It is very common in the early stages of digital transformation to prioritize the creation of a “playbook”. A playbook is typically a set of methods, practices, tools, and procedures that begin to standardize how members of teams work together to deliver value to customers through the digital products and services they create. Product management will have a playbook. Agile development teams will have a playbook.
Lately, I have been thinking about a leadership playbook if there is such a thing. On a high level, what would be in it, and what would not?
Let’s start with a definition of digital transformation at the enterprise level.
Gartner defines it as,
“Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models.
Accenture defines it as,
“Digital transformation is the process by which companies embed technologies across their businesses to drive fundamental change.”
The Leaders Playbook
I would start the leaders playbook with these four sections: Vision, business and product strategy, data strategy, and talent strategy.
You may see companies use words like “sustainability”, “innovation”, or “data driven”. People are not as inspired by words like they were a few decades ago when the visions were to be “best in class” or “highest quality”.
The leaders’ job is to set a vision and a course to achieve it. Then to inspire and motivate people to want to enlist. Today, we are inspired by the stories of how products and services will transform the lives of customers. Great leaders paint a simple, clear, compelling vision for their organization based on these stories of what is possible. They continue sharing real stories that articulate progress and the impact the team is having.
Great leaders also make it clear that digital transformation is not the goal to achieve. It is the means to achieve the goal. They do this through their actions and underlying product, data, and talent strategies ensuring continuous alignment with the vision and business goals.
Business Strategy and Product Strategy
The early stage of transformation is spent on the important work of defining the business strategy and where digital will play its part, the investment it will take. Alignment between boards and C-Suite leaders is vital and has greatly improved in recent years. The strategy needs to have the right level of transparency, and there is a sense of urgency. This is more than the typical call to action.
Great leaders help employees connect the vision to business strategy. It’s the “why” of your product or service, and everyone will be needed to create the what and the how. It should motivate people to enlist.
To answer the question “what ”, my playbook would include a “hypothesis-driven planning” section. The vision is clear. What we will do to get there is one hypothesis after another. Using this approach, a business will generate high value, high potential opportunities that the leadership team can prioritize and begin to act on. This approach gives product teams a much deeper understanding of where leaders want to go and why.
According to McKinsey’s study, where companies get stalled in digital transformation is in scaling up solutions. About 15% stall in the pilot phase, 44% stall in scaling, 14% scaled but did not achieve full impact, and only 28% successfully adopted and scaled (Mckinsey.com, “How to restart your stalled digital transformation.”). Adopting a “crawl-walk-run” iterative approach creates clarity for teams to move quickly with more control as they define and discover customer needs and refine the value assumption.
A good leader is a student of history. They are deeply curious. Without this trait, they are bound to repeat history. A great leader does not just learn from it. They use it to find and embrace the best approach and they make that their starting point. They change with the times.
The history of digital transformation at the enterprise level is not a long one. But a lot has changed in just one decade. It may have started as recently as 2010 and only emerged as a business strategy as recently as 2014.
What lessons have been learned? Four fundamental lessons are:
Lesson #1: Business strategy is the driving force, not technology.
Lesson #2: People make the strategy work, not processes.
Lesson #3: Data unlocks value, not technology for the sake of technology.
Earlier in my transformation career, the strategic mantra was people, process, and technology. To drive strategic digital transformation a new mantra of talent, methods, and data is required.
Lesson #4 – What digital transformation is not about.
In my experience, the early stage of digital transformation becomes complex and often derailed when someone says “agile”.
In the context of enterprise digital transformation, agile is not a strategy and the goal is not to become agile. At best it is a tactical methodology, like lean. Complexity and conflict begin when companies set up an enterprise agile transformation office and staff it with agile experts.
It is wildly expensive. Organizations spend hundreds of millions of dollars every year on consultants, agile coaches, and certifications that are meaningless. They typically spend the first year trying to standardize processes, create agile dictionaries, and train agile “awareness” to people in organizations who will never use it. It creates conflict, turf wars, distractions, and little value.
So where does agility play in the digital transformation strategy and how do you plan and implement agile? It’s an important decision that leaders need to make. Just don’t let it become your definition of transformation and take the spotlight away from your vision, business, and product strategy.
Don’t misunderstand, I am a fan and deep practitioner of “modern agility”, which I regard as the current best methods and practices. Give credit to the founders of agile who inspired incredible new ways of working, as did the fathers of lean and six sigma. Also, realize the agile manifesto and scrum is twenty years old. Work with experts who have a modern product-focused perspective and can execute that way.
While some standardization and governance may be helpful, great leaders create the space for people to accelerate change. They inspire an innovative, entrepreneurial mindset and sponsor small, accelerated ways of working.
Make your transformation about becoming the company you want to be and how to achieve the vision. No one will look back and talk about how agile they were. They will have accumulated stories about people. The people that led them, that worked alongside them, and the difference they made together. Start with stories and keep adding them to the leadership playbook.
Digital transformation is nothing without data. Most organizations need to start with cleaning up their data, data architecture, infrastructure needs, cloud solution, etc. Leaders often wait on a data strategy believing that the data is not ready or reliable yet.
Great leaders can prepare to accelerate teams to find and unlock value sooner. As a leadership team starts formulating how you will compete on analytics, start the strategic plan with business priorities and key indicators, and how you will execute with high value/high potential opportunities. Iterate on this plan as you build and release the product.
In the early days of transformation, the talent strategy needs to align to the business strategy. Most organizations do not have the technical talent they need and will typically prioritize recruiting digital talent. New digital talent needs to be properly onboarded and assimilated. These are the tactical pieces.
Great leaders also start with an intentional talent strategy for building the digital function. It will take about two years and go through two or three reorganizations. Everyone will be developing new relationships. Resistance from people in the enterprise toward people in digital is expected. The pace of digital is much faster. Slow legacy processes need to be abandoned. Silos must be broken down.
Great leaders do not wait for employee surveys to show that problems exist. They have direct lines of communication with key people in key roles. They listen. They notice things like whether employees trust themselves enough to accept empowerment. Or do they continue to push decisions to the leader because they fear accountability? Even if trust is high, it will need to be reinforced or reestablished many times over.
Here is an example. In a large global organization, the entire staff was asked for a list of barriers that kept them from working effectively. The list was compiled by managers and reviewed by leadership. They found out employees had strong beliefs about things that were not true. For example, employees believed they were not allowed to travel to a customer site to do product discovery because there was no travel budget. In fact, each location had a generous travel budget to spend on product design and development. This belief was slowing the work on developing personas or getting feedback on prototypes. Money was spent on features that did not matter. The leaders chose the top ten barriers and did a “myth-busting tour”. It was a chance for leaders to show up authentically and in a way that modeled transparency. Interestingly, employees said were not fully convinced of the truth until they booked their travel and saw that it was approved. People need new truths, and new experiences, and need to create new memories in the early stages of transformation.
One thing about the transformation is guaranteed. It will expose cracks in cultural norms that you did not know of or thought were small. The transformation will not just expose them it will enlarge them.
The digital leadership team should have a deep self-awareness of their traits and how they work together to lead the transformation. There are several excellent leadership assessments. Begin talking about their strengths in the context of digital transformation. Understand how they show up to employees. Find opportunities to start practicing new behaviors. Three key areas to explore right away are empowerment versus command and control, attitudes toward experimentation and how they respond to failure, and how they deal with trust and fear.
Digital transformation will mean rapid decision-making and reprioritization. Be aware of your decision-making norms. Establish behaviors that keep everyone focused on the delivery of value verse bending to the loudest voice in the room. Empower teams to make decisions at the team level where they can be made quickly and keep the flow of work going. Leaders can set guardrails that limit risk and still allows the team to make decisions.
Great leaders are constantly thinking about whether they have the talent they need. My expertise is in working with leaders to create a digital talent capability model. They use it to objectively assess where they are and prioritize their needs. Digital requires a different model. It accounts for technical and non-technical capabilities. It speaks to the unique structure of working in small “ring-fenced” product teams verses a traditional organization structure. That is why generic competency models do not work.
It takes time to get this right and an ad hoc approach will only lead to firefighting issues as they come up. Build the digital capabilities as you go and integrate it directly into the way you start to do product management and data science.
I recently read a study that claims it takes on average 10 months to realize the benefits of a restructure. So, if you change your organization more than once a year, and you most likely will, how will you make it pay off? Each change will expose new capability gaps. Assess the impact before you make it and have a plan to accelerate.
You may be thinking this all sounds like change management. In my experience, this is not a situation for a model like ADKAR, and I would not recommend adding a dedicated change lead. Change models are too slow and “waterfall”. I have seen that approach fail almost every time.
Finally, set some guiding principles or imperatives for success. In one organization they chose speed, transparency, and accountability. Stated imperatives give people permission to call out anti-pattern behaviors like, delays, hoarding information, and siloed behavior.
As Stephen Covey said, “The main thing is the keep the main thing the main thing.” Digital transformation is about people, your customers and employees.
Transformation is very intensive change. One of the hardest things for people to get used to is the idea that you are never done. If you don’t experience this, you are probably doing incremental improvement and your results will show it.
Leadership in the early days of transformation is tough but very rewarding. Finish your leadership playbook with stories about you, the people you led, and the new value, business, and organization you created through new digital solutions.