I’ve written a lot about digital transformation, but it can be a somewhat tangential discussion.
So, I thought I’d try to cover 26 different angles with this 2,500 word A-Z of digital transformation.
Let’s begin with a word many love to hate.
Agile used to be a project management methodology but thanks to Oreo (and others) has been co-opted by many with its meaning being diluted.
Here, Paul Boag looks at The Guardian’s agile working processes, a great case study for an organisation adapting to digital within a disrupted, even declining industry.
The Guardian experiments constantly, using data to drive design.
“Digital requires a huge range of skills and that requires close collaboration. The old waterfall process of handing off work from one person to another doesn’t work in a digital world.
“It is crucial that all team members sit and work together, and that decisions are not made without the whole team’s agreement. If this does not happen it is all too easy for a designer to create an impractical design. Or a developer might build a content management system that content creators don’t understand.
“This is where agile is so useful as a project management approach. It forces teams to work in a close collaborative fashion. Even if you do not adopt all the principles of agile, ensure your team are working together.”
Breaking it down to the nuts and bolts, the first stage of digital transformation is the process of setting a benchmark for an organisation.
This can be done through a capability audit, skills assessment or a strategy review. Getting some idea of where a business lies on the scale of what’s possible in the market (or indeed in more innovative markets), allows understanding of change requirements for people, processes and technology.
Of course, there are many companies that help organisations with such work, including Econsultancy, but first the organisation must decide whether this work is something they can do in-house, or if an outside perspective is needed.
The most common theme of digital transformation is that it should be customer-led (driven by your audience needs).
This is largely through a focus on consistent, personal and enjoyable customer experiences (in multiple channels), enabled by consolidated customer insight, all backed up by a flexible technology stack.
As customer experience touches upon many parts of the business (comms, fulfillment, payment, customer service, marketing, design, I.T. etc.), it’s clear why digital transformation require collaboration across the organisation.
The chart below, taken from Econsultancy’s Digital Transformation in the Financial Services Sector report, shows how serving/delighting the customer is a focus for differentiation in financial services (with price at the bottom of the pile).
Over the next five years, what is the primary way you will seek to differentiate your comapny from its competitors?
Much of digital transformation is modelled on the startup culture of Silicon Valley.
Tech companies that have grown to enormous valuations are often noted for their transparent culture.
What this means from an engineering point of view is unfettered access to data and code (as long as you leave it in the state you found it), and, of course, people with the skill to manipulate these.
It’s a fairly obvious point in 2015, but connecting customer data sources and empowering staff to dive in for insight is an important part of product development and digital optimisation.
Each year at Econsultancy’s Digital Cream event (roundtable discussions between marketers), the need for education is namechecked at the digital transformation table.
This is the theory that every part of your business, even those that notionally do not have a digital output, should understand the digital side of your business.
That might be understanding your own digital products, the theory behind your customer acquisition strategy, or best practice customer service.
Digital training for ‘non-digital roles’ was cited as a high or medium priority for only 27% of marketers we surveyed in 2011. By 2013 this had increased to 40%.
Fail fast. Test and learn. Iterate. More terms from the world of engineering and product development, and ones that firmly apply to I.T. in a transforming organisation.
Part of the attraction of the innovation lab is the ability to create a new tech stack, one that is quicker than the legacy structure managed by I.T. and allows teams to work quickly in sprints.
Government Digital Service
The poster child of digital transformation.
GDS and its standard of ‘digital by default’ has continued to transform the UK Government’s websites and move from a publishing to a transactional model.
Digital experiences are shaped by digital and design principles, and backed by a clear digital strategy.
Moving various Government websites to the GOV.UK domain involved creating or updating 120,000 pieces of content and training more than 1,000 people in user needs, writing for the web and how to use our publisher tool. All of this was documented through GDS’ blog.
For more on GDS, see the following posts.
- How the GOV.UK team future-proofed its web strategy
- 10 insightful GOV.UK blog posts on service design
- The Government’s website is better than yours
- The digital beauty of GDS
Common barriers to better digital experiences include regulation (in industries such as Financial Services), legacy technology (which takes time, money and expertise to replace) and a skills shortage (in specialisms such as engineering and data science).
These barriers can only be removed with investment and cultural change, two big factors in any digital transformation initiative.
Innovation labs are springing up faster than ever, from Manchester United to Ryanair. The aim is to incubate digital excellence, giving the company space to come to terms with a cultural shift, and the lab the freedom to create (and fail).
This separation allows a lab to target a desirable location and create a working environment likely to attract talent.
Labs are usually set up with product development as the main goal (such as Hive within British Gas).
Digital job descriptions are changing as a result of digital’s journey to every branch of the organisation.
New roles are emerging, such as Head of Programmatic. Skills diversification is taking place, meaning specialists must have key functional skills and work with other teams.
Organisational structures and reporting lines are changing, so a Head of Analytics may be manager to CRO specialist that sit in different departments.
Finally, more roles are moving inhouse. All this means your job descriptions need to attract the right people, not be a list of tasks or a pipe dream.
See our Digital Job Descriptions template.
The fear of losing control can cause tension in organisations as they restructure and restaff.
Ensuring employees always have KPI-level goals to work towards (which influence the rewards they see), will help to arrest this fear.
Recognising individual effort and ability sits alongside a shared P&L (and, of course, a shared customer) that ensures different teams are marching to the same beat.
Long-term value creation is the goal of digital transformation. Prioritising long term value over short term revenue creation is difficult for many businesses focused on month-end targets.
However, businesses investing in product or service development have shown how new revenue streams can be created or a competitive advantage achieved.
Management (without puppies and rainbows)
Management during cultural change sometimes requires tough decisions. Fires are as important as hires, according to Jack and Suzy Welch, writing in Fortune.
“Soft culture matters as much as hard numbers. And if your company’s culture is to mean anything, you have to hang — publicly — those in your midst who would destroy it.
“It’s a grim image, we know. But the fact is, creating a healthy, high-integrity organisational culture is not puppies and rainbows.”
Norms are defined by the culture of an organisation and vice versa. Changing norms can have an impact.
That might be macs instead of PCs, casual dress instead of business attire, and open-plan offices.
These things may seem inconsequential but can help change company culture and engender transformation.
In his approach to digital transformation at Travelex, Sean Cornwell talks about fixing ‘broken windows’. This refers to the theory that broken windows set the norm for a neighbourhood, and encourage more crime.
Similarly, setting those norms based on employee freedom and empowerment can have an effect.
Outsourcing (or, rather, in-housing)
There are clear trends for the types of functions outsourced by businesses (e.g. web design) and those done in-house (data and analytics, email, content production).
Planning to outsource a function or bring it in house is dependent on skills present within the business. Arguably, generalists are required to manage agency involvement, and specialists to perform a role in-house.
Companies going through successful digital transformations are often keen to bring everything in-house (at least within an innovation team), allowing for easier collaboration, iteration, and understanding of company culture.
Chart: Which areas are you most likely to do more in-house over the next couple of years? (from Econsultancy’s Insourcing and Outsourcing report)
Seldom do digital transformation roadmaps include personality types, but the role of transformation leader is certainly a fine balance.
Changing culture, being granted a big budget, sounding different, taking a position beneath the CEO, all these things can lead to resistance from the workforce.
It’s important for new product teams and digital specialists to stay hungry but humble and not walk around as if the future of the company depends on them.
Culture is a hard thing to define (and hence to change, which is often needed to transform a business). Culture can be anything from emulating the founder of the business, to espousing customer service, to adopting the ‘fail fast’ mentality.
I brought together 17 quotes attempting to define company culture. My favourites were from Mike Bracken, former head of digital at Government Digital Service.
“..to ensure that [data scientists, information architects, technical architects, product managers, service managers, software engineers, designers of all types, user researchers and delivery and test managers] can operate to their full potential, the people and organisations with which we work must be imbued by the culture and ethos of the web generation.
“This means they understand that what used to be hard is easier, and what used to be expensive is cheap and becoming cheaper. But above all they must understand that the challenge now is not about information technology, but about designing, developing and delivering great, user-centred digital services.
“We need fewer meetings between large budget holders to discuss procurement, and more stand-up meetings and daily releases based on user need. Or in short, we can do much more, more quickly by using the web, and digital tools and services internally, to collaborate.
“..In short, we are not just on the web, but of the web. And our culture and governance must reflect that.”
Here’s an example from Travelex showing the split between capabilities (the initial focus), products and initiatives.
Note the dotted line showing planned reduction in revenue share coming from core business products. This diversification is a product of prioritising long term value.
The theory of organisational structures is a good way to assess the digital maturity of a business.
A transforming business tends from isolated digital departments through to digital experts in every team, or indeed, digital knowledge as one facet of the generalist’s skillset.
There’s no doubt that attracting the best talent is vital for innovation.
This talent grab has led to a significant shift in tone from HR. Recruitment is now about emphasising culture and personality before the specifics of skills.
The rise of the innovation lab can be partly explained by a talent shortage, with labs often situated in capital cities (and apeing the freedom and fun of startup culture) in order to have access to the deepest pool of talent.
User testing is a well-established part of digital service design, but it’s even more important for companies undertaking a user-centric digital transformation.
Though market research can’t always tell you what a customer wants, user testing can quickly scupper a new product, or (hopefully) allow the iteration of a prototype.
Once again, I refer back to GDS and point you towards its user testing blog.
Language is an important agent for cultural change. In the words of Sean Cornwell from Travelex, you should ‘talk about speed, agile, failure, new capabiltiies, ways of working and collaboration like it’s going out of fashion’.
The grand cliche of agencyland – table football will make everyone more innovative.
In reality, there is a science to open-plan offices, with Harvard Business Review (and Marissa Mayer) pointing to random interactions with colleagues as advantageous to the bottom line.
For more on that study, and other nuggets, see ‘Why workspace design is important for digital transformation‘.
Okay, I had to squeeze an X in here.
The point I want to make is that digital transformation as a term in itself can be misleading. There’s no template cure. No process can be copied exactly (Xeroxed) between organisations.
Much like a plot from Fraggle Rock, every business must learn to play its own tune.
Other photocopiers are available.
If you want a yardstick for your own digital transformation, why not judge yourself against some of the companies we have profiled on the Ecnsultancy blog.
Some are right in the thick of it, and others are coming out the other end with new products and services.
- Axel Springer
- BBVA Bank
- British Gas
- Cancer Research
- The Economist
- Manchester United
- Marks and Spencer
- Resorts World
- Standard Life
- William Hill
Zany job titles
Do you need a Chief Digital Officer, a Head of Digital Transformation or a Chief People Officer?
Each of these job titles causes debate but each indicative of digital transformation at various stages.
Whilst some argue that the title of CDO marks digital out as a siloed part of a business, rather than suffused throughout, practically they seem to be proliferating.
Ashley Friedlein broke this role down into two types, the evangelist and the transformer. One starts the job of transforming culture by championing digital, the other is intent on changing people, process and technology, and is generally set on a trajectory to CEO.
The Chief People Officer has emerged from an increased focus on company culture. The CPO represents the workforce on the board, concentrates on employee retention and fosters accountability and intimacy.
BuzzFeed and The Civil Service are notable examples of organisations that have appointed a Chief People Officer.
video by LondonVideoStories