With an ever-increasing board-level focus on digital strategy, knowing how to effectively implement and execute a plan is vital to driving long-term business success. It’s not an easy task, but with many global companies that have already made the change, there are learnings that we can take from their experiences. To help shed some light on how businesses can embrace digital transformation, we invited Paul Willmott, Head of Digital McKinsey to share his insights gained from working with various senior executives.
Digital McKinsey works to advise their clients and, in 2013, Paul also led a major McKinsey research project on the economic impact of digitisation. Speaking at the third Freshminds breakfast seminar on this digital transformation topic (Read more on process building and delivering a plan), he took time to share emerging findings around what constitutes a sound approach to digital transformation.
“Stand-alone digital strategy shouldn’t exist at all.
Paul opened by inviting the group to challenge the principles of the digital transformation playbook, drawing from the insights of CEO interviews to deconstruct what he recognises as a flawed strategy.
First to come under scrutiny was the notion that a stand-alone digital strategy should exist at all; rather, a digital transformation should be an enabling strand of a business’s core strategy and applied there for immediate impact.
The common practice of identifying a single senior accountable officer is similarly flawed and, to be successful in driving meaningful digital transformation, businesses need to widen the stakeholder set. The incentive structure of the whole board should be configured around the delivery of digital transformation. When the mandate is extended across the wider board the cultural as well as the operational change needed to support this transformation, therefore, becomes more likely.
“If you can’t change the people - change the people.
One anecdote of a CEO at UBS highlighted a requirement for senior management to adapt and integrate to part of the change process. This leader took night classes, learned to code and shipped an app, all so that they could credibly lead from the front as the organisation changed around them. And of those who can’t or won’t make the change? Well, if you can’t change the people - change the people.
On the often contentious issue of investment for digital transformation, Paul was very clear – don’t let financial constraints dictate the scale or pace of change. Rather businesses need to quantify the size of the prize, and then use this as the yardstick for investment, not to figure out what they can afford first. The size of the opportunity, including the often significant opportunity cost of not driving effective digital change, should also inform the speed with which change is pursued; and CFOs should fund transformation accordingly.
Paul also urged the group to ignore the playbook instruction to use the technology around you, and instead to understand that technology is almost never the problem. Tech is almost entirely quick to build, readily available and with increasingly minimal upfront investment. Instead, look at how your existing tech may be encumbering the change process, constraining change and standing at odds with the goal.
“But what are your strategic aims?
Paul warned of making the mistake of listening too closely to your customer. Understandably, many digital transformation agendas are informed, at least in part, by the desire to delight the customer and businesses should never lose sight of this. But, in reality, your customer is actually unlikely to know internal advantages that your organisation may be able to leverage, and these should not be ignored. Keep the customer happy, but don’t lose sight of the strategic aims.
Agility and using this as a working methodology to drive digital innovation can also be misused or adopted in the wrong way. Unless understood and communicated clearly, being “agile” can be passed as a cover for accepting failure. Agility, it was asserted, should instead be interpreted as having appropriate planning horizons, and a commitment to testing and learning, rather than an acceptance of failure.
Paul encouraged the group to identify flagship projects within their own organisations and to quickly assign cross-functional teams ownership of delivery. With a competent scrum master, timely sprint cycles and demand for incremental gains, ownership of the project should be clearly held within the business, and the project is then more likely to succeed.
Furthermore, this approach would guard against a “centre of excellence” approach and rather let a shared culture of excellence develop – which is more likely to be both scalable and enduring.
The group highlighted digital transformation triumphs and tribulations they had encountered both as consumers and business leaders, from navigating new rail timetabling conventions, applying machine learning to vehicle value prediction, and the prospect of booking drone taxi rides. All served to highlight that there has never been a more pressing time to nail the digital transformation playbook.