Tuesday Tip: 8 Keys to Leading and Enabling Digital Transformation

by Graeme Codrington

Hi there to everybody at Novartis. Thank you for the opportunity to talk about the importance of leadership in digital transformation processes. At a staggering 70% of all digital projects across organisations around the world actually fail. And there obviously lots of reasons for that, from not allocating enough budget to overestimating the speed at which these things can be done, to not having the right skills in the business. But probably one of the most overlooked reasons that digital transformation fails is because of leadership and culture.

And our experience as a team at TomorrowToday Global, my experience in working with companies is that this is one of the biggest issues that holds companies back from moving into a new digital era and innovating in this space. I could have put together a three hour video and still had many, many things to say and examples to talk about. But I’ve extracted eight principles with a few examples that I think will prove the point. And I’ve used well known companies and examples, not because they’re necessarily the only companies we should learn from, but because I think that they are familiar to us and many of us know their story. So it’s easier, especially when we’re doing this in video format.

Okay, let’s not do 3 hours. So very quickly then, eight principles. Probably the biggest issue is culture, right? I think that most digital technologies provide possibilities for significant improvements in the way that organisations work and they are there to provide proficiency and efficiency improvements. They are aimed at transformation of workflows.

But if people lack the right mindset to change and the current organisational processes are flawed to begin with, what digital transformation does is just have the effect of magnifying those flaws. Culture change has to be at the heart of digital transformation and existing cultures that are going to be more successful with digital transformation are going to be those that realise deep structural change to the organisation itself is going to be required. Let me maybe give you an example to illustrate this. So Lego realised they needed to move into the digital age, but you couldn’t simply take old Lego blocks and simply create an app or plug it in. The example here, or the analogy here, is to say you can’t just keep doing what you’ve always done, except now add technology, build a website, create an app, automate, add data and so on.

You’ve got to reimagine what can be done now that technology is in the mix. So what Lego did was they actually moved into the digital age. They built Lego for the digital age. I hope this is not a bad example to start with, but it’s an analogy of saying at Novartis, are you simply thinking that the digital projects are there to take the way you’ve always done things and just improve their efficiency or add a layer of technology to them? Or are you open to a change in culture.

This leads to the second principle, which might will help us understand this a little bit more, and that is that almost all digital transformation is customer led. You could actually call it customer lead transformation because at its core, digital transformation is about realigning your business with customer needs through digitization. And that digitization involves both understanding the customer with data and data analytics and so on, and then also providing faster, better, newer, different solutions to the customer. Maybe here is a good example, one of the most famous collapses of all time. So, a bad example here.

This is BlackBerry, right? BlackBerry’s logo was literally inside a shield. BlackBerry gained favour. People loved BlackBerry. Not just for the keyboard that you now had on your phone, this full computer keyboard on a phone, but mainly because of security – and corporate absolutely loved BlackBerry.

It made security – and that was a big issue, especially when we started to go mobile. It made security easy for corporate, so it was brought on board as a digital transformation. But of course, as 18 years ago or so, when iPhones emerged, people wanted more usability. By people, I mean end users. So not just customers, but your employees as well.

The people who actually use the systems were less interested in security and more interested in how easy it was to use the device. Apple understood that, captured the market. BlackBerry refused to shift. They said, no, we think security is the right approach. And, well, we know what happened.

Literally just a few days ago, BlackBerry switched off in its entirety and we can go back to Lego, because what they did was they invited the customer’s voice in. This is the Lego ideas website, where they literally asked customers to say, what would you want? And of course, what customers wanted was not necessarily the robotics. In fact, Lego is defunding some of those robotics, but what they wanted was connection to the other entertainment brands that they love. So linking in with movies, linking in with Marvel and Disney and The Avengers and so on, and basically you can go and submit an idea.

They crowd source the ideas. So connecting to the customer, or maybe let’s just move to our third point. Collaboration becomes absolutely essential. Now, not every organisation, not every company, not every industry is set up for collaboration. And I think that at Novartis, without being a consultant via video here, I think this might be one of the things you’re going to have to work really hard on, is breaking down some of the internal silos.

Regardless of whether it’s changing products, internal operations or how a company engages with its customers and employees, digital transformation is always going to get different departments, different groups within those departments, and the customers themselves working together in a more coherent and efficient way. And if we don’t understand that, that’s one of the ultimate goals of any digital transformation programme, or maybe it’s not an ultimate goal, but it’s where the value lies in changing the way you connect and engage with other parts of the value chain. And I think this is especially true with Novartis, where you’ve got those multiple layers of customers, HCPs, end users, so there’s lots of different people you’ve got to talk to externally and then multiple layers of internal complexity between the different parts of the Novartis business. Some of those set up for regulatory purposes, some of those just legacy from the way you’ve always worked. And too many digital transformation projects focus just on the technology itself and not understanding this massive shift in mindset around collaboration.

A good example of a massive failure here was when Ford Motor Company realised this is probably ten years ago now, that they needed to move towards smart cars, needing to add not just new smart technology into vehicles, but think about what the future of vehicles actually look like in a smart world. So they created this magnificent part – you can go and check out some of what Ford Smart Mobility was doing. The problem is, they completely separated it from the rest of the business. They made it an entirely different business unit. They even put it in a different building, away from the they didn’t want this new smart mobility to impact the business.

Now, you can do that initially just to sort of ring fence budgets and things like that, but if it’s not integrated and connecting with the rest of the business, you’re in trouble. Maybe a good example. I’m not sure if you know Discovery. It’s a South African based company, but now working all over the world. Their vitality programme is remarkable.

It basically uses data gathered from customers of Discovery being a medical health scheme, and it incentivizes customers to keep healthy. So it rewards them with points for all the things that they do to keep healthy. And obviously the idea is, as a medical scheme, they’d rather keep people healthy than pay for them after they’ve got sick. But what Discovery has done over the last number of years is they’ve realised that all the data that they’ve been gathering, all of this information that they’ve now got, spreads into many other areas. And so they’ve started an insurance company. Then they recently started a bank, because they realised that pretty much every health decision is also a financial decision. So to be successful, digital transformation needs to be integrated across the entire value chain of the business and you have to allow it to change the business as well. That means we need to be more adaptive.

And that’s the fourth principle to extract here.Digital transformation mustn’t just be about trying to get the leaders and the organisations to accept the current project, to try and get people to use the software or the system that you’re now developing. It must be a lot less about the technology and a lot more about getting a mindset shift, where people realise that the technology is helping them, but also changing them. So it’s about building a culture that accepts ongoing change. Probably your best example in the last 100 years is IBM. I mean, they literally started as cashier and counting machines.

Then they moved into mainframes and they were slow to get there. Then they moved into desktop computers and they were slow to get there. And then they moved into laptops and they were slow to get there. They didn’t rush into any of those things, but each time they arrived, they then started to dominate the market. Most recently, two decades ago, they sold all of their computing work, actual work, which is sort of what they were known for.

They sold their laptop division to Lenovo, for example, a Chinese company, and then they moved into consulting and IP development. But then they’ve now opened up their patents. IBM is always in the top three or four companies in the world in terms of registering patents. But about a decade ago they just said, anybody who wants to use any of IBM’s patents, you can go and use them. I mean, come and tell us and there might be partnership opportunities and so on.

But basically, IBM have realised that digital transformation is not about the technology, it’s about becoming more adaptive as leaders, which probably means you need flatter structures, authority distributed more within the organisation. And often when leaders are pushing back against the digital transformation project, they’re actually pushing back against what they might not be able to articulate, what they might not be able to say for sure, but they know what’s happening, you’re changing the organisation. And that’s the actual thing. They’re pushing back again. So often we’ve got to engage with leadership and get leadership to understand the need and the importance of a new approach to leadership.

Let’s call that instead of leadership, let’s call it leader-shift, that we’ve got to move people into a different approach to leadership and that digital transformation requires this new approach. I’ve seen organisations really struggled with this. I don’t want to mention names, but a number of organisations that I work with, which do have headquarters in Europe, are absolutely pushing back and doing the opposite. They’ve got businesses all around the world. In fact, one of our clients has got operations in every single country in the world, and yet the managing directors of the countries do not have authority to even hire a secretary.

They don’t have any authority over the people that they need. All of that sits in head office in Europe. You can’t be adaptive, you can’t be responsive to change if you don’t distribute authority. And often digital transformation projects, you can feel that authority is being distributed, even if it’s just being distributed into the software and the system itself. Leaders can push back against that.

A good example of leadership. And leader-shift, if we can use that corny phrase I think is actually Starbucks. I think Starbucks are going to come out of Covid-19 much stronger because they basically pushed some of the digital transformation down to store and local level and Starbucks have shifted to pick up only stores and integrating a lot more with social media and created a massive omnichannel strategy during the last two years of cobalt. And I think they’re going to find that it works really well for them. Now, that leads to the 6th point and that is that we need to build a culture of experimentation, a culture which realises that failure will happen, but if we haven’t blown up the whole building, if we haven’t destroyed the business.

So in other words, there is a way to experiment that minimises risk but still distributes that experimentation throughout the organisation. If we get that right, it will make all the difference in the world here. Your best example is Google because Google constantly I think once a quarter they have these 24 hours marathons where they get people together to say, what are your biggest problems? Then everybody brainstorms coming up with potential solutions, then they vote down to the best possible solutions. This is all completely democratised across the organisation.

But then the people who’ve come up with great ideas are shifted into what they call Google X. Just for a three month period to say now work on this. Look at what this will look like. How it will work. And then often those things don’t go anywhere and then those people are just taken back to their old jobs to to get on with it. But pretty much every single new project, every single new product, every single great idea that Google has had, has come out of this Google X mindset.

And that kind of leads to the main takeaway for this video. If you’re still watching, thank you for sticking through this rapid fire approach to just thinking about leadership and digital transformation. But it really does come down to leadership attitudes towards change and helping leaders understand what will happen if you don’t change your attitude, the dangers of that and what you need to do in order to as a leader to contribute to the future of the business.

And so to my 7th point, and that is don’t just focus on the technology if you’re part of the digital transformation team. Digital transformation is an ongoing process of changing the way you do business and we can’t just be about trying to get people to accept using the current system you’re developing. If leaders don’t understand that this will and in fact must change the business, not just take the business you’ve always had and make it slightly better and a little bit more efficient, but actually change the business, if leaders don’t accept this, they’re going to end up delaying and even undermining your new digital tools.

So what do you do? You’ve got to get leaders on board and you’ve got to focus less on the technology and all the other bits and pieces of this thing. We could talk now for ages about changing how and what you can communicate, because you’ve got to talk less about the technology in the system and more about the value and the outputs. You’ve got to look for early adopters in the system, people who see what the value will be and what the outcome will be, and focus on them forming a guiding coalition, if you like, of people who love the system. And then you look for quick wins that they’ve got and you tell their stories and you enable them to be ambassadors of change. And if all of this is sounding a little bit familiar, it’s probably because, like me, you’ve heard of John Kotter’s eight step process of change management, famously written down as a lovely story about penguins on an iceberg. I think he’s got it spot on and I think there’s lessons to learn in his change process. It’s less about talking about the problem itself and it’s less about talking about the solution, more about talking