Your Playbook to Digital Transformation

Digital Business Transformation concept with arrow of compass (3

Reach for the Future

Nearly every business is impacted by digital transformation.

The key question for leaders is how to overcome the pull of the past to reach for the digital future. The authors of Digital@Scale: The Playbook You Need to Transform Your Company have developed a playbook based on years of McKinsey experience and research.

I recently spoke to author Anand Swaminathan, Senior Partner in McKinsey’s San Francisco office, about the book and his work in the area of digital transformation.

 

“Change is the end result of all true learning.” -Leo Buscaglia

 

3 Barriers to Change 

What do leaders need to know about identifying the barriers to change?

In our experience, executives face a fundamental conflict: Change requires a sense of urgency while highly-efficient organizations tend to have high levels of inertia. When business is going well, managers and employees generally only pay lip service to change requirements. Knowing that, there are three barriers we’ve identified:

  1. The good is the enemy of the better: Efficient, currently successful organizations often slow down the necessary change: Why cannibalize what is successful today? Why destroy efficiency gains of a ‘well-oiled machine’?
  2. Watch out for your top team: Ironically, today’s most successful managers might be the ones slowing down your transformation efforts since they have the most to lose. Transformation needs to start with the person at the top, and it’s often those who have grown accustomed to success that find it most difficult to change course.
  3. Your DNA takes time to change: Don’t underestimate the time and effort required to change deep-rooted mindsets and ways of working. Your legacy business exerts a natural gravitational pull that will stop all meaningful change unless you’re persistent and change at enough scale to break through

 

“Transformation is often more about unlearning than learning.” -Richard Rohr

 

What is the role of the CEO when it comes to digital transformation?

The successful digital transformations we see out there have one common denominator: the CEO spearheading and promoting the digital transformation. They are making it front and center of their personal agenda. Only if change is demonstrated and exemplified by the top management will the necessary changes to structures, processes, management instruments, as well as the establishment of new skills and new IT systems, be successful. That can mean using new technologies, challenging existing ways of doing business, and making the bold decisions necessary to change the trajectory of the business.

 

Assess Your Readiness

How can management assess the current strategy of the company and its readiness for digital transformation?Digital@Scale book cover

That’s two questions. The first is understanding your strategy, and that requires looking at sources of value – where they’re created in your business and in your sector. Most important, you need to look at where sources of value are being created outside of your sector – that’s where some of the biggest changes (and challenges) might be happening.

Then you need to look at where you are today and what needs to change. There are lots of assessments and diagnostics out there, but you need to take a cold-eyed view of where you are as a digital business and what needs to be in place to drive value at scale. As an example, we have developed a comprehensive benchmark to derive a company’s Digital Quotient (DQTM), road-tested with several hundred organizations across the globe. It helps leadership to take stock compared to best practices across sectors and within its own industry.

In addition to the benchmark, some questions that management should start with to determine the urgency and their organization’s readiness for change include:

  • Are we assessing whether we can use our strengths to penetrate completely new industries within the current rules?
  • Are we actively creating an ecosystem of partners, customers and suppliers that will last into the digital world?
  • Have we defined a feasible timescale and meaningful KPIs to reliably measure success or failure?

 

“Transformation literally means going beyond your form.” -Wayne Dyer

 

Break the Silos

A Leader’s Role in Achieving Excellence in Execution

Leadership execution
This is a guest post by Robin Speculand, author of Excellence in Execution: How to Implement Your Strategy. Robin is the founder and CEO of Bridges Business Consultancy and creator of the Implementation Hub.

Don’t Lead by Example

To guide an organization through the execution of its strategy, leaders… don’t lead by example.

In strategy execution, leaders are responsible for driving the strategy forward and championing the direction the organization is heading. This involves, for example, reviewing progress, coaching people, resolving issues, and ensuring the right outcomes are being achieved. Leaders don’t lead by example as they don’t implement strategy; their employees do.

Before you even start your strategy execution, the odds are stacked against you as more fail than succeed. I have seen from my seventeen years consulting in this field that leaders are guilty of delegating the execution and not paying adequate attention to it. When leaders do this, their people also stop paying attention to it. McKinsey & Company stated that, “Half of all efforts to transform organization performance fail either because leaders don’t act as role models for change or because people in the organization defend the status quo.”

 

Show Confidence in the Strategy

If leaders perceive execution as an interruption to the business, they will not drive and champion it.

Anything short of embracing a new strategy and its execution by leaders can be seen by employees as a lack of confidence in the strategy itself. That feeling will spread throughout the organization.

  • If you only apply lip service to the execution without championing it, employees will sense the lack of commitment and not step up; the execution will fail.
  • If you don’t create the time to oversee the implementation journey, change the agenda and explain why the organization needs to transform, then employees will sense the lack of commitment and not step up; the execution will fail.
  • If you don’t set the strategy and create the budget to allocate required funding, employees will sense the lack of commitment and not step up; the execution will fail.

 

Booz and Co. Survey: 53% don’t believe their company’s strategy will lead to success.

 

A key question to consider is:What are you willing to do to execute your organization’s strategy?”

In contrast, strategy execution progresses when leaders support their comments with time and actions. Because only so much can go on a leader’s radar, he or she has to carefully select which actions will best drive the execution forward and where to invest their time.

Booz & Company surveyed executives from around the world on the results of their organizations’ strategic initiatives. Given more than 2,350 responses, the findings suggest a high degree of disillusionment, including:

  • Two-thirds (67%) say their company’s capabilities do not fully support the company’s own strategy and the way it creates value in the market.
  • Only one in five executives (21%) thinks the company has a “right to win” in all the markets it competes in.
  • Most of the respondents (53%) don’t believe their company’s strategy would lead to success.

If leaders don’t believe in the strategy, they will never be authentic and sincere in executing it.

 

PWC Survey: 55% of CEO’s state lack of trust is a major threat to growth.

 

Demonstrate Increased Commitment

How an Interim CEO Saves a Company in 9 Steps

This is a guest post by Richard Lindenmuth. Richard has been an Interim CEO in a number of industries. He has over 30 years general management experience in operations and is noted for his comprehensive execution skills. Lindenmuth is Chairman of the Association of Interim Executives. He is the author of The Outside the Box Executive.

I’ve led major corporate transformations and turnarounds for decades — taking ITT and 12,000 employees through deregulation into record profits; overhauling Styrotek, a California agricultural packaging company, in 3 months during a drought. That’s the job of an Interim CEO: to parachute in, rebuild a jumpy staff’s trust and engagement, and manage profound change. It takes a unique skill set, but as I wrote in my new book, The Outside the Box Executive, extreme leadership is really leadership, just the condensed version: there are lessons for everyone.

 

“Leading by proxy is not leading.” Richard Lindenmuth

 

Here are my 9 steps for saving a struggling company:

 

9 Steps for Saving a Struggling Company

 

1. Hit the ground leading.

Don’t ask permission to start making decisions and forming strategies: do it. The Board brought you in to do a job. And don’t dispatch a group of VPs to speak for you. Leading by proxy is not leading, particularly in today’s business culture, where transparency matters (for good reason).

2. Get out of your office.

To learn about a company’s daily operations, its staff (good and bad), and its problems and challenges, you have to get out there. Don’t hide behind your desk. Walk the halls and let everyone see you.

3. Talk less, listen more.

I recommend active listening, in which you repeat back what someone tells you, and continue that cycle until you reach common ground. It forges mutual respect, paving the way for the honest opinions and information you need for your own due diligence. While an Interim CEO draws from outside experience to set direction and strategy, listening creates the necessary knowledge base.

4. Do your own homework.

No CEO is an island.You’ll need a team of the best and brightest to rely on, but forge your own impressions and make your own judgment calls. That way, when someone’s not being entirely above board, you know it. That’s how I stopped a damaging game of politics at one firm: I knew the difference between reality and rumor.

 

“A floundering company is a dangerous behemoth.” Richard Lindenmuth

 

Orbit Shifting Innovation

 

How do you create the type of innovation for the history books?

Why did record producers reject Queen’s Bohemian Rhapsody?

What are the 8 enemies of innovation?

 

After twenty years of research in the field of innovation, Rajiv Narang and Devika Devaiah authored a terrific book, Orbit Shifting Innovation.

If you’re interested in small shifts, slight improvements, and new versions of an existing product or service, then you can pass.  Orbit shifting innovation is all about huge, disruptive, groundbreaking transformations.  With an orbit shifting innovation, history is created.

I had the opportunity to ask Rajiv and Devika about their work.

 

“Innovation distinguishes between a leader and a follower.” -Steve Jobs

 

Experience An Orbit-Shift

 

Your new book is the result of 22 years of work in the field of innovation.  Would you define “Orbit-shifting innovation” and share an example?

Orbit-shifting innovation happens when an area that needs transformation meets an innovator with the will and the desire to create, and not follow, history.  At the heart of an Orbit-shifting innovation is the breakthrough that creates a new orbit and achieves a transformative impact.

 

There is nothing called a saturated market, just saturated mindsets.

 

Orbit-Shifting Water Purification

 

The Swiss firm Vestergaard Frandsen has developed an Orbit-shifting product that is and will continue to have a transformative impact in areas where there is a pernicious shortage of clean drinking water.  The entire water purification industry is locked into the mindset ‘Purify at the source and then drink.’   So bottled water is purified at the source or in factories, and then supplied through retail to consumers.  Home water purifiers either have pre-purified water dispensers or purify the water which is filled into containers (jugs and bottles) and then dispensed.  LifeStraw broke this industry mindset by making it simultaneous: purify as you drink.  The real shift that LifeStraw made was not in miniaturizing the system; deploying technology to make it smaller, sleeker and speedier is a given in the natural progression of development and growth.  It is the delivery mechanism in the format of the straw that changed the game comprehensively.  By putting a miniaturized system into a straw, LifeStraw broke the mental-model boundary from ‘purifying and then drinking’ to ‘purify as you drink’ (Vestergaard Frandsen).

LifeStraw

You can literally drink water from any source:  This straw filters 99.9 per cent of water-borne bacteria and parasites.  A single straw costs about US $6.50 and filters about 1,000 liters of water, which is enough for one person for one year.  This has bought potable water within the reach of millions of people for whom traditional water purifiers or bottled water is simply not affordable.  Vestergaard is truly saving lives with this Orbit-shifting straw by safeguarding against waterborne diseases, which are among the commonest sources of illness.  No wonder then, it has been named LifeStraw.

What’s more, Vestergaard was originally a clothing company in the fabric industry.  And yet fabric became the trigger, rather than the boundary, to create the LifeStraw – its central component is a cloth-based filter membrane.

 

“Imagination is more important than knowledge.” -Albert Einstein

 

The Enemies of Innovation

 

I’m interested in your view on the enemies of innovation.  You point to a survey by Business Week and BCG that identified the enemies as:

  • lengthy development times
  • lack of coordination
  • risk-averse culture
  • limited customer insight
  • poor idea selection
  • inadequate measurement tools
  • dearth of ideas
  • marketing or communication failure

And those “enemies” would be the expected ones.  You, however, say that all of those are really manifestations of something much deeper.  What is it?

From our experiences in ‘Making Innovation Happen’ with over 250 Orbit-shift projects over the last 20 years, we find that these are not the real enemies, these are merely symptoms. The real enemy is the underlying mindset gravity.

02fig2Mindset gravity conditions and limits even the most brilliant teams and organizations, layers of invisible constructs and beliefs that unknowingly limit the thought spectrum, reduce the exploration space and stifle new possibilities.

Most organizations and teams have a tendency to settle into an orbit that works, that is reasonably successful, that is fairly predictable and one that minimizes uncertainties.  The more settled an orbit, the greater the desire to cling to it – the greater is the accumulation of gravity – gravity that prevents a move into the next orbit.

 

We need to hire mavericks; only people with this kind of a rebellious attitude can come up with innovative ideas and see them through to the end.

7 Triggers That Can Transform Your Business

Image courtesy of istockphoto/RomanOkopny

Daniel Burrus is a world renowned business strategist, futurist and technology forecaster.  He is the CEO and founder of Burrus Research, a firm that helps spot trends for clients to take advantage of coming market forces.  His latest book Flash Foresight is a New York Times and Wall Street Journal bestseller.

In his book, he outlines seven principles of transformation including:

1. Start with certainty

2. Anticipate

3. Transform

4. Take your biggest problem—and skip it

5. Go opposite

6. Redefine and reinvent

7. Direct your future

You provide seven triggers for users to pursue to create their own flash foresights. What’s the history of the development of these triggers?  Which came first?  Did you end up discarding or merging other potential triggers?