Four things about #digitaltransformation

I’ve been thinking for more than 25 years about how companies, services and the internet interact. I was director of strategy for the Government

Digital Service when we made the UK government substantially better at the internet. I’m an advisor for a bunch of ‘digital’ startups.

And I’ve no idea what people mean by ‘digital transformation’.

So I thought it might be useful to explore a couple of definitions, and think about why it’s so hard and why you’re going to have to do it anyway.

Michael Slaby, who made the Democratic Party election machine digital for Barack Obama, described it like this: “It’s not complicated, it’s just hard.”

He’s right, but that doesn’t really capture just how hard.

1. It’s a battle just to get to square one

There are two definitions of digital transformation I like.

The first is from Tom Loosemore, who also worked at GDS: “Applying the culture, practices, processes and technologies  of the internet era to respond to people’s raised expectations.”

The second is from Giles Turnbull, also of GDS. He describes it as “catching up with the real world”. These two equally effective definitions highlight the problem. Loosemore’s highlights the scale of the transformation required – everything about your organisation  will be involved: cultures, practices, processes and technologies. It’s not about changing your marketing, it’s about changing everything. Turnbull’s definition points out that all you’ll be doing is catching up with reality – the reality that, for most people, you should be doing this stuff already. Google and Amazon can do it. Why can’t you?

The problem, of course, is that catching up with digital era businesses means starting again. Starting everything again. You can’t transform  by starting a digital lab or buying a startup. As Antony Jenkins, former Barclays CEO, puts it: “Setting up an incubator  is not a sign of fighting back. It’s just a more sophisticated form of denial. Buying a fintech is not enough of a response either, because they’ll buy this fintech, and impose all of their governance requirement and budgeting and so on, and suddenly the thing dies. It gets overwhelmed by the parent.”

2. There’s no one to copy

There’s a legendary episode of the radio show This financial incentives, despite having people on board who knew how to do it, GM could not, or would not, learn those lessons. Senior leaders were unwilling to risk loss of status and disruption  to ‘the way we do things around here’, and preferred  instead to drive the business to the edge of bankruptcy.

That kind of change is easy versus remaking most large organisations as digital ones. That’s why it doesn’t seem to be happening. Work in this area for very long and you find yourself being asked for examples of large organisations that have successfully remade themselves. Boardrooms want to follow best practices, but there don’t seem to be any. 

If you want examples of businesses that have encountered the internet and been radically transformed, the best ones I can think of are Borders and Blockbuster. And presumably you don’t want to copy them.pe

3. It’s a leadership problem

If there was a GCSE in being a CEO, there would be a module on finance, one on HR, one on corporate strategy and governance, and an optional paper on whatever industry your business happens to be in.

There would be nothing on technology. Most CEOs know it’s important but don’t actually know anything about it. 

They can look through a financial report and tell if it’s healthy or if something smells fishy. They can’t do that with a technical architecture. They can’t evaluate their own corporate  infrastructure in the same way. (They have to ask their CIO or head of IT, and that’s normally who a proper digital transformation will disrupt, so they are no impartial witnesses.) Digital transformations fail not because the workforce isn’t sufficiently digitally savvy, but because the leadership isn’t.

4. Get it right and it will be thrillingly liberating

Imagine throwing your legacy away and starting again.

Imagine having internal systems your staff found intuitive and useful.

Imagine being able to iterate your products and service multiple times a day.

Imagine increasing sales because your service keeps getting better, not because someone in your advertising agency has an interesting  idea for a Christmas ad.

Then, remember, if you don’t do it yourselves, someone will do it to you.

This article originally appeared in our January 2018 issue of Market Leader.