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“We really need a digital transformation strategy.” A version of that phrase can be heard coming from many boardrooms and executive teams around the world. Digital business is quite the buzzphrase these days and why shouldn’t it be? With the increased velocity and volatility going on in and around organizations—much of it due to technology disruptions—companies realize that they must adapt, or else. Take financial services, for example. New Fintech and Insurtech entrants are challenging existing norms and business models to start gobbling up market share. Firms like Kabbage and Lemonade are the digital natives of today’s business world. They are born in an age where technology is ubiquitous and only know one speed—fast. Wall Street expects the same rapidity in financial performance. Established organizations are the digital immigrants— working to learn a new language and adapt to a foreign culture. In addition to speed, incumbent organizations are placed on quite the rollercoaster of unpredictability with evolving political and regulatory environments alongside changing customer dynamics.
Faced with these pressures, what are conventional organizations to do? And, how many of these companies know what digital transformation means—or should mean to their organization? In this article, we discuss two critical parts of the answer: enterprise architecture and organizational culture. These areas can help organizations speed up in order to reach and slay the dragon of digital transformation.
A common misconception of the enterprise architecture (EA) practice is that it is only about technology, and EA practitioners themselves sometimes lean a bit too much toward the technology side of the equation. This bias makes sense as many enterprise architects rise out of software development or infrastructure areas, but enterprise architecture is much more. It is enterprise architecture.
Digital transformation presents the realization that a firm’s business strategy is their technology strategy, but the business and its desired outcomes are the engine of the metaphorical organizational train. Enterprise architects should first work with business and technology leaders to help shape the digital vision for their organization. Part of this exercise usually involves discussing the business operating model to determine the desired level of business process standardization and integration.
Enterprise architects need to have a strong grasp on the business operations. They need to know the intended organizational changes and how they impact business processes in the target operating model. Digital transformation often introduces new business capabilities and enterprise architects must blend these digital-first capabilities with the legacy core.
With this understanding of the organization’s future state, enterprise architects can develop roadmaps and work with program and project portfolio staff to decompose the roadmap into projects and other initiatives requiring investment. It is important to represent the collaboration and mutual involvement from business and technology associates in these new digital efforts— especially in the realm of information management.
Finally, architects meet with technologists in applications development and infrastructure roles to dive into the changes required to the underlying technology components. Leading this collaboration, enterprise architects should seek answers to major IT concerns. Which legacy applications should get retired and which ones should be modernized and service enabled? Should we utilize cloud technologies for new infrastructural needs?
Along with seeking a digital transformation and using enterprise architects to help set the vision, some leaders might exclaim, “I want us to be the Uber of our industry!” Well, not so fast. Consider the recent public relations maelstrom as a result of the poor culture within the transportation disruptor. There has been much written on the importance of organizational culture, but after experiencing poor culture, a former Uber employee remarked, “Now I know that culture is everything.” I like to highlight four Cs of cultural emphasis for successful digital transformation.
In a statement that would go on to be dubbed Conway’s Law, computer scientist Melvin Conway writes, “Any organization that designs a system [defined broadly] will produce a design whose structure is a copy of the organization’s communication structure.” The implications of this statement are powerful. If you have poor, fragmented communication, then the result will be a poor, fragmented system. How can one realize an integrated digital platform with inconsistent and siloed communication? Organizations must break through communication barriers and enable boundaryless, bidirectional communication to ensure that all employees have a voice. Successful communication allows leaders to obtain a more complete perspective on how the business does—and should— operate. Customer-oriented discussions yield customer-oriented solutions, and those are a must in the digital arena.
Digital transformation can be like planning a large family reunion—one of the first things you need is to get everyone to support a common vision. In the organizational family, one group may want to pursue a different initiative than another. Enterprise architects must collaborate with key stakeholders and help get everyone to endorse a shared vision. Once leaders are on the same page, then architects craft enterprise roadmaps depicting how the various family members travel and ultimately reach the desired destination.
Change management is where strategy moves into execution. There are many models of change management and they generally share similar notions of deep communication to get down to the why behind the change, employee empowerment, execution—particularly in generating quick wins that can be built upon, and solidifying the changes. Lean thinking and Agile methodologies, especially when scaled throughout the organization, can help deliver the small victories. Regardless of the approach to change, companies must set metrics, provide employees the necessary knowledge and tools, and measure progress along the way.
And how does change get implemented? Through the employees. Studies have shown that over seventy percent of employees do not fully understand their company’s strategy. This, of course, points back to the notion of collaborative communication, but it also highlights issues with employee engagement and their desire to advance the organization. Empowered and engaged employees will own the digital transformation strategy and seek to make it successful. The softer areas—people’s hearts and minds—are the harder parts of digital transformation.
Digital transformation is no small issue, but organizations should use it as a moment to reexamine their fundamental operating model, determine which aspects should be digitalized, and improve the underlying cultural issues that can hinder execution. The demands for speed in a highly volatile atmosphere will make failure more fatal than ever.