Leslie Willcocks, Professor of Technology Work and Globalisation, London School of Economics and Political Science.
Major projects mean big change, to which the organisation itself needs to adapt. Moving into American or Asian markets, embedding digital transformation, rolling out a new world car—such strategic moves need not just change management underpinning the project, but also require the organisation itself to change, to some degree or other. How to achieve this? Adopting program management offices and applying big project management disciplines help here, at the project level. But to behave strategically, over three years to five years, to change culture, work habits, redesign processes, and apply and evolve digital technologies as they become available, does require more transformational practices.
The more strategic and transformational the project, the more a comprehensive, systematic approach is needed. Working with Knowledge Capital Partners, we developed the holistic approach shown in Figure 1. Let’s have a look at this.
While there are always barriers to change, few organisations take a sufficiently ‘big picture’, but detailed approach to dealing with these barriers and mobilising the organisation. As a starting point it is important to understand what you can do little about. Ralph KiImannis useful here in pointing to two such major imponderables. One is the setting—the external environment, its complexity and external stakeholders. Of course organisations try to influence environmental factors but events can slip out of grasp very quickly, thus today’s calls for resilience and adaptiveness The second is the psyche of people—their innermost qualities that translate into their fears, desires, what they will resist and defend. The psyche cannot be changed in a short period, if at all.
Drawing on Kilmann’s work, the good news is that all the other likely barriers, including culture and assumptions, are manageable and changeable, provided an integrated, planned approach to change is adopted. KiImann also makes the essential point we have discovered in all the major IT projects we have encountered over the last thirty years: for optimal outcomes, cultural change has to be addressed from the beginning, and throughout, not at the end of change programmes.
Culture can be thought of as the long standing, tacit but very ‘stickable’ habits permeating how people think, behave and deal with problems. As such culture is quite difficult to address. Historically, many have pointed to the abiding power of culture in organisations, nicely summarised in a formulation attributed to Peter Drucker as: “Culture eats strategy for breakfast”, or quoted by Thomas Lloyd as “culture beats strategy”. Our own studies point to the fact that, without accompanying cultural change, major change—a new product, a new, shared service centre, a new technology, invariably disappoints. It’s the same with digital technologies.
In Figure 1 we offer a way through the inherited, very often siloed organisation. Silos build up in organisations in eight major areas—processes, data, technology, strategy, structure, skills, managerial mind-sets, and culture. This is a lot to change! There are six tracks that need to be managed on a mutually informing basis. Digital transformation has become a typical large-scale project to manage. Usually international in scope, digital transformation is something almost all large organisations have been and will be working on for the next five years at least. While listening to what the technology can do, and its potential, by all means build carefully crafted details of the target strategy, structure, technology, and processes. But these must be provisional, because the first three tracks that need attention are culture, management skills and team-building. These adjust the behavioural infrastructure of the organisation. Note, that the focus here is on developing an adaptive inner organisation. Without this, changes to the outer organisation—strategy, structure, rewards systems and technologies—will be cosmetic and short-lived. However, there must be from the start a very strong sense of how all these factors fit together. For example, it is not enough to have a business strategy without also at the same time establishing how digital technologies can leverage, or even change the strategy, and whether a supportive culture is feasible. If the business strategy is based on false assumptions, then all digital technologies can do is to provide an efficient underpinning for the existing model. If this is slowly failing, then what you get might be tantamount to ‘disaster faster’. Many years ago my case study research into information technology projects banged into something I call the technology amplifier effect: a good management is made much better by the application of technology; a bad management is made much worse. This is very much the case still with digital technologies. Another issue is management patience over the long-term. As we shall see in a later paper on DBS, with large-scale transformation projects, implementing and institutionalising the changes may well take several years.
Figure 1 shows the rough sequencing of change activities. Check first the assumptions on which the business decisions are based. Are they realistic? The starting point has to be whether the culture will support the behaviour needed for organisational success. If not, shifting the culture—by identifying the shared norms, values, and change propensity organisational members are willing to commit to—must start immediately and continue throughout the change process. What should this culture be? One that stakeholders will buy into. Our own work on digital transformation suggests that having a digital ready culture accelerates the adoption of automation technologies. George Westerman and his colleagues are helpful here. They looked at over 500 companies in digital transition. They concluded that the four founding values of digital culture are:
1. Impact—changing the world radically through constant innovation;
2. Speed—moving fast and iterating rather than waiting to have the answers before acting;
3. Openness—engaging broadly with diverse sources of information and insight. Sharing advice and information openly rather than keeping knowledge to oneself;
4. Autonomy—Allowing people high levels of discretion to do what needs to be done rather than relying on formally structured coordination and policies.
But it is practices that bring values to life. Therefore we include the digital development and operations (Dev-Ops) practices where values are made real through, for example, rapid experimentation, time-box philosophy, data-driven decision-making, multi-functional teams and self-organisation. The difficult balancing act is to develop this culture while preserving more traditional practices also needed—such as, for example, a primary focus on customers and results; acting with integrity; seeking stability, while shifting rules-based cultures to results-based.
The next phase is building the necessary management skills and teams to deliver the change. At this point the originally formulated business strategy and organisational structure will need revisiting. On technology, our experience with IT and digital technologies suggests that these must be in the ‘first order thinking’ done at the time of, and included, in the first formulation of business strategy. A feasibility analysis of organisational readiness to accept and deliver the technological changes should be carried out then, and a natural checkpoint for digital transformation comes when trying to establish stakeholder buy-in and governance. Management and teams will need to regularly liaise over technology delivery and driving out business value. Finally, the rewards system needs adjustment to incent changed behaviour and target required business outcomes.
Throughout digital transformation, senior sponsors, project champions, and managers have to be alive to a key finding from our case research: organisational politics breed in times of technological change. Our past studies of major technological change shows that management attention to the politics of change is so key to success that we see it as a vital seventh, ‘shadow track’ operating from the start of, and through every digital transformation endeavour.
My purpose here has been to lay out what it takes to deliver digital transformation. The Figure 1 framework is a generic one, meaning that many variants are possible. However, it has been generated from synthesising the findings from the case research we have been conducting and reporting on for many years now. Our conclusion is that the formidable demands are manageable and achievable. To confirm this, our final paper offers a concrete detailed example of effective transformation in the form of DBS bank.
Leslie Willcocks is emeritus professor at the London School of Economics and Political Science. The issues here are based on research for his forthcoming book Willcocks, L. (2021) Global Business: Management (SB Publishing, Stratford-upon-Avon, UK) - available from www.sbpublishing.org