Posts from the other side of digital transformation #1
Stuart C. McLeod. February 25, 2020.
I’m a businessman and investor who’s been through digital transformation and come out the other side. In my Real World blog, I talk frankly about that journey and what I’m still learning along the way, so all opinions are welcome.
I’ll start by addressing what I think is the basis of every successful digital transformation: confidence.
Digital transformation starts with people
Anyone trying to understand how digital transformation works should begin by looking at their own parents or grandparents. Even the proudest technology laggards have gone digital to some extent. They might not like the idea of digital, but they are persuaded by the good things it delivers, such as seeing their grandchildren on a video link without worrying about the bill.
New technologies and approaches can intimidate business too. Risk is a big factor here. Getting digital transformation wrong can cost hundreds of millions of dollars. On the other hand, the costs of inaction and being left behind are potentially even higher. Several businesses that got digital transformation right have gone on to dominate the marketplace.
Cautionary tales
In the early days of digitalisation, some businesses spent fortunes on untested technologies that were supposed to solve big and intractable problems. The legacy of these traumatic failures still haunts us today.
The threatening word ‘disruption’ hasn’t helped us to embrace risk either. Setting up an M&T department is a good start to transformation, but it doesn’t achieve anything if all those promising pilot projects fail to be implemented on a larger scale.
The point surely is that we need to learn from previous mistakes and implement digital transformation in a way that is going to deliver the improved operational efficiency and capital discipline that everyone wants.
What is digital transformation?
I’ll begin with what it isn’t. Digital transformation is not about replacing people with technology. This is a pervasive myth. At one major auditing firm I know, fear of job losses created widespread resistance to the management’s digitalisation strategy. Is resisting innovation a smart way to protect your job? Maybe not. But fear is seldom rational, and in this case, it was based on a fundamental misunderstanding of how digital transformation works.
Digital transformation is about empowering people to solve problems better with the help of advanced technology and new ways of working. The role of technology is to provide useful data insights to teams and then scale up their solutions to achieve transformative results. It should be clear, therefore, that people are fundamental to the whole process of transformation. Our jobs are not going to disappear.
However, it is fair to say that the scope and nature of our jobs is going to change.
Accepting change
Technology is set to play an increasingly important role in the workplace, just as it does in almost every other aspect of our lives. Data management is going to be a key skill. The benefits of data insight will also push us to collaborate with people whose professional backgrounds are very different from our own. As a consequence, our organisations will become less hierarchical and more transparent, which is surely a good thing.
It may sound like I’m getting into the business of making predictions here, but actually it’s already happening. Businesses that I’m involved with have undergone these very transformations, and the results are genuinely impressive.
But like everything else in business, digital transformation has to be executed properly. For that to happen, people need to understand what the technology does, what it’s for, and how to use it in a way that reaches the desired objectives. None of this happens spontaneously, by the way.
Building confidence
Persuading people to embrace digital transformation requires a certain amount of trust on their part, and plenty of credibility on yours. For credibility, you are going to need some genuinely compelling evidence that the new approach will do the job better than existing methods. It’s human nature that your teams are going to prefer what they already know.
I still remember the resistance we got to web-based processes when I was running a commissioning management and software business a few years ago. Now those web-based processes are considered a minimum requirement in the sector. Attitudes really do change that fast.
Realistically, people will only be won over by digital transformation when they discover for themselves how it works and what it can do for them. Getting some low-risk practical experience of the technology is key. It builds people’s confidence, and that’s when they feel ready to give the tools a proper go.
Baby steps
Remember to start small. By addressing a simple task that is separate from the rest of your processes, your people can learn on the job in a low-risk way.
At Silverhorse, which is a big-data business that provides asset management solutions, we started with a corrosion inspection and refurbishment application. Multi-functional teams were equipped with mobile devices that linked to an intelligent data hub. By connecting data to actionable workflows, we enabled teams to complete their tasks much faster and more safely than before, with minimal back-office support. Judging by the excellent results, it deserved to be called a genuine innovation. To the teams, however, it felt more like common sense.
Taking ownership
The fact that these teams were authorised and equipped to complete tasks in their own way was an essential part of the process. Everyone likes seeing their own ideas put into action and achieving positive results. It also breathes confidence into the culture of the business.
Embracing change
In an age of rapid technological innovation, the culture of your business is more important than ever. The binary world of computing that we are familiar with is being superseded by neural networks and deep learning. These new technologies interpret the shifting sands of data and probability in order to predict the future. To meet this challenge we need to become more agile in both thought and action. The benefits of these transformative technologies are within our grasp if we have the confidence to wholeheartedly embrace them.
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