I recently came across an observation about parenting that I think is widely applicable to business decisions: “When we make assumptions, we contribute to the complexity rather than the simplicity of a problem, making it more difficult to solve.” It’s a trap that companies often fall into at the outset of a digital or business transformation initiative aimed at achieving breakthrough performance.
Leaders tasked with driving the transformation are asked to plan how to reach the end-state goals in the company’s vision. But those detailed plans and road maps fail with a high degree of regularity. The problem: even though they know the destination, they don’t know what challenges await them and what adjustments will be necessary on the multi-year journey.
Here’s how Herb Kummer, who as CIO has led transformations at several large companies, describes the situation: “Whatever you design today will be modified or maybe even thrown out the window in three years because the world changes. There are just too many unpredictable things that will happen on the technology side and business side that will render useless whatever you designed three years earlier.”
As a leader driving change in a transformation initiative, you need the ability to adjust the plan quickly as the environment changes during the journey or as capabilities and decisions become clearer. I’ve blogged frequently about the necessity of segmenting the transformation journey into short sprints or phases, which enable agility and making adjustments along the way.
In addition, there are three key decision-making areas that can become pitfalls or, if handled with future-proofing in mind, can enhance the success of a breakthrough performance.
Three cautions for future-proofing your transformation decisions
1. Ensure technology extensibility
Recalling a major transformation effort at a global company, Kummer says the company’s leadership team recognized that many things – especially technologies – could “change drastically” in their five-year journey to achieve their vision. Thus, part of their company’s design principles for the transformation were based on the recognition that whatever they built would have to be extensible, meaning it had to be able to be changed easily to accommodate something they hadn’t contemplated at the outset.
“Part of the design principles from the get-go was that we build things in such a fashion that we wouldn’t have to throw out the baby with the bath water if something new came down the pike,” said Kummer. “An example is the notion of big data, unstructured data that had to reside somewhere if we thought the data might be important somewhere in the future but wasn’t important at the outset of our initiative. Each tool we used had to have the ability to subsume future technologies.”
Their design principles also meant they would need to use widely accepted market-leading tools and infrastructure platforms for software development. This had the benefit of a wide pool of people who understood those systems. Kummer explained they didn’t “use new technical companies because we didn’t trust that they would necessarily be around in three or four years or that we could find the people that understood their products well enough to be adequate contributors from an employee basis.”
2. Build for an increasingly interconnected world
An emerging trend and perspective for future-proofing breakthrough performance is the imperative to find ways to engage with, acquire and retain customers in different ways. Kummer points out this is especially crucial in the financial institutions and retail industries where “the interconnected world is challenging the role of intermediaries, creating peer-to-peer networks that bypass intermediaries.”
Digital technologies such as analytics and artificial intelligence will play a role in engaging more effectively with customers and minimizing the cost of improving the customer experience. On the infrastructure side, cloud capabilities facilitate communications and stable data transfer for anywhere/anytime connectivity that is not dependent on a data center that can’t scale on demand.
Future-proofing your business transformation and enhancing breakthrough performance will require coordinating a variety of technologies – not just to create new value through products but also to create more valuable customer experiences in an interconnected world.
As I said at the outset of this post, there is no way a company’s leaders can know today what technologies and new perceptions of value will start to dominate markets in two to five years over the journey to a breakthrough performance. Therefore, it’s crucial to segment the transformation into short phases so leaders can make adjustments as the business environment and needs change.
3. Document intended business outcomes
I recently spoke with a CIO leading a multi-year effort for a breakthrough performance at a global company. They are currently starting a phase focusing on centralizing several operational centers around the world. The intended benefits include optimizing the supply chain but also changing the decision making. The CIO explained that if the business unit leader that proposed the centralization initiative were to leave the company before the multi-year project is completed, “the initiative likely would collapse. The company must make investments for the change. And people would then ask questions about the reasons for the change, and we would need to be able to challenge their concerns.”
In my work with companies investing in transforming their business over the past few decades, it’s not unusual to find situations where companies falter in a multi-year project such as a complex technology implementation. It’s common that after two or three years the original intent and benefits get lost and people ask, “Why are we doing this?” Or the people with the original vision exit the company.
My advice for this future-proofing challenge is to make sure leaders at the outset clearly describe their vision for the breakthrough performance and create a strategic intent document. The description of the vision and intent must include the intended benefits of making the changes. This document becomes the foundation not only for planning the approach to the transformation journey but also for ensuring continuity and ongoing commitment for the duration of the initiative.