Digital transformation is a hot topic, with many of the largest charities announcing major projects. In the first of a series of blogs on the subject, Alison takes a look at the various meanings of transformation and argues that the key is not to deliver a programme of change but to build a culture that enables continuous, focused change.
Digital transformation is, it seems, the very latest strategic fashion and everywhere I go on my travels around the charity world people are talking about how to wear it. This is brilliant news, Heads of Digital have been calling for the implications of digital to be debated within the sector at the most senior level and now it is.
That it is the same phrase being talked about doesn’t mean it is the same thing that is being discussed. I have heard it mean everything from ‘we want more digital stuff’ and ‘we’d like to roll out to a hub-and-spoke model’ to ‘we know we must re-envisage our organisation to compete in a radically changed environment’.
That disparity is ok, ‘digital transformation’ is a recently invented concept and its definition, even from highly respected sources, seems fluid. But, if you are discussing a major strategic change, and one most see as crucial to survival, it’s important that you understand what your position is and how it relates to organisations around you.
I spend a large amount of my time researching and implementing transformation and innovation projects across the NfP sector and its potential for social good is something I am passionate about. When researching definitions for ‘Digital Transformation’ I found a surprising amount defining what it isn’t. I suspect that’s because describing how you transform an organisation that does digital into an organisation which is digital is very challenging – if it weren’t we’d all be working for Google clones right now.
Here’s are what some of the major management consultancies are saying about transformation:
“Business success today requires a customer-focused digital transformation. It starts with prioritising a superior and relevant customer experience, and aligning the organization, processes and technology to power it.” Accenture, Digital Transformation
“The realignment of, or new investment in, technology and business models to more effectively engage digital customers at every touchpoint in the customer experience lifecycle.”
Altimeter – The 2014 State Of Digital Transformation
“Digital transformation is uniquely challenging, touching every function and business unit while also demanding the rapid development of new skills and investments that are very different from business as usual.”
Mckinsey.com – 7 traits of effective digital enterprises
“Digital transformation — the use of technology to radically improve performance or reach of enterprises.”
Sloan Review, MIT, Jan 2015
There’s quite a lot of consensus in these quotes, with the top two focussing on achieving transformation by working from the outside in – devise a beautiful customer experience and then engineer the structure and processes to make that happen. Definitions three and four deal with the other major strand of transformation, re-engineering processes to improve performance and increase profit.
Although intense customer-focus is what makes good digital companies it is mixed with brilliant process engineering to make them outstanding. Amazon’s payment and delivery model leaves it miles above any other book seller and Uber’s rating functionality means that the physical experience is far above competing organisations.
The recent flurry of third sector organisations talking about transformation projects have been talking mainly about major investment in their systems and customer experience. So, in order to help categorise the different types of change, I have attempted a few definitions of my own:
- Digital Native – these are the companies who were born in a digital age and behave differently to older companies (successful older companies who have become digital are known as ‘digital by evolution’). Examples are Apple, Google, Just Giving and Kiva.
- Digital First – these are older companies, who have implemented digital as the first execution of a process. This is often confused with hub and spoke, which is an enabling structure rather than a strategic position. Digital first emerged from media companies but has gained wider usage; examples include The Guardian, Unicef UK and Macmillan.
- Transforming digital – This term, devised just for this article so not in wide use, describes organisations who are investing in digital to deliver enhanced user experience. Examples include .Gov.
- Digital transformation – describes an organisation that is actively trying to reinvent itself to compete in a digital age. This is organisational change enabled by digital technology.
And, therein lies the rub, digital transformation is organisational transformation which is enabled by digital technologies. Therefore the drive must come from the very top of the organisation. For many senior leaders, it will be a different type of change than those they have implemented before. Change is often thought of as moving from one state to another (similar to the Kurt Lewin Change Management model – unfreeze, change, refreeze) but for digital transformation to work effectively you need to move to a model that enables permanent, continuous change.
I sometimes use the analogy of trying to build a Lego organisation rather than an Airfix one. Your aim is to build components out of skill, ethos, process and insight and be able to easily reconfigure them as customer requirements change. If your shape is fixed– like an Airfix toy – then you break irreparably when change is forced upon you.
We see that all the time with the major digital companies. Google Inbox is an evolution of Gmail and you can bet that right now they are working on further evolutions. Apple disrupted its own market leading iPod with the iPhone and their recent purchase of Beats is thought by many to be a move to stem disruption by streaming services like Spotify to its iTunes business.
And Beats is a really good example for the third sector as it is currently being run separately from the main iTunes business, so as not to entirely kill the download business. Many charities have complex structures which hold real value within them. Change within a complex system is challenging and we must find ways to transform whilst retaining existing support and services and achieve that within a timeframe that reflects the rapid the rate of change in the external world. It’s a major challenge for every organisation.
If you are currently on the transformation journey or want to understand the trends in the sector, contact Alison@wearemc2.co.uk. We have put together a way to enable clear debate around how you will position your organisation.
I’ll blog more over the coming weeks on the major questions around transformation – why you should do it, who leads it, how is it commonly implemented, etc. I’d love to hear any thoughts, comments, examples and experiences.