7 Requirements for Digital Transformation
Digital transformation is not just about technological transformation of the organization, it’s about transforming the culture of an organization. It’s not enough to bolt technology onto an existing strategy and consider it transformed. That’s the message from our Chief Marketing Officer Mick Hollison discussing digital transformation with Charlene Li at Cloudera Now.
Charlene is a titan in the field. She has over 20 years of experience in tech and business and has been a respected advisor to Fortune 500 companies on digital transformation and leadership. She also serves on the regional board for YPO, a global network of CEOs. She’s the New York Times bestselling author of six books, including her newest release, The Disruption Mindset: Why Some Businesses Transform While Others Fail.
As Mick and Charlene both pointed out, COVID-19 has forced companies to adapt with digital technology faster than we ever imagined. Practically overnight. “Our response to COVID should be giving us confidence that we can move a lot faster than we thought,” said Charlene.
However, technological transformation alone does not guarantee new revenue or even long term survival. Businesses are now faced with more data, and from more sources, than ever before. But knowing what to do with that data, and how to do it, is another thing entirely.
Poor data quality costs upwards of $3.1 trillion a year. Ninety-five percent of businesses cite the need to manage unstructured data as a real problem. By 2025 nearly all data generated will be in real-time. “For companies to not only survive COVID but thrive in the new world order, they are going to have to do more with their data,” said Mick.
Companies need to start focusing on the transformational part of digital transformation to get the most out of their data. Culture needs to pivot, to allow everyone the power to harness data and innovate quickly. Charlene laid out exactly what that looks like over the course of the discussion. Here are the main lessons I took away:
Digital Transformation is a Process, Not a Goal
Digital transformation itself isn’t a goal. It’s a tool to increase digital maturity and to build the digital capabilities to transform a business. It’s not just about implementing new technologies. Leadership and culture play a pivotal role in a company’s successful transformation.
Leadership Makes Digital Transformation
Charlene used the story of Adobe’s transformation to illustrate the importance of leadership. Abode moved from packages of software to subscriptions in the cloud before any of their current customers asked for it. In fact, their customers were very happy with the status quo. However, Abode realized that the world was about to change and, in order to attract new customers who wanted more agility, collaborativeness, and faster updates, they had to evolve.
It was not easy. In fact, it was a painful process to overhaul their entire business model and they lost significant revenues over the course of two years. But the publicly traded company was transparent and bold in communicating their plans and objectives. They were dedicated to the idea that the pain would be worth it to come out better. In the end, according to Charlene, “it was the leadership that held the organization together, communicated to customers, communicated to Wall Street — that made the transformation part of this possible.”
“Culture is how you get things done,” said Charlene. It is the engine that dictates how fast you can move your strategy. Businesses that successfully transform, like Adobe, have a lot of organizational structure, process, and culture that focuses on supporting a disruptive mindset. A disruptive mindset creates an environment that embraces constant experimentation and change. It doesn’t punish failure, but learns from it and adjusts. “We all learn more from our failures than from our successes,” Mick emphasized.
Stability during Uncertainty
Creating a culture of disruption is a leadership initiative, not a technological one. People are not going to feel comfortable taking risks if they feel like their job is on the line. Companies need to make it safe for teams to experiment and try different things. No one will push the limits of innovation if failure means unemployment. Especially in this extreme moment, when the world feels so chaotic and uncertain.
“When the world is highly uncertain around you, you want stability and safety inside your organization,” said Charlene. “We have to do things a lot faster and things aren’t always going to be perfect, but we will get there faster if we have this acceptance and we have built systems of safety and security for everyone to do that.”
Openness Creates Transparency and Accountability
Culture flows from the top. To foster a disruptive culture, Leadership needs to be clear about objectives, transparent about strategy, and open about failures and successes. People need to see that failures are not punished. It is always better to know when something has gone wrong. “You can’t fix what you don’t know,” said Charlene. “Bad news is good news, good news is no news, no news is really bad news because you have no idea what’s going on.”
Bias for Action
Transparency in an organization also fosters a deeper sense of ownership throughout all levels. A culture where every employee has agency and sees themselves as an owner means that more people feel comfortable taking action. Employees know what the strategy is, what their role is, and how they can execute on it.
If people are more confident and less scared of the consequences of failure, you can move quicker. Instead of collecting all the information and not taking action until there is close to 100% certainty that everything will work, people move as soon as you have minimally viable data. After all, most decisions are reversible, so you might as well take a stab at it.
Democratization of Data and Insights
The data that it takes to make a decision should not be hoarded by those in powerful positions. “If only a small group of high priests of data hold on to the insights, that’s not going to help you,” said Charlene. Data should be in the hands of the people who need it. Importantly, the people on the front lines that work with customers every single day are sitting on the most important data. They need access to, not all of the data, but the most relevant data.
Leading a digital transformation is so much more than just integrating new technology. It’s about creating a culture of openness and innovation that harnesses the power of data and does more with it. As companies mature digitally, that transformation becomes more vital to business strategy and requires more leadership spearheaded by the CEO.
However, Charlene calls the most successful leaders of digital transformation “Realist Optimists” — people who are open to change and inspire that openness in others, while empowering them. What’s more, she says they can be found at any level of the organization. Successful digital transformation relies on finding those people and empowering them.
Watch the full discussion from Cloudera CMO Mick Hollison and Charlene Li from ClouderaNow.