Setting up an innovation lab or digital garage is easy – in fact, technology vendors will fall all over themselves to help you do that. Access to new technologies has never been easier, and access to modern digital prototyping and design-thinking methods has never been easier either.
However, here is a much bigger challenge: Once you have created one or more digital initiatives that show real potential, how do you “industrialise” what you have built and so you can drive real enterprise-scale change?
With IDC research showing that about 65 per cent of European chief executive officers are under significant pressure to deliver transformational results from digital investments, it’s clear that organisations must move beyond investing in individual digital technology pilots and proof-of-concept (POC) projects.
Organisations almost always start digital transformation efforts by seeking to reinvent customer experiences, which makes sense — transformations should be led outside-in, taking the needs of the customer as the starting point. However, focusing only on creating a “digital outside” for a business using new digital projects tends to lead to what IDC calls “islands of innovation” that are built on siloed, stand-alone digital platforms (see figure below). This can be a great way to start on a digital transformation journey, but it has limited potential for scaling.
Moving from this first stage of digital transformation platform maturity is fundamentally about finding new ways to bridge the old and the new, the fast-changing and the slow-moving, the inside and the outside. The time has come to bring new digitally-inspired ways of thinking and working right into the heart of business systems — leveraging technology to automate, instrument, co-ordinate and optimise activities not only at the outside edge of the organisation, but also throughout value chains and vital support functions. This is what scaling digital means.
But this shift is not only about technology: it’s also about people and culture. And, crucially, it’s not just about taking the positive aspects of new cultural ideas and practices from digital initiatives to improve established “old school” IT ideas and practices; it’s also about taking the positive aspects of those well-established IT ideas and practices and seeing the value of embedding them into new digital practices.
As you progress on your journey through stages of digital transformation maturity and success scaling, it’s vital that you anticipate and deal with these four major potential challenges:
- Ungoverned development approaches. The fast-moving and well-funded world of digital technology start-ups has competed with itself to create a seller’s market for talent. People with significant experience of working with hyperscale cloud platforms, microservices architecture, data science tools, agile development and continuous delivery approaches can be eye-wateringly expensive to hire. The demand for these people is also such that they can effectively call the shots over the development tools and approaches that businesses will use. Some proliferation of tools is therefore inevitable. However, allowing talent to drive tool usage will lead to poor outcomes if there are no broader governance structures in place.
- A culture war between IT and digital teams. As organisations look to transition from stage 3 (Side-Car Model) to stage 4 (Integrated IT+Digital), a culture war can break out between the teams responsible for shepherding and improving the organisation’s established systems and the teams responsible for driving digital innovations. The innovators are often supported and sponsored by line-of-business leaders, whereas “core teams” can lack senior business executive sponsorship. Resolving the tensions that can overspill into major conflicts is a hugely important task at this stage.
- The changing nature of platform ownership. As organisations start their journeys to digital transformation maturity, it’s usually straightforward to identify the senior individuals who should sponsor individual projects and provide the executive support that’s needed. In the early stages of maturity, it’s natural to allow existing IT leaders to take responsibility for a clear set of services, and digital leaders to take responsibility for others. However, a true digital transformation platform can’t be solely owned by IT, or by a digital leader, or by a business leader — ownership has to be a collaborative effort. Navigating this shift in ownership can be challenging, as it requires one leader to step up initially, but then be resolute in ensuring that peers make a long-term commitment to participate in a collaborative effort.
- Flipping the enterprise security mind-set. The traditional mind-set for security has been to lock down assets to protect them from external threats. This kind of inside-out approach is useful in the pursuit of technical security excellence, but it comes at the expense of usability. This may be tolerable in the early stages of digital transformation maturity, but beyond this, traditional approaches become a roadblock to reform. To truly support a shift to a digital ecosystem-driven business model, security’s perspective has to flip 180 degrees. Instead of locking down assets so that external threats cannot address them, security must adopt an outside-in position, embedding itself into the organisation’s platforms so that users can operate what they see fit, within the enterprise’s appetite for risk.