With digital transformation strategies, many organizations wonder how they can apply the latest technology within an existing organization or how they can use big data or artificial intelligence to develop new business models. That is a transformation in a narrow sense. In those cases: ‘business optimization’ would be a better word. Some organizations wonder how they can sell more with big data or how they can monetize available data. The more data you have, the more you can achieve with digital transformation, which is still the idea in many organizations. They are unable to deviate from their linear thinking. They think the future is an extrapolation from the past. The strategic compass is wrong and the chosen path is a dead end. Most of the data that organizations think they possess is not owned by the organization, but by people or other organizations.
Real transformation in our vision is a transition into a durable, digital and decentral future. That is a future without redundant work, digital waste, siloed IT-systems and central governance. An effective strategy is to build new organizations on the edge and make existing office organization obsolete. That is okay because, during your transformation, you discover new values. As a caterpillar, you can eat a lot, as a butterfly you value the ability to fly and reproduce yourself. To become a butterfly, the caterpillar has to choose for a transformation and let go the old. Real transformation is not only a different technology but above all new DNA and a different way of thinking in which you give up some autonomy, let go your own organization as the center of doing business and work smartly together in ecosystems.
Our experience is that many organizations wonder how, with a tight talent market, increasing regulations and customer wishes for example, they can free up the time to be fundamentally and consistently engaged in a transformation program. How paradoxical it may be, transformation is more a about gradual process than a quantum leap. The quantum leap is the result. The transition and a lot of small steps (in the right direction) is the process. Transformation is not about turning your entire organization upside down. It is about design, engineering, start over again, build a new organization on the edge and transfer existing effective task and processes into a ‘new building’. Transition is the road to transformation.
To understand the difference between transition and transformation you need to see the difference between improve, change and renew. In short: Improve is to maintain, change is to widen and renew is to construct a road:
- Improving is optimizing the current situation, for example: digitization, but still using the existing business model.
- Change is the adaptation of new processes and customer relationships (digitalization = digitization + new business model).
- Renew is to break down and start over (re-engineering, reduce digital waste, erase redundant work etc.)
The future is durable, digital and decentral. That is a big vision. But The biggest problem of having a big vision is that it’s extremely hard to get excited about the trivial, small stuff that needs to happen on the way there. However, execute those little steps well and you’ll go places well beyond of what you’ve ever envisioned.
To understand the way we look at transformation, I usually recommend the metaphor of the pioneer traveling: leave your safe haven behind, use your compass, choose a path, and bring a backpack:
- Safe haven (here and now): spend enough time and attention to let go of routines (dogmas, paradigms and pillars of the old system). Christoffel Columbus on this: “You can never cross the ocean unless you have the courage to lose sight of the shore.”
- Telescope (there and later): be aware of the context you are in (soon). Look with different perspectives and, find out what you believe, what the patterns are and which organization principles there are
- The compass (destination, ideal situation for men & society, long term, 5-10 years): devote sufficient time and attention to awareness. Above all, think about the direction and let yourself be guided by principles, patterns, different perspectives and a moral and common sense “compass”. You should not lose this compass on the way or put it in your backpack. The direction must remain visible to organization stakeholders at all times in the form of purpose, vision, mission and ambition. You may not subordinate the compass to road (medium long) and backpack (short term). A compass is not a route planner and a compass has to do with compassion: tell your story, your believe with passion to others and they will follow (eventually).
- The road (budgets, capabilities, medium-long term, 1-5 years,): choose a strategy, choose a road along which you want to realize your ambition based on your compass. Make sure there is sufficient support from your stakeholders. Always choose, based on the route you choose, prioritization in the content of your backpack.
- The backpack (short term, next year): choose your instruments for structure, culture change, governance, economics and development. Start with small manageable projects, with one or a few smaller projects that contribute to the new vision and ambition. Provide new skills if necessary. During the projects, you take stakeholders along in the new way of thinking and doing. But remember: everything you choose and do is the right direction!
You see this metaphor also back in two of our most important methods: The Community Model Canvas and backcasting.