New Beginning or the Start of the End?
Is Your Transformation answering the right questions?
Everywhere you look across the Australian business and government landscape, organisations are actively engaged in Digital Transformations. The higher order questions that remain unanswered in many of the Digital Transformations we have observed include;
- The Strategy Question:
How will we compete with new tech-savvy competitors, and the disruptive tech giants in rapidly changing markets?
- The Business Model Question:
What is the impact of these disruptive influences on our business model? What products/services should we invest in and promote to which customers in which markets with what value proposition now and next?
- The Operating Model Question:
What new capabilities will we require and what operating model options and partnering opportunities should we consider to balance speed and cost?
The ASX is dominated by large, well established organisations, the average age since founding for the ASX100 being 72 years (circa 1946). Only 3 years prior, the then president of IBM, Thomas Watson famously predicted “I think there is a world market for maybe five computers”. The foundations that these organisations were built upon once provided stability and resilience through predictability. Unfortunately, many of these foundations and their underpinning tenets are outdated, and now proving to be significant impediments, rendering these organisations sluggish and exposed in fast moving and highly competitive markets.
Amongst ASX listed companies, transformation budgets exceeding hundreds of millions of dollars are not uncommon and form the response to significant market disruptions impacting all industry sectors. The alignment of focus and investment across the market suggests that these disruptive forces have appeared overnight, however this is not the case. The impacts of technology advances that have fuelled global connectedness, consumer empowerment and data proliferation have been forecast, published and discussed for over 2 decades. Sadly, our largest organisations in Australia either failed to respond in a timely manner or failed to respond with effect.
Digital Transformations represent the current flavour of transformational silver bullets that seek to address the years of technical, process, structural and cultural debt that have amassed over many years. In doing this, the hope is that Organisations will be better equipped to;
- Innovate at speed – deliver products and services to market faster
- Acquire new customers and meet their changing needs – be more customer centric (B2B, B2C)
- Reduce operating costs and increase productivity (simplify, optimise and reduce waste)
- Achieve the holy grail – change their DNA to predict market trends, innovate and adapt as the new modus operandi. Staying highly responsive, adaptive and relevant.
Meaningful definitions of value and success start with strategy
Whilst Digital Transformation narratives often describe a focus on end-to-end business processes, driving rich data insights and customer intimacy through Design Thinking, the reality is often a different matter. Too often;
- the actual scope is centred around addressing technology debt through programs of simplification, modernisation and re-platforming, with pockets of agile DevOps thrown in for good measure,
- they are driven as technology initiatives by a technology division (inside out) rather than a series of business transformations (outside in) and fail to move the needle on any core strategic goal or measure, and
- the outcome is a suite of new market facing software assets that customers don’t notice, and new technology platforms enabling business units to drive their own change at some subsequent juncture.
Perhaps the starkest observation is how many Digital Transformations fail to commit deeply to the enterprise-wide cultural change required to achieve the overarching transformational aspiration. In the Australian market, there are many examples of transformation clean-up activities, and significant subsequent rounds of transformation investment.
So, while most organisations have convinced their boards to invest in a Digital Transformation and the technology infrastructure that underpin them, the following questions remain unanswered;
- If everyone knows the key ingredients of the Digital Transformation cake, then why is it that in Australia we continually only half-bake it?
- Where are the showcases of great and relevant local Digital Transformations for us to reference and learn from?
Surely a 10-year old US based technology company is not the best case-study for a 100 year-old Australian bank.
Our direct and indirect observations of digital transformation programs over many years, including many frank conversations and admissions from managers and executives presiding over these Digital Transformations suggest that most are a long way from delivering their organisations to the promised lands. Many are on their second, third or fourth round of capital injection (and management teams) in pursuit of the holy grail and very few have a map, let alone a plan connected to the set of measurable core value drivers.
The Australian experience in Digital Transformation does not follow the same pattern as International markets. Our opportunity is to calibrate global good practice with an Australian flavour for a better outcome by leveraging local lessons and expertise.
How does your Digital Transformation differ from other local market examples?
Coming Up Next: Insights and Observations from Australian Digital Transformations
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