As we have recently started celebrating 2018, the paramount of Digital Transformation for companies is clear. Organisations in all industries must invest in transforming their businesses. To stay ahead of competition, discover new growth opportunities and meet the evolving demands of customers and employees.
Once you have decided to start your Digital Transformation you have made a conscious decision to build a new version of your business and organisation. This is important to mention, since we always have the option of doing nothing.
As this is not a popular option and offers little growth perspective, we tend to prefer transformative strategies.
So this is how most of us proceed:
1. Let’s hire some of the big 4 consultants, since “they must know.”
2. We will have some well structured benchmarks and strategy meetings in order to plan our investments for Digital Transformation.
3. We get the right, winning projects in place and decide what new tools to implement.
4. We restructure our teams, change the way we work and hire some agile coaches to support transition.
Luckily, you are not ‘most of us’, and you are reading the right stuff to prevent mistakes that others made for you.
Because what I just described is still how it goes nowadays.
And all the people you work with are just fine with that.
No surprise, as you are fuelling the economy with your demands for transformation.
Very few will tell you the truth, and dispute why these efforts will probably not meet your expectations nor the desired results.
You are about to make heavy investments in tooling, projects and consultancy.
Please take a deep breath. Sit down and relax. Think twice.
Are we forgetting something?
Yes you are.
Now please consider, what was the reason again you needed your company to transform in the first place?
Oh right, because technology and market developments have accelerated and our organisation did not keep up the pace. So actually, we have all these bright people and experts in our company, we installed solid processes and decent tooling that did not evolve the way our customers would like to see it. And now we need to change.
In that case it is inevitable to look into the deeper causes of why your business model, the customer and employee experience are no longer growing the right curves.
While the whole ecosystem around digital transformation is full of technology/tools, processes and people, mindset is the 4th key aspect of transformation and often overlooked.
First of all, the transformative mindset is something that no consultant, technology partner or system integrator will offer you to help with. Moreover, most consultancy firms suffer exactly the same behavioural and mental barriers for transformation as their clients. It is very unlikely the people consulting your firm are aware or know how to address these barriers. In this perspective, the Digital Transformation of your organisation can be viewed as a sociological problem. And you are not alone.
Examining these mental barriers can provide a key answer to why your business needs to transform. Of course you are the only one that can answer this question for your company. Yet, based on my biographic material during years of practise this is an attempt to conclude the most common behavioural and mental barriers we need to overcome for true transformation. Please consider them as moving targets or work in progress. And share with me if you agree or disagree and why.
1. Virtual Walls of your company
Companies originated in 20th century (or before) have traditionally established a virtual wall between the world outside and inside the company. We have made classified information and a formal spokesman common practise. Trying to protect your reputation in a world of endless timelines and digital media is becoming increasingly difficult, nearly impossible. But we still try, and I tend to go with the wisdom of Nassim Nicholas Taleb for this one: If you worry about your reputation, you probably don’t deserve one!
Whether you agree or not, if you are programmed with a mindset of two different worlds (inside and outside the company) there are a few issues:
- A lot of your people live in a vacuum of no customer contact and create hallucinations of what they think customers want, need and experience. This is not a practise only the board uses, but happens throughout the entire organisation and all disciplines.
- The above mentioned creates a lot of unnecessary work and discussions about priorities and frustrates the people having daily customer contact.
- You don’t have access to highly skilled expertise in communities, outside your company. Something you will receive as a positive return for tearing down the wall.
- You need to do all of your work with internal resources or the external consultants that you have hired exclusively. Prepare for an internal battle on scarce resources.
- You constantly need to think and rethink what is public and what is private. That keeps you busy and makes you tired. Whether you want it or not.
There is a few things you can do to break the virtual wall. Start with putting your customers in the face of your employees. This will deliver the highest direct pay-off. Enable real contact on a regular basis and make sure everyone sees the benefits and participates, especially your executives and board members with ferocious agenda’s! After that, make sure your product development and marketing teams truly co-design the next product or service your company will launch with your customers. At the same time, challenge your teams on their social and deep listening skills. Do they really understand how customers feel? Or is data interpreted in a self-serving manner, mainly supporting established views?
2. The ego’s menu
Now this is a delicate subject. So don’t take it all too personal.
Since I have been a little boy, my ego’s has been of great use. Being competitive in sports, hobbies and at work I always found my ways on how to stay ahead of competition. In that sense, my ego served the purpose of performing and provided me with enough confidence and comfort in whatever I did.
Unfortunately, I have only learned to understand the needs and appetite of my ego in my (late) thirties. The improved understanding provided me insights on what my ego desires, how it influences my behaviour and also what it takes to control its impulses.
I do realise that’s a bit late now, and I am very sorry if my ego offended you (more than once), but hey, that’s life.
I only realised what ego’s have for menu when I made it to my first official meeting in an investment committee. It was our task to decide on the best ways to invest (the limited) funds available. The organisation I worked for was no exception and existed in functional silo’s, such as HR, Finance, Marketing & Sales, Technology. Nothing wrong with that and lots of companies still work this way. The thing is, when something gets scarce, the ego tends to take over. The proposals for investments always had an owner, coming from a silo. And in order to get what you want, the ego will try to make their proposal bigger than the other. People got in survival mode, trying to dominate others and push their opinions and projects. We ended up being our worse competitors in that room. And the people with the right pitch, on the right time for the right audience, simply outperform the others, regardless the quality of their ideas. What struck me, was that whatever project would make it to receive their requested budgets, everyone was losing. We were people, working for the same customers, serving the same company, and we tend to compete, for budgets, for resources, for fame. And yet, the ego loves it. It’s ready for his favourite menu; the power games of seeding fear and politics (you notice I just choose male for the word ego, but in my experience women show similar signs).
The ego loves the instant satisfaction when it gets its way.
We need our ego’s to be who we are, so it is key to understand the mechanisms and make sure we serve them the right menu before they still their hunger with fear and politics. This is what you can do:
- Begin with the assessment of your companies massive transformatie purpose. Does it inspire and attract your people to work on? Does it create a sense of collective goals and stimulate people to take initiative? Once you have that in place, you can proceed. The company’s purpose should be seen as our Ego’s main course. It describes why it comes to work everyday.
- Ego’s that have demonstrated repeatedly they prevail their own career above the company’s collective goals and purpose, should be removed. This is extremely important and often forgotten, especially in the upper ranges of our hierarchies. Your executives and leaders are a daily role model to your people. Their behaviour is an implicit signal of where your company will be in the future and has a massive impact on your teams.
- So once you have a collective purpose, and removed ego’s with other priorities, it is time to look at rewarding systems. Do you reward ‘supporting the growth of others’, do you praise ‘helping others reach their objectives’?
Is the reward system mainly programmed to serve yourself or to serve others? The reward system is often an important driver for people to behave in a certain way. So you need to understand how it drives your teams and people, for the sake of your transformation. With a very strong purpose you might not even need the reward scheme, but that is up to you to decide.
The theory of ego has once been translated in a mathematical formula bij Albert Einstein, as follows : Ego = 1 / Knowledge.
This formula implies that more the knowledge lesser the ego, and lesser the knowledge more the ego. I think the formula still goes in our times, however would propose a slight adjustment. With a declining half-life of knowledge or half-life of facts, as described in the field of scientometrics, we can no longer take “Knowledge” as a static noun. So for this equation I believe it has evolved into “the ability to updating and creating new knowledge”. The ego will decrease once it has discovered the magic of continuous growth and learning. Stimulating this collective learning is the main thing what needs to be done. Yet, if the ego’s menu remains unchanged, your transformation will be frustrated, guaranteed.
3. Assumptions of the expert
The third mental barrier I meet regularly are the assumptions that we develop through our expertise. They are a direct consequence of the experience and knowledge that we gathered throughout our (professional) lives. All this is of great value of course and is a consequence of being successful and achieving results in your company.
But when times have come to transforming your business, all this expertise and assumptions you have collected can suddenly become a massive barrier to get things changed.
Our assumptions tend to make us think we are right, and the others are wrong. The future is uncertain and we don’t like that. Our assumption trick us and make us want to predict future developments, trying to take back control over what is uncertain. Making plans, preparing measures, mitigations and get behind the steering wheel.
If this is your practise of exploring the future, again, take a deep breath.
A growing popular approach to transforming businesses is the innovation and exploration of new growth opportunities on the edge of or outside the company. When accepting our current business model will end some day, we create the mental space to explore without losing focus in our daily business.
But there is a dark side to this approach, as it polarises. By setting up different frames for innovation of new business and exploitation of the current business you might create potential warzone. Two enemies, the old versus the new. And you can guess who will benefit from that zone, your direct competitors.
When looking at transformation, you want to create a new state of the old. You don’t want them to oppose each other. And that means the teams running the business, need to improve their experimenting practise. Now these are the things you can do, if you want your existing teams and people to overcome their assumptions.
- Invest in company wide learning of new practises.
Design thinking, prototyping and testing assumptions in real-life experiments need to become a standard for your whole organisation. Not just shiny tools of your innovators.
- Scale up your experimentation.
Experimenting with your products and services means you need to cut down resources working on big projects with (assumed) guaranteed value. Instead, have them organise regular sprints in which they prototype new solutions to old problems.
- Use your innovators to facilitate the experimentation processes of your business teams.
This way you enable a true collaboration and disseminate knowledge in two ways. The business expertise is added to your innovators. And your key business teams improve their creative skills of designing, prototyping and interviewing customers.
Whatever you choose to do. Beware of the expert. Challenge their reasons not to change. Ask when it was the last time they tried.
Ask if you can see the data that was collected in experiments.
See how the collected data is interpreted.
This will give you a clear sight if experiments are used to learn new things or to confirm existing views, opinions and assumptions.
4. Minus infinite growth
As for the last mental barrier I need to warn you that I was recently biased by reading the book ‘An Everyone Culture’ of Robert Kegan and Lise Laskow Lahey. In the book, they describe a very rare species of companies creating a culture in which everyone—not just select “high potentials” can overcome their own internal barriers to change. Kegan also addresses the different levels of mental complexity we humans have. The third level of mental complexity is the transformative perspective. This is the level of complexity that not all people will reach in their lives, but leaders need it to transform their business. It helps to connect others and oversee the transformation, and lead in order to learn. Helping your people overcome their internal barriers and behaviour, stimulating their continuous growth is a key thing to do for transformation.
The cases described in the book read like fairy-tails. One of them is Next Jump , a culture hacking company with a digital platform. Their philosophy ‘Better me + Better you = Better us. The company demands from their employees to never stop growing, but also to help others grow. It is both hopeful and admirable to know we actually have companies on our planet that make the magic of infinite personal growth happen. Just in case you need a more local example. During a meetup I had earlier today with Netvlies, a progressive online agency in Breda, I realised once again they are doing just the right things for their people to continuously grow to the next level. If you ask them nice, you might even get a tour (ask for Philip)!
I realise that, when reading this, you are tempted to think; “Hey, we are also doing this in our company!”
Sure, your organisation invests in human resource development, talent programs and makes your people grow. But when it comes to difficult choices, I bet the company goals prevail over people’s personal goals. Most organisations have developed a sense to look at personal goals within the boundaries and context of what the company desires. The degree to how people achieve their personal goals, is in most organisations subordinate to the overall company results. Minus infinite growth is how I define that personal growth is limited within the boundaries of organisations objectives.
In practise this leads to the following issues:
- People that are good at what they do, are well rewarded for the value they add. They are not stimulated to move on. Even if they feel it’s maybe time for a new opportunity, we prefer not to lose a good expert on such an important place. This is a common reason for (growth mindset) people to leave companies.
- There is a high risk of developing a fixed mindset. Since you are being rewarded and praised for what you already know. As a person you have lower stimulus to develop new skills.
- People slowing down their personal growth become less valuable over time which is directly devaluating your companies main asset.
- People tend to avoid risk taking in discovering new practise or exploring new methods as they are aware these growth and learning experiences are not valued equally to measurable and proven business results.
Should you want to have some great tips on how to establish a growth culture, I recommend you read the book or visit Netvlies. Stimulating continuous growth is invaluable as it comes to build a transformative mindset as your people will never accept status quo again.
The best experiences I have gained in my work exist of how we dealt with a big mistake in one of our customer contact teams. I mean a big mistake, one that bring you in the news. Instead of blaming we organised a ‘Failure Night’ around the incident. It was our attempt to maximise the effect of learning in case something goes wrong. Employees together with our most senior leaders were on stage talking about their personal failures. It certainly was one of the most memorable things we did.
To conclude, investments in technology, digital tools and literacy of your people need to be carefully planned to remain a valuable company in the future.
And yes, you should spend a great amount of energy and time to carefully define how you will manage the delta plans of your IT infrastructure, Data Management and Digital capabilities. But to make these investments worthwhile, you cannot avoid the deeper causes behind your need for transformation. Why is it, that your assets have not evolved on time, your people have not updated themselves in their fields? Why do your processes no longer fit customer demands? How come our consumers use more state of the art technology than we have at work? There is a high probability that one or more of the above mentioned barriers will also slow down your transformation.
So if you are still convinced that your organisation should transform, you should consider how to address the mental barriers and establish a true transformative mindset throughout your company. Again, no single one solution will fit for all companies, but you probably know best what to do to lead your transformation.
In case you need advice, just make sure you ask the right people.
You recognise them by what they do, not by what they have done.
And by what they practise, not by what they preach.
Wishing you all the best.