Digital Economy Dispatch #051

29th August 2021

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The Secret to Making Your Digital Transformation a Success – Be Lucky!

You’ve got to ask yourself one question: “Do I feel lucky?”. Well, do ya, punk?
Clint Eastwood, Dirty Harry

Something made me mad the other day. And I am not quite sure why. It was a routine conversation of the kind I have almost every day. Then the other person finished the call by saying “Yes, but you have always been so lucky, haven’t you?”.

I am sure this was just an innocuous comment to end the discussion, but it struck a chord. Is success earned or is it just by chance? Do people see what you do to be a result of blind luck? I’d like to believe there is a lot more to it than that. But maybe I’m deluded. If it is really luck that makes the difference in what we do, can we give luck a little help along the way?

I’d never dispute that fortune plays a part in many aspects of our lives. I am sure we can all point to occasions and situation where we feel that we have been in the right place at the right time, or we have suffered from a bad roll of the dice. Even so, I am very much a believe in what some people call “planned serendipity”. That is, our ability to put ourselves in good places to be lucky. That’s particularly true when it comes to delivering digital transformation.

Undoubtedly, a lot of what we do in our work is successful as a result of a great deal of planning, careful management, and a maniacal focus on execution. Particularly in familiar situations and times of certainty, we can rely on experience to guide our decisions, identify common patterns, and overcome the roadblocks in our path. Over the years many organizations and individuals have developed skills that maximize their effectiveness through hard work and have built the instincts that come from seeing what works and what doesn’t.

For many people, the foundation of this approach is the well-known adage that “the harder I work, the luckier I become!”. A view that is difficult to dispute. With rigorous preparation and by repeatedly experiencing common situations, you will be better positioned to take advantage of the opportunities that arise. For example, it is a position often adopted by sports people celebrating the importance of long hours of practice and its impact on their ability to perform when it matters.

Yet, if we have learned nothing else in today’s fast-paced digital world it is that we need to expect the unexpected. The so-called “digital revolution” brings into question the strategies that have worked in the past, invites us to view the world through fresh eyes, and highlights how we now face a lack of certainty across many aspects of the business environment. Time and again experts and successful leaders from across the public and private sector remind us that we will be placed in unprecedented situations where the rules of the game have changed.

Consequently, digital transformation drives us to assess the opportunities and challenges with a more balanced approach between following the good habits of the past and exploring new ways to move ahead in times of uncertainty. In such an environment, a different perspective is needed. This is experienced in practice by adopting two important techniques: Opportunity-driven approaches to leadership and agile delivery practices.

For digital leaders, strategy and decision making must adapt to recognize that traditional top-down hierarchical models are unlikely to be effective in times of rapid change and massive uncertainty. The bureaucratic approach developed during the industrial age emphasized the importance of productivity and efficiency through standardization and rigour. Hierarchical management models helped to organize large teams into manageable units aimed at achieving a common purpose through adherence to shared processes where the steps to be taken are well rehearsed and the outcome well known. Consequently, many see them as ineffective in digitally-driven scenarios where diversity, creativity, and fast response are hight prized.

To overcome these limitations, successful companies over the past decade have begun to leverage their insights and accelerate access to new knowledge by building organizations based on meritocracies. These data-driven organizations perform detailed analysis and amass expertise to guide informed choices about future directions. Strategic decision-making is based primarily on evidence drawn from data. Those that master the data-driven technologies and their application rise to the top. However, as we have seen in recent months, this approach relies on a base of meaningful data to which standard data analytics can be applied. Something we may not find in these unprecedented times.

So, while this approach has helped many organizations in domains where digital change is well underway and the goals are relatively predictable,  it has been found to be sub-optimal in many digital transformation situations characterized by massive uncertainty and a fast-changing environment. Here the focus must necessarily be on speed of reaction to the weak signals received, with strategic intuition and opportunistic risk-taking playing a more significant role. This opportunistically focused approach, defined by Julian Birkinshaw and others as adhocracy, requires a fast-paced experimental learning cycle that thrives on uncertainty. Progress requires tightly integrated multi-disciplinary teams using exploratory techniques such as short sprints and Minimal Viable Products (MVPs).

How do these different leadership styles affect the decision-making process? For example, when bureaucratic organizations solve complex problems, they would typically rely on their hierarchical management structure to understand roles and responsibilities, delegating and escalating decision-making as necessary. In contrast, a meritocratic organization solves problems by collecting data and using rational data-based arguments to justify a particular course of action. However, in an adhocracy, the default problem-solving approach is to experiment to learn more, using feedback to refine direction, and continue operating through swift act-learn-refine cycles. The focus in an adhocracy is to maximize learning in the shortest possible time.

It is this flexible delivery process that in my view is the foundation for “planned serendipity” in a digital age. The agility this brings is essential to execute effectively within the opportunity-driven leadership model described by Birkenshaw. Properly applied, experimentation based on data-driven feedback is at the core of agile methods such as Scrum. It is successful in situations of uncertainty because it takes small, progressive steps forward by optimizing learning and encouraging flexibility in response to lessons learned. Everyone in the organization is aligned to the same goal to react in a coordinated way when opportunity arises.

In the end, of course, there is no substitute for surrounding yourself with skilled colleagues focused on delivering a meaningful outcome through a lot of hard work. The key challenge in digital transformation programmes is to ensure this effort is aimed at achieving the right target and adapting quickly when it is misdirected. When dealing with a complex, changing environment, it is far too easy to be stalled through “analysis paralysis” , or to be trapped into endlessly following a “death march path” that has long-since lost its way.

We all need to gain experience and to build the skills and expertise required for our chosen fields. But in our digital world we also need to be constantly looking to focus our effort where it will make the biggest difference as our understanding of the situation evolves. Work hard on what matters to you. But most of all, whatever you do, be lucky!

Digital Economy Tidbits

Why every executive should be focused on culture change right now. Link.

Here is a useful Sloan Management article with a summary of what many people now see as the key elements for any organization seeking to be more adaptable and flexible for the post pandemic digital world. See how you rank your organization in these 7 areas.

The Seven Elements of Adaptive Culture:

  1. Customer centricity: Understanding and prioritizing the needs of customers rather than focusing on products or profit.
  2. Ecosystem focus: Prioritizing the well-being of the entire multiorganizational system and not just the company.
  3. Analytical orientation: Fully embracing the power of data and analytics in decision-making rather than relying only on experience or judgment.
  4. Collaborative reflex: Proactively engaging in cross-organizational collaboration and teamwork rather than working in silos.
  5. Bias to action: Valuing speed, not risk minimization, over perfection.
  6. Learning mindset: Engaging in experimentation and rapid learning.
  7. Leader as enabler: Empowering and energizing people while holding them accountable.

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