefit targets include new business, the scope impacts business environment outside your current organisation. A key challenge is to manage this digital intensive change as an integrated solution. Following agile development principles, each program release should be able to synchronise development streams frequently and demonstrate draft integrated solutions several times during the program execution. In your digital transformation programs, have you demonstrated new way of working side by side new digital applications, frequently?
Digital transformation planning is in a crucial role to ensure success when scaling out. Program leadership is another major capability any organisation has to master. Even though the default digital development approach is agile, combining changes in customer interface, business rules, people roles and technical elements call for senior leadership. No matter how small steps you take at a time, digitalization remains a complex transformation problem.
We at Midagon know the key challenges of digital transformation. They include specific failure factors you want to avoid. And success factors you want to include. More information about these critical factors is available in a fresh Midagon whitepaper, supported by academic research (https://www.midagon.com/insights/).
A root cause of the digital scaling problem is a gap between a piloted idea and start of a wider transformation program. When started, a program can implement digital scale benefits in an iterative manner. The gap is proposed to be solved through three steps:
In context of digitalization, these steps require experimental-minded people. Leaders are to demonstrate strong top management support, experienced transformation managers are to lead pragmatic program releases and innovative team members implement incremental results. If the start of a transformation program is well supported, there is a good chance that business benefits can be harvested at the end.
If an organisation tries to shortcut in implementing the above mentioned basic practices, scaling of digitalization remains very difficult. It may be that you are underestimating the transformation challenge ahead. If digital innovation flow is not impacting core strategic portfolio, how can you ensure that top management support is in place? A cross-functional transformation needs top priority, funding and people. It is a well-known fact that agile transformation steps can’t flow quickly through the organisation without dedicated resources and skilled transformation management.
Good news is that you can start improving the planning system in your own portfolio, for example at product family level. Companies have planning processes in place, so implementation of digital intensive components is hopefully a tuning issue rather than a major change in way of working. And in pragmatic way, a program can be scoped and started properly by an experienced program manager.
Let’s continue closing the scaling gap. What are your next steps?
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