AT#19 The only effective Way to drive Digital Transformation

AT#19 The only effective Way to drive Digital Transformation

AT#19 The only effective Way to drive Digital Transformation

For a long time, setting the direction of a company was done by a small group of top executives that elaborated a detailed business strategy. Business strategies typically define goals that are normally associated with the creation of value for the coming ten years or so. The concept of ‘Business Strategy’ has been introduced in the 60ies by [Chandler62]. 

This 50+ years old concept is still valid today. What has changed dramatically over these 50+ years is the planning horizon. The notion of ‘long-term’ became shorter and shorter. Today, in the VUCA world, there is no ‘long-term’ anymore. Strategies become more fluid, like software that needs constant upgrading. The reality, today, is that most companies do not have a clearly written out strategy. Why formulate a strategy any more when things are changing before you have your strategy ready?

But how do you make strategic decisions without a clear, verbalized strategy? The answer is given by [Westermann14]:

‘The only effective way we’ve seen to drive transformation is top-down, through strong senior executive direction coupled with methods that engage workers in making the change happen by setting direction, building momentum, and ensuring that the company follows through. This kind of change does not happen through a simple mandate, it must be lead. Among the companies we studied, none have created true digital transformation through a bottom-up approach. Successful transformation starts at the top of the companies’.

What you should do:

  • Let your CEO create and clearly communicate a strong, short, simple and compelling vision instead of a detailed, long-term top-down strategy.
  • The vision should be clear but needs to let room for self-organization by autonomous teams
  • Derive your high-level business- and IT architecture from the CEO’s vision. 
  • Base the aim of the vision on customer’s needs –  this brings in an outside pressure or force that drives the self-organization
  • Focus your vision on one of three perspectives:  (i) customer experience, (ii) customer value (iii) operational processes
  • Create new business models around any combination of these three perspectives.

 

Further reading:

AT#16: Ten Guidelines for a successful Digital Transformation

AT#15: How to make decisions in uncertain Times

References:

[Chandler62]: A. D. Strategy and Structure: Chapters in the History of the Industrial Enterprise. MIT Press, 1962.

[Westermann14]: G. Westermann, ‘Leading Digital: Turning Technology into Business Transformation’, 2014

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1 comment so far

Charles Posted on 8:57 pm - Dec 3, 2018

Hi Wolfgang, companies that want to successfully ride the digital wave the views on Strategy & Structure should also take into account the digital understanding of the CEO & COO (human & cultural factor). Old skool companies with lot’s of assets might benefit from appointing a CTO who can help bridge the divide. The CTO combines the functions of CIO & CDO (D for digital) as far as digital change is concerned. Creating (and growing) the digital eco system for the company to grow in the digital world is his / her first and main task.
Cheers,
Charles

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