At this year’s Peter Drucker Forum, I was confronted with a pivotal question: Does digital transformation genuinely make organizations flexible?
My candid response: Nowhere near the mark.
In the rapidly evolving digital landscape of the past decade, executives have grappled with a common dilemma: How do I digitally transform my business? The term ‘digital transformation’ became synonymous with big budgets and high-risk, multi-year programs, primarily focused on implementing new technologies. However, often lacking was sufficient emphasis on delivering the flexibilities necessary to succeed in the ever-changing business world.
Flexibility for an organization can manifest in various ways. It aspires to be swift – quick to launch new products, adaptable in response to customer feedback, and capable of swiftly entering new markets. It seeks a resilient supply chain that can cope with demand fluctuations. It also aims to facilitate seamless collaboration among employees across different locations, breaking down organizational silos. Assessing our flexibility, the pandemic has shown how resilient businesses have been, while decreasing corporate longevity on the S&P 500 Index serves as a testament to their relevance for their customers.
Fast forward to the present, where, with everything changing at the same time, escalating complexity, and a pace of change that can only go up, it is imperative to critically re-assess the design of digital transformations.
Leveraging insights gained from hands-on experience in transformation initiatives, here are six rules to guide the re-design of your digital journey for enhanced flexibility:
- OUTCOMES DRIVE WHAT GETS PRIORITIZED:
There’s a common pitfall in transformative journeys: the measure of progress shifts from achieving outcomes to simply executing the plan and delivering outputs. This happens because those devising the strategy and those who execute it aren’t quite on the same page. Simultaneously, the world has become increasingly complex. To navigate this complexity successfully, it’s crucial to continuously steer the transformation based on the insights gained at every stage of execution.
This rule empowers organizations to consistently direct their efforts toward actions that lead to the desired outcome. Stay focused on the goal, but be prepared to adapt on the way.
- TIME-BOX OUTCOMES:
Humans are very good at expanding work to fill the time available for its completion.
This rule introduces an explicit time constraint for achieving outcomes, no matter what. A commitment to demonstrating real value within 120 days not only speeds us up, but also sparks creative thinking to focus on what truly counts. This creates an environment in which organizations can constantly learn and adjust.
- RE-IMAGINE THE WAY UNCERTAINTY IS MANAGED:
Strategic decision-making is crucial for the success of any transformation, yet executives steering the process often hesitate in the face of inherent risks.
Imagine a company contemplating a shift in its product line to align with evolving market trends. Executives might well feel queasy – will customers respond positively? Are we addressing their most pressing needs? Will they be willing to stump up to pay for the proposed changes?
This rule dials down their discomfort by breaking down such decisions into micro-components, providing executives with incremental evidence and facts to underpin their choices, and minimize risk before expensive commitments are made. By reducing uncertainty at an early stage, such a structured approach enhances the chances of success.
- ADOPTION BY DESIGN:
Meaningful change happens when the solution created by a digital transformation is adopted by target customers. Take-up happens when the solution genuinely adds value from their point of view, meaning it must address problems that truly concern them. We often assume we understand their needs, but much of the time reality is quite different.
Placing people’s needs at the core, this rule enables you to continuously learn what really matters to customers and fosters an ongoing understanding of their evolving needs. The key is to establish a proactive strategy for driving adoption of the solution, recognizing that merely creating the solution isn’t sufficient.
- INNOVATION-INFUSED TRANSFORMATION:
Despite substantial investments in digital transformation, many organizations still lack readiness for the future. The issue often arises from treating innovation and transformation as distinct entities, assigning the sole responsibility for innovation to the innovation department rather than integrating it into the overall transformation.
This rule reshapes the approach, emphasizing the integration of innovation at the heart of transformation. It promotes a culture where creativity, adaptability, and forward thinking are inherent at every step of the ongoing change, helping organizations build a powerful competitive advantage.
- BALANCED PORTFOLIO APPROACH:
A common pitfall for many organizations is the tendency to lean heavily towards either efficiency or growth while shaping their transformations, even when the underlying landscape that delivers both remains the same. An excessive focus on efficiency may streamline operations but risks losing customers to competition, while an exclusive emphasis on growth might result in unsustainable cost levels.
This rule serves as a strategic compass, urging organizations to avoid the extremes and adopt a balanced portfolio approach. Embracing both offensive strategies for growth and defensive measures for efficiency, tailored to the organization’s risk appetite, ensures a dynamic equilibrium.
These rules, drawn from our practical experience of assisting customers with the TCS PaceTM – Digital Innovation Factory, aid them in establishing a next-generation setup for digital transformation to deliver enhanced flexibility. This enables them to stay resilient and relevant in these uncertain times, making the transition from merely ‘doing’ digital to ‘being digital’, and transitioning them into a digital business that constantly adapts.
The future is exciting. Get comfortable with being uncomfortable and embrace the future with confidence.
About the author:
Lalit Karwa is Head, TCS PACE, Tata Consultancy Services, Europe, specializing in helping organizations respond to shifting customer needs and gain more value from their innovation and transformation investments.