Article by Otto Acuna N. MBA, CMC, CSSBB 🇨🇷 🇪🇪 – Originally published in Arabian Business on April 26th, 2024
Most organisations embarking on the digital transformation journey have very general and grand vision statements, but many leaders can’t define what they are transforming into
Lately, I have been thinking quite frequently about “governance”, specifically “digital transformation governance”. As a CEO or a top decision maker in your organisation, this topic probably does not raise your enthusiasm, at least not in the same way the topics of “results”, “KPIs” (key performance indicators) or “strategy” might.
I lead a boutique management consulting service provider, specialised in backoffice operations and a B2B company to consultancies in this same field. Therefore, my day is usually filled with conversations around how to improve the business and achieve operational excellence and resilience in the midst of this digital avalanche we’ve been immersed for the past 3-5 years.
Everyone knows these days that they must “transform digitally” and I believe the priority of this initiative is well understood within the context of the strategic goals and boundaries of every organisation. What is not that clear, at least in my interactions, is “what are we transforming into?” and this is where the word governance comes into play.
The problem with the term “digital transformation” today is that it means many different things for different organisational leaders. This description is given usually to a discrete group of initiatives that can bind under the same roof migrating to a new ERP (core system where accounting, procurement and billing are performed), changing the way we tackle marketing through social media, the installation of a CRM (customer relationship management) system, the incorporation of IOT (internet enabled devices) into daily field operations or the automation of the manufacturing shop floor with some robotics or other technologies. They all fall under “digitising”, “digitally transforming ourselves” or similar terms.
Most organisations embarking on the digital transformation journey have very general and grand vision statements and even strategic objectives around digitally transforming, but if you ask the leaders to define with detail what are they transforming into, they will probably have to sit and think for a few minutes to describe it. If you ask your C-Suite team, they may come up with several versions of that answer.
Through different accounts by the Big 4 and MBB consultancies and other sources, it is considered that 70 percent of digital transformation projects fail. I think this is a very bold statement that could be perhaps re-phrased as “70 percent of all DT projects have partial success and have not achieved what they thought they would”. This unfulfilled sentiment may take the form of “not scaled up as we wanted”, “not widely adopted in all Divisions”, “some successes but not everywhere” or something more dramatic, in a lower percentage of cases.
Let me share my own definition of digital transformation governance: “it is a group of definitions and rules that help you fulfill your DT expectations in spite of yourself, aligning everyone on what the priorities and the operational achievements of such change should look like”.
Scholars define successful digital transformation governance as:
- Having a very ‘operational’ shared vision of what digitally transforming look like, on a way that can be recognised by the shop floor or the field operations level. This a way to say that everyone understands what we are transforming into.
- Establishing growth priorities for the portfolio of digital transformation initiatives. That means to control how many projects are out there and focusing resources and C-Suite attention on the key initiatives.
- Experimenting new ideas or ways to accomplish objectives as a conscious decision and process. Experimentation by itself and let alone without any direction might not be focalized enough and can waste resources. Organisations should establish experimentation guidelines down to the lowest level of the ranks in a way that allows for time and resources to be assigned to think “how to do things differently”, in a focalized and directed manner. Also, the channels to submit the results of this experimentation effort and the processing of these results has to be clear for everyone.
- Flexible decision making at lower rank level. This is in itself a challenge for Middle East companies, where business culture fosters a very clear structure regarding decisions and roles within the organisation. A very clear structure (policies, processes, priority rules, etc.) on “how to experiment” might work, as the organisation might feel more comfortable to “encapsulate the boundaries” of that expected experimentation within its “Digital Transformation Governance” policy.
- Establish operational principles (clear enough for people to act upon them) that inoculate a “digital culture” at every level of the organisation, especially at the lower ranks that are more used to operate within policies and procedures, in a more rigid manner. Operational principles are guidelines that through operational examples, show the expected behaviour and criteria when the staff is presented with certain situations. For example:
- “When presented with 2 alternatives to accomplish something…. Choose the one in which the experience of the end-user, our client, is simpler and quicker”
- “In meetings, when presenting an idea, your pitch must stay below 5 minutes and contain the benefit to the client or end customer and to the operational team handling the process. You may add additional materials for the discussion, but summarised in maximum 2 pages”
Operational principles are guidelines that drive behaviour in a very clear way. Having well thought statements that exemplify what is expected of employees help them navigate innovation or other cultural changes in their daily work.
As a CEO or a key decision-maker related to your Digital Transformation Initiative, you may start assessing your DT governance by asking all your projects managers and your senior team to describe what Digital Transformation mean for your company as a whole (not the individual projects). You may find some differences or even some unanswered questions in the responses. This is a good place to start: make sure everyone has a shared vision at a detailed level.
By clarifying in detail, the vision of a “digitally transformed you”, misalignments might come up, scalability questions may arise and the thoughtful discussion of the priorities on what you are trying to achieve will provide you guidance on the next steps to govern your DT initiatives as a portfolio that is aligned in the right direction.
In the past 4 years, with the pandemic in the middle, many companies have embarked in the DT journey either as a reaction to challenging conditions or as a result of separate strategies or strategic moves. It is never too late to assess the alignment of your journey with the strategic objectives of the organisation today and to make adjustments to get the maximum benefit of your investment.
How is your digital transformation governance today?
