This is Part 1 of a three-part series on how the pandemic is accelerating the need for digital transformation and why many business aren't ready.
Business is changing quickly, maybe for good. While the events of the past few months are certainly anomalous in the extreme, the weaknesses they’re exposing in corporate cultures and business models were well understood long before the current crisis. Over the past five years, transformation has been the topic du jour from corporate board rooms to corporate mail rooms. Everyone has understood the need, if not the urgency.
And while many companies have been slowly evolving away from the monolithic processes and hierarchical cultures that keep them from competing with digitally native businesses, the current crisis will set a new timeline for adaptation. As much as it’s ever been, it’s a change-now-or-get-left-behind business environment.
In the immediate wake of any crisis, the focus will inevitably turn to preparation. “How do we better prepare ourselves for an uncertain future?” This is often reflected in a somewhat desperate lunge toward new capabilities. But building new digital capabilities has already been the focus for most businesses.
Instead of demanding the sudden delivery of new capabilities, companies should first focus on their culture.
In the wake of massive disruption, it has become immediately clear that despite the efforts made so far, there’s still a long way to go. And as we enter an extremely cost-sensitive environment, where resources have become constrained, wand-waving won’t suddenly result in the new capabilities needed to survive in the post-pandemic world.
Instead of demanding the sudden delivery of new capabilities, companies should first focus on their culture. They need to create a new environment—one where world class digital experiences can be delivered quickly. That has been the problem all along. It has not been for lack of resources that digital transformation projects have taken too long and delivered too little. It’s been for an abundance of resources.
Digital transformation initiatives are often over-resourced, unduly political, and poorly planned. These mistakes, borne of economic excess, can no longer exist. And the business will be better for it. But only if it embraces the culture-redefining implications.
Transformation at speed requires small, relatively autonomous teams. It’s been a cliche in corporate meeting rooms for years that big companies need to start acting more like startups. But it has never happened, despite the open office plans. In the midst of a recession, with a global crisis in the side view, the only way to move forward is with a strict focus on efficiency. Running lean means getting a lot more done with far less overhead. Fewer people, faster decisions, flatter hierarchies.
Flattening the decision-making hierarchy has traditionally been viewed by management teams as a risk. In many ways, this self-serving assessment has allowed managers to maintain their turf in the midst of significant change. In a flat hierarchy decisions are democratized and power is spread amongst the doers, rather than consolidated within management. This is a hallmark of startup culture. There is a tradeoff here, but the risk of business-as-usual is far greater than the perceived risk of moving quickly.
Digital skills are survival skills in the post-pandemic business environment.
Reconstituting internal teams means reconstituting partner teams as well. While the immediate instinct may be to turn to lowest cost resources, the goal is still innovation. Transforming the business quickly will never happen with the lowest cost providers, just like it will never happen with the largest corporate vendors.
That doesn’t mean businesses need to spend more. It just means that vendor teams need to get smaller and more senior. Fewer people with a higher level of skills. These are the kind of teams that get to market quickly, and reduce the overall cost of transformation. In their transformation, companies should be looking for partners that they can emulate—smaller, boutique firms with a strict focus on delivery.
This goes for technology decisions as well. While massive enterprise technology solutions may be difficult to justify in the best of times, these purchase decisions become nearly impossible during lean times. Creativity in technology decision-making means surveying all available options. Startup technology that shows real promise, cheaper open source solutions that will return value more immediately, and even custom solutions that let you get to market faster with the capabilities you really need are all important aspects of running a lean transformation initiative.
Digital skills are survival skills in the post-pandemic business environment. But there is no way to build them without first changing the culture. Affordable innovation happens within small teams that can move quickly with best-of-breed solutions. Barriers to the productivity of these teams need to be removed, even if it means accepting more short-term risk. Preparing for an uncertain future requires building new digital capabilities. The first step is learning to run lean.