Credit by Peter Bendor-Samuel
Why do digital transformations experience more failure and face more peril than companies anticipate? Why do they take far longer than anticipated? With apologies to Einstein, I believe we can understand the answers to these questions by viewing them through the lens of “GUT” – (General Unified Theory) of digital transformation – and how many related factors intertwine to increase complexity and complicate change. I’ll explain those factors in this blog and discuss how to navigate them so your company can minimize the perils of change and end up with a beneficial economic model.
The GUT Components
Imagine GUT as a wheel with the spokes of the wheel identifying the major components that must change in digital transformation, as follows:
1. Purpose, Vision and Mind-set. Put another way, these elements represent what your company tries to do. The purpose is what you want to achieve. The vision and mind-set are how you try to achieve it.
2. Talent Model. This component comprises the people your organization requires to administer and drive what you’re trying to achieve.
3. Technology. The main feature in this component is the digital platform that enables the activities involved in delivering your purpose.
4. Economics Model. The economics are the cost of your operations. This component relates to what you charge for the service you offer, your market share or your cost-benefit analysis.
5. Controls. This component is the governance your company puts in place to control regulatory requirements affecting your activities. It would include, for instance, how you ensure your digital platform complies with the GDPR privacy issue and other processes around security issues. Metrics are an example of these controls.
Those “wheel spokes” are the components that exist in any operating model. The General Unified Theory (GUT) says all five components are interrelated. The interrelated nature causes enormous changes in the rest of the components.
Why Digital Transformation Is So Fraught With Problems
Imagine the wheels pinning - that happens in digital transformation from changing a component.
You might change a component because of an acquisition, change in purpose, increased competitive pressure or needing new technology that enables different activities or behaviors. Changing a component necessitates changing the other components. When you change any of these components, the economics change.
The components change in ways that are difficult to anticipate because of their relationship to each other because not all the complexities of the relationships are known or foreseeable. Thus, you must iterate your way through the changes to fully understand the ambiguities.
When a company changes so many components at the same time, it makes for a lot of institutional pushback. This degree of change is so difficult to work through and accommodate because it's so far-reaching, so deep and broad, and there will be resistance.
The complexity of the interrelated nature of the change is why digital transformation take so long to complete.
How To Navigate The GUT
The purpose is normally expressed as a customer experience or an employee experience.
If you express your company's purpose for the transformation as the customer or employee experience, it galvanizes the rest of the organization and allows individuals to understand how to apply it to what they do.
You will need to determine whether you can reuse existing talent, reshape the existing talent, whether you need to adapt and bring in additional talent to meet requirements of the new operating model.
Keep in mind that not delivering a great customer experience or employee experience will cause a digital transformation to fail.
Framing the transformation according to the experience helps people focus on goals involved in achieving the changed purpose and operating model.
A primary transformation activity involved in evolving your technology is assembling or building a digital platform that enables the great customer or employee experience.
Framing your purpose in the experience, you can identify which existing pieces of the technology you can still use, which pieces you can repurpose, which technology no longer fits with your new purpose and must to be replaced and what additional pieces of technology you need.
There are often new pieces of technology that are necessary to achieve yournew purpose - cloud or analytics, for example.
Companies consistently find that any major introduction of digital technology inevitably leads to changes in talent requirements, new controls, new metrics and often new organization structures.
A helpful hint that makes managing all this change much easier is to start the journey by focusing on the customer or employee experience and work backwards to identify the changes needed in the technology estate, talent pool, policies, and organization.