Companies and leaders must take a holistic approach to get digital transformation right.
In 1816, French physician René Laënnec faced a problem. Traditional methods proved unsuccessful in diagnosing a woman with a heart disorder, so he rolled several sheets of paper into a cylinder, placing one end on the patient’s chest and the other by his ear. With that, the stethoscope was born.
Little did Laënnec know that his innovation — inserting an instrument between patient and doctor — would transform medicine. Over time, technical reporting from machines replaced traditional methods of deep inquiry in this same field. Human intuition and holistic evaluation increasingly took a back seat. What we now know as conventional medicine came to be about the disease, not the patient.
Today, there are innumerable medical technologies and specialists — and Big Pharma — available to help treat patients. However, while health care has provided immense good through its modern transformation, it has wrestled with several shortcomings, including making overly narrow diagnoses, addressing symptoms rather than root causes, and providing elaborate and expensive treatments. And these issues aren’t just contained to the health care industry.
Exemplified by the challenge of deploying effective multidisciplinary health teams, the shortcomings of health care transformation mirror the issues companies face in their digital transformations.
Too often, organizations with big digital appetites are focusing narrowly, overlooking chronic and systemic issues and making overly ambitious investments. You don’t have to look far in the business literature to see that we have a digital obsession.
Racing Into the Deep End With Digital
A decade has passed since the term digital transformation was coined, but it has taken a life-changing pandemic for digital capabilities to substantively alter how businesses operate. As a result, business leaders from every industry now feel the strategic necessity of investing in digital platforms, products, and services.
The upside potential is clear: With organizations slated to spend $6.8 trillion on digital transformation by 2023, they’re aggressively seeking to lower operational costs, accelerate speed to market, and unlock new opportunities. But companies also can’t afford to rush in blindly — the 70% failure rate (and associated costs) for digital initiatives is alarmingly high. Leaders and shareholders might crave near-immediate returns, but the path to digital maturity is an arduous one. Most companies’ digital capabilities, including cloud services, software development, cybersecurity, and the like, currently live in silos or are outsourced.
Companies and leadership teams need to be realistic about their expectations around harnessing this digital power in targeted and coordinated ways. Infusing digital capabilities into everyday business operations isn’t intuitive; it takes thoughtful design and change management.
To do digital transformation right, we can take cues from integrative and holistic medicine — disciplines that consider the patient’s totality, including mind, body, and spirit.
A More Caring and Comprehensive Approach
Unhealthy digital obsession has caused many organizations to blindly launch arrows into the night without genuinely understanding their aim. Commenting on organizations’ hasty digital investments and resulting waste, Transformant president Tony Saldanha said in a Forbes article, “Digital transformation is an ongoing journey, and you get there only by changing the DNA of the organization.”
Progress requires leaders to question the patterns, underlying structures, and mental models existent in a business. Here’s how to start.
1. Treat the business as a unified whole. As physicist and systems theorist Fritjof Capra said in May 2020, “Ecology has taught us that maximizing a single variable will invariably lead to stress and vulnerability of the system as a whole.” This sentiment rings true with digital business. Surging investment into a few digital capabilities to “transform” the business without doing the difficult, holistic integration work will result in failure. We’re not giving one-time booster shots. There’s no magic digital platform, acquisition, or talent base that will unlock new business success overnight, and bolt-on investments rarely stick.
Business and technology leaders should apply systems thinking to map and interpret the business as a unified whole, including all entities, workflows, and outputs. By drilling down to first principles and seeing the business as the interconnected, living ecosystem that it is, we can then ask, “Where can ‘digital’ help us create value?” Answers may include cloud-based business applications, “smart” retail experiences, AI-powered marketing analytics, or enhanced cybersecurity for critical assets. Once you rationalize where you’d like to apply pressure, choose the people, process, and technology levers to pull, and then begin orchestrating digital transformation.
Zooming out and taking a systems-based view of the business gives leaders the proper perspective on why, where, and how to infuse digital capability.
2. Make your digital “aim” outcome-focused and human-centered. Digital transformation isn’t about colossal technology upgrades or having world-class data analytics capabilities. It’s about relentlessly creating new value, for customers and yourself, through the careful application of digital enhancements. Getting there first requires a clear expression of the outcomes you seek to deliver. For example, you might want to provide a seamless omnichannel shopping experience or digitize supply chain management operations. Regardless of the specific goals in mind, desired outcomes should be FAST — frequently discussed, ambitious, specific, and transparent.
Separately, because neglecting organizational culture can be a major failure point for transformation, organizations need to understand the critical human touch points along the journey to a specified outcome. Here, it’s necessary to design process, tooling, and organizational enhancements with deep empathy for the people you’re serving. Effective and lasting impact comes only from human-centered design — immersing yourself in the lives of affected individuals and crafting your digital approach to fit their needs — rather than by indiscriminately implementing best-practice or off-the-shelf solutions.
3. Take an experimental, scale-later approach. Going too big, too fast with digital investments can prove disastrous. Most digital platforms fail, and fail quickly. For example, the Dutch telecom Veon had to scrap an ambitious digital platform, triggering 200 lost jobs and the closure of its London office. Finding a groove with digital investments takes time, and it may involve several iterations. The opportunity might be huge, but that doesn’t mean your digital bet needs to be proportional.
Companies can take a discovery-driven approach to test and learn rapidly in order to avoid betting the farm with expensive digital investments. An experimental mindset advocates microinvestments that enable digital value to spread across the business quickly and cost-effectively. For example, an organization might test and prove robotic process automation software for one finance process before rolling out a large platform for the CFO’s office.
Lastly, agility is at the core of digital experimentation. Adopting agile principles, coupled with a small but robust learning engine, gives business leaders critical insights into what is and isn’t working — helping them course-correct investments before hitting the “scale” button when something sticks culturally and technically. Numerous studies have shown that effective and durable digital transformation starts conservatively, by aligning the technology and human elements, before institutionalizing a capability as “business as usual.”
The pandemic has accelerated digital efforts for businesses across the globe, revealing the massive opportunity and value available to companies. However, leaders would be wise not to let this transformation be their undoing. Now is the time to take a step back to understand the organizational environment as a system, design for the proper human-centered outcomes, and experiment judiciously to reach your desired scale. Reframe digital transformation from executing a one-time endeavor to embedding it into the organization’s DNA.
ABOUT THE AUTHOR
Matthew Doan is a digital leadership coach, strategist, speaker, and host of the podcast The Rising Digital Leader. He’s also a leader within Boston Consulting Group’s digital practice and a term member of the Council on Foreign Relations. He is passionate about solving problems at the intersection of technology and human dynamics. His work, including his popular “Wednesday Wisdom” newsletter, can be found at https://matthewdoan.com.