What makes a good digital transformation?

‘Firstly, let's scrutinise the claim that most digital transformations fail. This grabs headline attention but is not reflective of my experiences from working within transformations’, begins Dr Warr. ‘I have seen several research studies that suggest that around 80% do not achieve the outcomes expected at the beginning of the transformation effort. But that isn’t the same as ‘failure’. From my research and practice, it is too simplistic to define a digital transformation as a success or a failure - outcomes are more sophisticated and certainly more nuanced. 

Transformation: success or failure?

Some transformations deliver what was intended in the time and resource expected. Others deliver less than was hoped for or take longer or are more expensive than forecast. In my experience, few digital transformation projects are actually defined as ‘failures’, even when they do not deliver. In organisations, success is not always achieved the first time; instead, the first efforts pave the way for further, later efforts to deliver the expected benefits.

Success is also multi-dimensional with at least two key dimensions dominating - these being the extent to which the intended business outcomes were achieved and also, the extent to which the organisation improved its capabilities to conduct future transformations. Digital transformation initiatives should ideally be aiming to achieve both of these dimensions.

The optimists and the enthusiasts

The sort of people who lead or join digital transformation efforts are optimists and enthusiasts. They are often innovators and pioneers by inclination. They bring almost naturally what is called ‘optimism bias’. They underestimate the challenges and risks and they overestimate the speed and size of the benefits to be realised.

A narrow discrimination of digital transformations into those that achieve what was planned and those that fall short can miss this point, that the transformation can be perfectly executed but if the stakeholders were overly optimistic, the outcomes will be disappointing.

Daring to climb the learning curve

They will have learned from their efforts what the real costs, benefits and risks are and can factor that into further transformation efforts. They have climbed a maturity or experience curve. My own research found that an organisation’s maturity in the technologies being used for transformation is a very strong determinant of its success at digital transformations.

Sometimes, the only way to develop an industry-leading maturity is through painfully climbing a steep learning curve. Buying-in or otherwise acquiring generic capabilities still leaves the work needed to localise those capabilities to the specifics of the organisation, its services, customers and markets. That painful climb is often punctuated throughout with noble failures.

People are the key to transformation

All too often, executives from a non-technical background will say ‘people are the key’ in order to downplay the technology and management science dimensions that are also necessary for a successful digital transformation. If getting the right people was all that was required, then we wouldn’t have spent four decades wrestling with this problem.

Other keys include an organisation’s maturity with the technologies involved as mentioned already. Also, the vision, strategy and business model are key to high levels of success. Programme and project management and benefits realisation planning have been another key that we have made great progress on.

I also found that organisational politics is another key, whereby high levels of politics inhibit dramatically the likelihood of success. The many research studies conducted on what drives digital transformation provide a rich picture of many factors contributing to the level of the success that was ultimately realised.

People and people factors directly influence the outcomes of digital transformation initiatives. The capabilities and behaviours of the business sponsor, transformation leader and transformation team have a major influence at all stages from ideation through implementation and into embedding the transformation.

Those external to the project team but significantly involved also have influence. All have the potential to influence positively through supporting the changes underway or negatively by resisting the changes or deflecting the changes into forms more to their liking.

What you need is the best people...

It may seem that there is no harm in trying to achieve the dream team led by a superhero transformation leader who comes with a long record of success in the very transformation the organisation is seeking to implement.

But I have seen this lead to the transformation project losing momentum, as an organisation spends a year working its way through several recruitment cycles before finding a candidate with a rare CV that claims all they included in a long list of must-haves in the person specification.

In my experience, maintaining momentum is always key in any change initiative - transformational or BAU - and that is achieved with a pragmatic approach that recognises that most of the transformation effort will often come from existing staff.

People can be upgraded with training

Somehow UK organisations seem to have lost the appetite to hire or allocate good people that may be missing some of the capabilities needed and then onboard them into the transformation project along with the skills training needed for their new roles.

Instead, they go out to the recruitment agencies with a long list of specific requirements ideal for their unique project and then conclude that there is a skills shortage and that government or universities or someone else should be doing something about it.

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Most transformations will involve technologies or services, or business models that are new - and so finding experienced talent that is ready and willing and affordable is unrealistic. Long term investment in developing digital transformation skills across the organisation is by far the best approach.

There are advantages that come from selectively hiring consultants or external talent that can bring an independent viewpoint into a transformation, but for most significant transformations, the lion’s share of the change capacity will come from within.

The best way of attracting talent is not to lose it!

We have been seeing a significant reduction in time in post for these roles and especially for technical roles in the digital transformation area. This is not all bad because as technical talent moves from company to company it accumulates knowledge and skills. But for the organisation, the combination of digital skills and local business and technical domain knowledge is lost immediately.

This perhaps explains why the consultancies in the UK are playing a major role in the provision of this short term transformation talent. They played a massive role in the pandemic response in transformational projects like Track and Trace. It is the one source that senior leaders can turn to for transformation talent that is well trained, motivated and talented, albeit at a day rate that they would rather not have to take on.

Use the BCS tools available

My observations on HR recruitment functions in our larger organisations may be partial but it is that they are doing a terrific job of trying to attract talent, whether graduates or apprentices through to experienced hires. But, often, recruiters are rarely from a STEM background themselves and I wonder how well they really understand the digital transformation roles they are recruiting for. And the use of IT specific resources like BCS’ SFIA skills framework seems underutilised.

Without doubt, the digital and IT apprenticeships in which BCS has played a leading role have been a positive development - although this needs to expand as digital apprentice numbers are not growing in line with rising demand.

What are the best IT transformation skills?

In the late 1980s, BCS conducted ground-breaking research with the Centre for Research in Information Management at Oxford University, led by Professor Michael Earl. It discovered that people with hybrid skills in both digital / IT and business brought huge advantages to digital transformations.

My observation is that this finding has held throughout the various waves of IT-enabled transformation - that either through individuals being hybrids or through the composition of the transformation team encompassing individuals from both IT and business specialisms - a hybrid of technical and organisational skills remains essential to success in digital transformation. 

Experience that’s more than qualifications

For initiatives that are truly transformational, there is an additional set of skills and behaviours that are needed. There is a darker side to transformation. It has existed forever and was eloquently described by Machiavelli in his famous book of advice for leaders called The Prince. He observed that there is nothing harder than to change the order of things because you get the lukewarm support of those who will gain and the undying enmity of those who will lose. For digital initiatives that are truly delivering transformations, Machiavelli’s advice applies.

So, those involved in such transformations, and especially those who lead them need the skills and characteristics to work in such brutal environments for the long haul. Skills such as change management, political skills and stakeholder engagement are essential, along with personal characteristics such as resilience, self-awareness, commitment and personal regimes for recharging and dealing with burnout.

Transformation is also about the tech

Consultancies are reporting that the world’s major organisations are emerging from the pandemic with radical ambitions for digital transformation. This makes complete sense as a set of technologies have emerged that individually are transformational, but collectively are revolutionary. AI, low-code automation, 5G, AR, IoT, blockchain, quantum are all coming into fruition together.

Almost all futurologists and privileged observers such as business academics and consultants are predicting massive changes from technology over the next decade with around 40% of all jobs in advanced economies being replaced by AI-enabled technologies. It offers the prospect of radical improvements in almost every aspect of our organisations and societies. But this also comes with compensating growth in employment in new AI-enabled jobs and industries meaning 50% of all current workers will need reskilling.

We recently saw the pandemic drive transformations in working from home and in services like remote doctor consultations in healthcare. These revealed how much underlying potential there is that is unexploited - held back by the lack of skills or awaiting the leadership vision needed.

Digital skills and digital transformation skills will be critical to realising the transformations that should herald a new level of productivity across economies and will also play key supporting roles in tackling the grand challenges such as global warming, conquering diseases such as cancer and bringing the world increasingly closer together. That we are short of such digital skills is something that governments are concerned about, that organisations are experiencing and that BCS is working hard to address.

That everyone will need such skills to some extent, from basic personal digital skills to access most services in a digital society, to the hard-won digital transformation leadership skills to make the massive changes happen, is hard to argue against. So how big a difference can digital transformation talent make? Perhaps as big as it gets...