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The Essential First Step Toward Digital Transformation

Credit from Jeff Rajeck

Many people wonder where they should start with a digital transformation programme. The most obvious place, since we are talking about ‘digital’ transformation, is technology.

At the event, Cummings argued that digital transformation actually requires five components all working together to be successful:

Strategy: So that everyone agrees where the transformation is headed.

Engagement: To ensure that everyone, not just the initiators, are on board.

Innovation: Because the north star of transformation should be progress.

Technology: To bring in advances from outside the organisation into the company.

Data & Analytics: Feedback from data and data-driven action plans make sure that digital transformation can continue on an ongoing basis.

If any of these pieces are missing, organisations risk encountering one of the many insurmountable obstacles to transformation.

So, before starting digital transformation, it is essential to determine who can hold all of these pieces together.

The trouble with driving it from any of the C-suites is that they are either constrained with fixed budgets (CIO, CTO), are not resourced for such an undertaking (CEO, CFO) or do not typically have the clout in the organisation to ensure that all departments are engaged (CMO, Chief Data Officer or CDO).

The department to help lead the change, therefore, should be one which has:

  • Flexible budgets

  • A well-resourced team, and

  • Existing relationships throughout the organisation.

According to Cummings, the one department which fulfills all of these criteria is human resources (HR).

HR and the start of digital transformation

One of the best ways to create this climate is to write and communicate an emotionally compelling vision of the future which Kotter calls “The Big Opportunity.” The Big Opportunity should highlight an exciting new direction for the company which, if everyone pulls together, will place the organisation in a better, stronger position in the future.

This forward-looking vision could be initiated by the CEO, CMO, or another senior executive, but without early and total buy-in from HR it will be difficult to communicate it company-wide and ensure it is well-understood throughout the organisation.

Ongoing digital transformation with HR

In order for The Big Opportunity to remain relevant, real change needs to start happening throughout the company quickly. Kotter’s model lists several changes that matter, including:

Forming a new, powerful coalition around the vision,

Empowering departments to act decisively, and

Making sure that change ‘sticks’ and becomes part of the culture.

Out of any one department in the organisation, HR has the reach and influence to make sure that each of these come to fruition.

Additionally, there is another, more significant change which Kotter claims may be necessary. In his more recent book, Accelerate, Kotter describes how the typical, management-driven hierarchies are ideal for delivering reliability and reducing risk.

But, he adds, that revolutionary change to an organisation (e.g. digital transformation), cannot happen if an organisation is focused on reducing risk.

The answer? Companies should setup a ‘dual operating system’ where the hierarchical management structure remains to run the business and a new, parallel network of employees who work outside of the normal reporting structure are responsible for innovation.

Perhaps surprisingly, this idea is not new. Xerox, the office automation supply company, has had two company cultures for decades. The hierarchical one is responsible for selling copiers and other machines and its Palo Alto Research Centre (Xerox PARC) is responsible for innovation.

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