I’m just about to publish results of interviews with 13 professional services firms who enlightened me on how they approach transformation engagements. Here’s a sneak peek:
Approaching digital transformation within traditional project structures doesn’t work. It’s difficult to set quantifiable objectives if the ultimate business model you’re driving toward is unknown. Transformation puts you in discovery mode; treat it more like a scientific experiment versus an engagement with a known deliverable.
For example, most projects are all about delivering on-time and on budget and keeping risks at a minimum. Transformation is about discovering real breakthroughs in current performance versus marginal improvements. It’s about taking risks and working iteratively against unknown outcomes using agile principles of operating. Consultants call it discovery oriented project management where theories are developed to build hypotheses, conduct experiments and launch-and-learn. Other advice:
Keep your core team small: Staff a core team of six to eight business leaders, comprised of C-Level executives (or one of their direct reports) from marketing, operations, finance and sales. Large teams are not as equipped to work fast – and speed is important especially if you’re being threatened by agile startups. Many decisions will need to be made in real time, another argument for a small empowered team.
Understand customers as users: B2B organizations in particular, may know their buyers (division managers, procurement arms or corporate buyers) but know little about the people that actually use their products. After intensive observations many companies find ways to play a larger role in the customer’s day. Fedex and electronics distributor Ingram Micro for example, embraced this exercise to find ways to use their business infrastructure to push their services further up the value chain.
Engage cognitive & behavioral scientists. Be open to staffing transformation engagements with cognitive and behavioral scientists who understand how the digital customer perceives problems, uses information and analyzes data. These guys come to the process with no biases or preconceived notions of how things should be done. They also ask second-order questions ( “Is there a better way to decide how we replenish stock?” versus “What stock should we place on shelves today?”).
Approach the old and new in parallel. Think of transformation as parallel tracks. The first re-positions your legacy model to an altered marketplace leveraging the value proposition that has worked in the past. The second develops new sources of growth through an internal, startup-style business unit. This dual approach is occurring at Xerox, Barnes and Noble, Nike, the New York Times and scores of companies going through customer focused digital transformation.
Get inspiration outside your industry: Most of you insist on consultants that deeply understand your sector. You’re not wrong to insist this, but be open to staffing these engagements with an expert that may have a moderate understanding of your sector, but with a high degree of empathy and expertise in the area you want to impact, for example customer service, delivery, loyalty or user experience.
Don’t treat transformation as a one-time initiative. Every organization needs to build transformation expertise into its core competence, because this exercise will come around again. For example, research from Innosight reveals that in 1958, corporations on the S&P 500 lasted in the index for an average of 61 years. By 1980, that had fallen to 25; today it’s just 18 years. This rate will only accelerate as digital techniques mature.