Digital Economy Dispatch #033

25th April 2021

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The 4 Key Elements of Your Digital DNA

Q: What’s the difference between a £100 haircut and a £10 haircut?
A: About 3 weeks!

I was reminded of this joke while sitting in the barber’s chair getting my first haircut in over 4 months. Due to lockdown restrictions, these kinds of activities have become something of a rare event. Rather than a constant monthly clip, the long wait to be shorn has meant that the “before” and “after” pictures make quite a statement. And my £10 was well spent, I think!

Such dramatic transformations in appearance are, of course, quick fixes that have more to do with optics than substance. More meaningful and long-lasting change requires a deeper approach that addresses fundamental aspects below the surface. Something we face all the time in leading our organizations through the digital transformations they require to be successful in today’s turbulent environment.

The broad scope of digital transformation presents a major challenge to organizations: Where do they focus to have substantive impact? This raised its head very clearly for me in discussions recently with 3 different organization in my role as an advisor on their digital technology strategies. In line with many organizations I have reviewed, they all described a long list of technology upgrades and software replacement tasks they have in progress. Looking further out, they outlined several compelling technology-led initiatives that are being explored as they seek to improve their online services and offer new client capabilities. And in support of these moves, a variety of skills-based improvements were planned and training programs were underway. Yet for all this effort, reviewing these activities still felt too much like experiencing a “digital haircut” and as though something more was required.

To be effective, digital transformation requires a more substantive review of the core ways of working in an organization. Not only do they need to deploy digital technologies and experiment with new capabilities, but they also must create the processes, practices, and habits of a digital organization. Something we can characterize as redefining their “Digital DNA”.

It is a concept that has received attention in the past. One useful review examined the kinds of working practices typically found in born-digital organizations and related them to what is usually seen in more traditional established businesses. Unsurprisingly, the review highlights how traditional organizations have a culture that emphasize stability and strong management practices to minimize operational risks, while the more recently created companies optimize flexibility and are primarily concerned with ensuring they decrease their delivery risks.

Taking these ideas further, a Deloitte research study from 2017 focusing on digital marketing groups presented 23 traits that were believed to define the digital maturity of an organization. These ranged from design practices such as continuous innovation through to management styles aimed at flattening hierarchies to speed up decision making. They were used by Deloitte as a measurement framework and improvement roadmap that they rolled out in consulting engagements with their clients across the world.

However, while the Deloitte framework has some appeal as a useful perspective on the breadth of areas to be addressed in digital transformation, I find it rather unsatisfying as a tool to help focus attention for busy executives and decision makers in Large Established Organizations (LEOs). Something simpler and more directly appealing is needed that targets attention where LEOs can quickly see ways to deliver value to their clients, stakeholders, and employees.

Based on my practice-based insights and research activities, here are the 4 key areas of focus that I highlight when considering how to redefine an organization’s Digital DNA. It is these areas that I believe over the long term will determine an organization’s ability to survive and thrive in a digital world.

Capacity for Change. Created over long periods, organizations have always needed to evolve to match current circumstances and plan for the future. Yet, their ability to absorb and accelerate change does not often receive direct attention. Rather, individuals and teams are rewarded for following current approaches and continuing along well-worn paths. Increasing change capacity requires a review of several basic aspects of an organization’s practices: What is measured and why; Who is rewarded for what behaviours; How products and project progress is reported.

Management of Uncertainty. Most traditional organizations have created an environment that not just manages risk, it seeks to eliminate it. In a digital world characterized by volatility and uncertainty, management approaches must adapt to help our teams embrace risk as part of the role of any effective manager, and to create decision making practices that encourage early identification and exploration of risk throughout a project. This introduces a different balance for effective control and governance in the organization: How to prioritize investment across the product and project portfolio; Which practices are introduced to drive innovation; Where to look for product differentiation; How to measure a project’s progress.

Support for a diverse, resilient workforce. Building appropriate skills across the organization is critical. In established organizations the challenge, however, is seldom a lack of domain expertise or gaps in understanding of how the industry operates. It is an inability to challenge traditional thinking, bring in new ideas from outside the organization, and revise products and services to meet a different set of demands from non-traditional customers and markets. The needed refresh in thinking can only partly be handled through education and talent management schemes. It also requires more radical approaches to challenge current workforce support activities: Where do we look for new talent to join our organization; How do we encourage more diversity in our workforce; What are the effective techniques for engaging current employees; How do we support our workers to thrive in uncertain times.

Engagement beyond borders. Over many years, the insular thinking in many established organizations creates challenges for those attempting to move their teams in a different direction, bring in alternative approaches to problem solving, or ask questions that may open up new opportunities. Greater access to the opportunities being created by digital approaches is only possible by increasing transparency and connecting through more open, honest dialog with those outside the organization. In recent years, the need for direct engagement with customers, suppliers, and the broader community has required a reassessment of the dominant fear of most traditional organizations that they are at risk of exposing too much of an organization’s internal operational details. This rebalance is essential. Ensuring more active engagement brings new insights and opportunities: How well do we understand our market; Which customers are driving product use; Where can we partner to extend our reach; What are the right priorities for new capabilities.

 

A focus on your “Digital DNA” is critical to deliver substantial change. By highlighting attention in these 4 areas, you will not only see a difference in your digital technology deployment, but you will also see changes in the behaviours and attitudes you will require to be a successful digital organization.

Digital Economy Tidbits

The 5 core IT shifts of scaled agile organizations. Link.

Here is a very useful summary and analysis of 5 key IT shifts that are essential for Large Established Organizations (LEOs) to compete with digital natives. These are all underway in just about every LEO I know. The challenge is to understand where they are in these transitions, and to provide approaches that accelerate their journey.

Shift #1: Collaboration: From siloed IT department to cross-functional agile teams

Shift #2: Applications and services: From a monolith IT core to granular applications and services isolated by APIs and owned by teams of teams

Shift #3: Sourcing and people: From outsourcing IT to strategic IT hiring balanced with partners and vendors

Shift #4: Delivery process: From waterfall processes to continuous delivery

Shift #5: Infrastructure: From physical infrastructure to cloud, containers, and infrastructure as code

 

Research proves your brain needs breaks. Link.

In our always-connected digital world, here is some excellent research from Microsoft looking at the importance of taking breaks and resting the brain. Learning how to maintain our mental and physical health is a critical aspect of our emerging digital world.

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