Successful Digital Transformation - 4 Things Leaders Know

Laszlo S. Gonc, Board Member

Laszlo S. Gonc,

Board Member

We've all heard about the inevitability of digital transformation. Many of us are undergoing some type of digital transformation initiative ourselves. For others, it's become part of the prolonged media din.

With less than 75 of the Fortune 500 from 1955 still in existence today, change or die seems to be a good direction to be going. What is digital transformation? There is much talk about the process whereby an organization overhauls its business activities, processes, competencies and models to fully leverage the opportunities afforded by new technologies. Still no one has a clear definition.

Richard Foster, in his 2001 book Creative Destruction, applied Joseph Schumpeter's theory of economic progress to the modern practices of management and innovation. The core lesson from all this is "how" companies go about change is critical to their survival.

When Corporate Culture Kills

There are many well-known examples of companies that resisted change despite the opportunities presented:

Blockbuster Video. Reed Hastings founded Netflix because he had paid a $40 late fee to Blockbuster Video. While Blockbuster collected $800 million in late fees in 2000, it declined to purchase Netflix for $20 million (its anti-late fee competitor).

Kodak. Founded in 1888 and its share price falling from a high of $80 in 1999 to 78 cents by 2010, Kodak demonstrates a company culture that failed to adapt for nearly 50 years. Steve Sasson went to work for Kodak in 1973 and invented the digital camera in 1975. His bosses were unimpressed and the marketing department resisted. His camera never saw the light of day.

Borders. In 1971 Borders began as a single bookstore in Ann Arbor, Michigan. With its stock price at an all-time high of $44.88 in 1997, Borders closed its doors in 2011. Growing its well diversified stock of books, movies, music and e-reader sales, it was considered the envy of the industry with its innovative inventory management system. When it had an opportunity to significantly expand its online sales, Borders decided to outsource their website to Amazon.

Obstacles to Change

Jane McConell, renowned author, speaker and founder of NetStrategy JMC, has conducted global annual surveys on the internal digital work environments of organizations since 2006. She grouped the toughest obstacles to change into five categories (1):

  • Slow or stalled decision-making caused by competing priorities, internal politics, or attempting to reach consensus
  • Inability to prove business value of digital through traditional ROI calculations, resulting in lack of senior management sponsorship
  • Too much focus on technology rather than willingness to address deep change and modify how employees work
  • Lack of understanding operational issues at the decision-making level and difficulties in practical applications
  • Fear of losing control by management or central functions

According to Jane, "The toughest challenge in digital transformation is not to define a strategy, but rather to make it tangible and actionable."

Creating the Right Cultural Mindset

For organizations that rate high on digital maturity, Doug Palmer and Anh Nguyen Phillips found remarkable similarities when it came to corporate culture. The results of their work are highlighted in a 2016 report in collaboration with MIT Sloan School of Management, "Aligning the Organization for its Digital Future."

Taken together, these four cultural characteristics provide the foundational ingredients for a super-charged recipe to go from "doing digital" to "going digital" (2):

  1. Value experimentation and speed. It's not just about the agility of the organizational structure, but empowering employees, incentivizing them, and giving them the authority to enact and drive change. 
  2. Embrace risk. Risk-taking is built into the fabric of how these organizations manage. They emphasize innovation and don't get upset when something doesn't work out. 87% invest in innovation at the early stages.
  3. Organize for collaboration. These organizations moved from vertical departments to a project-based approach. Think distributed, not hierarchical.
  4. Make data-driven decisions. These companies set very clear goals and measurable objectives, and then communicated them clearly. They get very specific and tactical on what they want to achieve and how to measure success.

Changing an organization's culture is not easy. However, the ingredients to the recipe are not a secret either. Use the four proven characteristics above to foster a culture of change as your organization continues on its journey.

SIM Chicago is undergoing its own transformation. Please visit our new website as we continue to launch our stronger social media presence. An easy way to stay current in this age of acceleration is to get more involved with upcoming SIM events especially during May and June. Learn from others what challenges they are facing and how they are dealing with the current issues. The upcoming event on May 11th is focused on the State of Illinois and its own journey in these challenging times. It will be a great opportunity to network with the SIM Membership as well. Register today!


(1) "The Company Cultures That Help (or Hinder) Digital Transformation", Harvard Business Review, Jane McConell, August 28, 2015.

(2) "Aligning the Organization for Its Digital Future", MITSloan Management Review Research Report, Deloitte University Press, Summer 2016

A SPICY RECIPE FOR AGILITY AND INNOVATION

Jane von Kirchbach, Board Member

Jane von Kirchbach,

Board Member

Throughout my career, I have been fortunate to have opportunities to travel and live abroad. Whenever I travel, I take time to understand the culture, values, and the customs of working with my international colleagues.

Personally, I enjoy exploring the local cuisine. I find food offers a unique window into the culture of a country or a community while providing a powerful platform for building human connections.  

In my quest to experience local flavors, I took a Thai cooking class during a trip to Bangkok. It was a unique and refreshing experience. Western cooking techniques require focused study of a recipe, precise measurement of ingredients, and careful execution of instructions. Thai cooking, on the other hand, involves no recipes and no measurements. In its place, you rely on core techniques coupled with diverse ingredients, high heat, spice, and speed. Most importantly, you are expected to continuously taste and season your dish trusting your taste buds to create a perfect combination of flavors.

The Thai cooking experience enriched my skills in the kitchen and offered me some interesting business and leadership insights: 

Taste, Season, Repeat. Classical western cuisine is built upon complex techniques, long cooking processes, and inability to taste the dish until the end. Not that different from our traditional approach to business and technology projects.

Early mistakes are not evident until late in the process - time is lost, resources are wasted, and there is no dinner on the table! In Thai cooking, you begin tasting your creation and making adjustments throughout the entire cooking process. This early and iterative feedback-correction loop is key to introducing agility into our business endeavors.

Eat Bitesize Projects. In today's business environment, we face large complex problems to be solved quickly and effectively. Best practice asserts we break problems down into smaller components. While intuitive, most organizations do not leverage this technique sufficiently.

I challenge my teams with "No project longer than 3 months!" While it may be an aspirational goal, it forces us to think in new ways and try new approaches. When facing complex problems, think of bitesize deliverables like an Asian stir-fry instead of a 12 oz steak!

Try that Scorpion. Thailand is an amazing country, full of diverse and unusual ingredients. I remember walking through a local market with stands full of roasted and fried scorpions, a tasty snack for many Thais. Would you try a roasted scorpion?

As leaders, we are in a unique position to set the tone for the organization. Are you willing to take risks, attempt new approaches, and explore new business models? Are you willing to be vulnerable and accept failure? Creating a culture of innovation requires us to take a deep introspective look and challenge our own habits, beliefs, and expectations. Let's taste that roasted scorpion! 

Spark the Fire.  Fire is a key ingredient in Asian cooking. High heat is necessary to create fast and flavorful dishes. How can you generate the heat necessary to fuel creativity and speed in your organization?

A "burning platform" is one possibility. It can be a powerful driver for strategic change, creating wide-spread energy and rapid alignment. However, "burning platforms" are not always feasible or ideal for creating lasting culture change.

There is a better way!

If your organization has a dozen or more people, sub-cultures and counter-cultures are bound to have developed. Among these cultures, there is a good chance the mindset you need is already present. Instead of trying to drive large-scale culture change from the ground up, you can build offwhat's already there. The key is to identify areas where the right sparks exist, raise them into the spotlight, and encourage their propagation from niche to mainstream. 

While titled "A Spicy Recipe for Agility and Innovation", I am convinced the secret sauce is to also learn to cook without a recipe. 

Teaching your teams to reduce blind dependencies on established approaches is a great way to change thinking, spark innovation, and deliver breakthrough results. Mindfully, you have to remain structured, organized and compliant.

I encourage you to cook without a recipe once in a while! 

Building Your Technology Strategy (Storytelling)

Susan Malisch, Board Member

Susan Malisch, Board Member

I am a big fan of telling a story to engage other business leaders in understanding the value of IT and technology strategy.  But how do we do this well when the world of technology is filled with constant change, complexity, acronyms, and excruciating detail that makes others eyes glaze over?!

At Loyola University Chicago, we’ve made an attempt to develop a “technology strategy on a page”.  This design has helped us share the story, initially in a consumable form, that others outside of IT can easily understand.  We follow this business story with a layered approach of more detailed views that help articulate what we must do to achieve our desired future state. 

The one page story begins as follows showing the basic premise in an easy-to-understand format that describes how we want the technology experience to enable the many relationships a university must maintain.  So, envision yourself as any one of the following members of our community and read on for the experience we’d like you to have:

If I’ve piqued your interest, click here for the next layers of detail on our roadmap for Anytime Anywhere Access including the concepts of the vision, the detailed user experience, and the planned technology change required to deliver the vision!  While I still see these as working documents, I’ve shared these specifics for two purposes:  1) to share some real examples of building a technology strategy that may inspire helpful ideas for how you think through your own process of storytelling, and 2) to ask for your reaction, feedback, comments and suggestions to help us continue our thought process for Loyola University Chicago.  I really am interested in hearing from you – an outside perspective is so helpful!  Please send your thoughts to me at susan.malisch@sim-chicago.org.

Conviction in Service

George Wang, Board Member

George Wang,
Board Member

As many of you in my network know, I was fortunate to have been offered a Cluster CIO role with the State of Illinois last year, focused on Students and Education. As a first timer in public service, it has been an honor to work with so many hard-working team members focused on serving our citizens, businesses and institutions in Illinois. Having worked in many different industries, company sizes and roles over the last 26 years, I thought I would reflect and share with you some of my learnings that seem to also hold true in government public service:

  • Conviction in Service: Our world is faced with so many challenges and issues that it can be difficult to solve all of them. Yet through each person's effort and commitment in trying to make a difference we can contribute our small part towards a solution. Whether it starts with yourself, your family, your community, your state, your nation, or your faith, there must be conviction in service and helping others. Throughout my career I have tried to help others and found that during even the most difficult times, that your core value of service is what steers you to the True North. At the State we face very difficult times and constraints and yet our newly formed centralized Department of Innovation and Technology (DOIT) organization (a $1B startup of sorts!) is undergoing an amazing transformation journey. We have 45 years of modernization to accomplish in 4 years (our oldest active system dates back to 1971). DOIT, with our Illinois First strategy, is accomplishing new things that have not been done before through collaborative enterprise-wide efforts in the areas of Social, Mobile, Analytics and Cloud (SMAC). It's not easy but if each of us have conviction and passion in what we are doing, it sure goes a long way.
     
  • Seek the Truth: I believe each of us have gone through great positive times as well as those very tough times that bring out the not-so-good side of people and teams. I genuinely believe that people come in to work to make it a good day and wish their job brings a certain level of personal satisfaction. Yet during difficult times of organizational transformation (positive spin) or reorganization (negative spin) one must seek their own internal truth as to why they choose to stay in the organization or role they are in. Many times I have heard of folks complain about their role or organization (even in good times) and my advice to them is simple: have you asked yourself what have you done to make the situation better: do you have a solution to offer? While it is important to be committed to the organization, I believe one will know when it is time to move on. For example, long periods of unbearable work stress is one of them that hurts your body, your family and even relationships. For those that choose, including your own staff, to not make a change or are afraid to do so, seek help and support from others who have made the transition into a new role, company or even career. For those not as fortunate and are impacted by a reorganization or reduction in force, that move is forced upon you which leads me to next bullet...
     
  • Keep the Network Alive: You have probably heard this before but it is important to network as one can never predict the future and in this day and age, organizations and roles come and go unfortunately. Even in government service, one might think there is no competition and therefore insular -- but we know that isn't exactly true either. Presidents and governors can and will change with each election and with that change, the positioning or posture towards technology can change drastically or perhaps minimally (perhaps if things seem to be going right). Either way, this is where organizations like SIM Chicago offer a great venue to stay connected, share and learn with other senior leaders, and just as important -- provide support to our community like through i.c. Stars via our annual SIM Golf Charity event in August, our SIM STEM scholarships and our annual charitable donation to the Arts and Business Council of Chicago at our recent February SIM Winter Social.

We have two great SIM Chicago events you won't want to miss in March: Our SIM / Chicago Innovations Award (CIA) Partner Event on March 1 in the evening at Xfinity Studios with a moderated panel of past CIA winners, and our 2017 SIM Spring Gala on March 16 at the Chicago Marriott O'Hare where we feature Kelly Leonard from Second City discussing where improvisation and humor can in many ways help enable game changing transformation. I plan to be at both events and hope to see you there!

Digital Transformation SIM Chicago

Rob McGillen, Board Member  

Rob McGillen,
Board Member

 

Since joining the SIM Chicago Board and the Marketing committee last year, I have heard a steady flow of feedback on all things communications and digital from members. "The website needs work", "the emails are too long", "the experience is not mobile enabled" all frequent observations (mixed in with a few more colorful ones). Yep, I agree!

I spent a portion of my family holiday trip to China thinking about what to do about it. Taking a commercial and analytic approach, I took the time to review the utilization reports (as we have them), evaluated other SIM association websites, and competitive groups that also serve a similar audience.

Evident in the analysis, we are trailing what we could and should be doing. The website today and our processes around communicating are aging. We need to make a change to improve our communications engagement for existing members (+brand awareness for new members we want to attract.)

We clearly have compelling reasons for change. That said, a website overhaul used to be one of the top three projects IT & marketers avoided if they could. When I first broached the topic with several of our board members, I got a slight pause and "Won't that take a long time and be expensive?"

In short, No transformation does not have to take long or carry a heavy cost.
Lately, the game has changed.

You can transform your business and become a digitally effective company in a very short order, and for a reasonable investment of time, tech, and talent. Digital transformation is now about 20% tech, and 80% change management. You need a game plan, a comfort with uncertainty, and the right expertise to get it done. And passion to change the game.

In my two+ decades experience, passion is the key ingredient that makes the difference in successful transformations (digital or otherwise). Passion is crucial in the drive for change. Sponsors need to exhibit it, the project team needs to live it, and the customers should be excited about the changes to come.

So we are announcing today our plan to launch the new SIM Chicago website in time for the Spring Gala four weeks hence. We will have a new UX experience, which is built mobile first from the ground up. We will be taking measured change steps (experience and UX first, events sign up / payments second, and email / social marketing engagement third) to ensure we hit the value points in the midst of the digital change. And we will seek your feedback frequently on the improvements (features, content, and experience) that will make for a game changing member experience.

We are passionate about the digital change for SIM Chicago because the opportunity is needed. We benefit as a society of IT leaders when we can most effectively gather together to share knowledge and experiences.

So four weeks and counting. Time for late nights, headsets on, coding, marker design boards and load testing, SEO tuning and security checks. In the words and spirit of the late, great James Brown - "Relax, and watch us work". See you at the Gala, and bring your mobile phone.