The reality of transformation: report launch event

This January, Great State welcomed in the new year with a lively breakfast debate on the topic of ‘The reality of transformation’. In the session, we shared insights from our recent report and invited questions from senior leaders from a range of organisations including TUI, Merlin Entertainments, Network Rail and Save the Children.

Our Director of Strategy, Nicola Hinds, kicked off the morning by sharing key insights from our new Transformation Report, which includes research we’ve conducted with brand leaders on the reality of transforming – uncovering what ‘digital transformation’ actually means to the people in charge of delivering it, where people are in their journey and common blockers and enablers to moving forwards at pace.

Key insights from the session

1. Transformation isn’t about digital
2. The big blockers to transformation are mostly cultural, not technological
3. Transformation is about balancing evolution and revolution
4. Agile is a method, not an endgame – and you need your own flavour.
5. Making ‘transformation’ a discipline is dangerous (don’t pin it on a siloed team)

1. Transformation isn’t about digital

Lara Burns from Age UK highlighted that it’s not just so-called ‘traditional’ companies that are struggling with how to transform themselves. Indeed, even the high-performance FAANG (Facebook, Amazon, Apple, Netflix, Google) group of companies are wrestling with how to transform their cultures and offerings in order to retain the best talent and continually innovate in line with users’ needs.

This underlines the fact that – for all kinds of companies – transformation is as much about people, structures and processes as it is about ‘digital’. Given this, a pure focus on digital transformation (for example re-platforming your website or building a new app) is unlikely to transform your company in the long-term, let alone inspire your workforce or your customers to stay loyal.

Instead of being all about digital tools therefore, transformation should be about the adoption of modern working practices.

As Jean-Jacques Thomas from SNCF notes in our report: “Human and technical challenges must go together. It’s as much about new ways of working as incorporating new technology.”

2. The big blockers to transformation are mostly cultural, not technological

When it comes to transformation blockers, it turns out that the clients we surveyed felt that cultural – not technological – factors were key.

Indeed, 4 out of the top 5 factors were cultural, namely:

1. The right talent
2. Culture
3. Legacy
4. Consensus
5. Methodology

And key to building the right culture (that can, in turn, attract and retain the best talent and build consensus) is vision. In fact, 80% of those we surveyed cited ‘vision and senior leadership focus’ as the single most important accelerator to transformation.

During our breakfast debate, people also expressed sympathy for those at the coalface who are often wrongly seen as blockers to progress: Tech and IT directors. It was felt that these teams too often get the blame for being slow to implement innovative technical solutions.

However, rather than being laggards, it was felt that these technical teams are simply not getting budget or resource to do more than prop up tired legacy systems and support ‘business as usual’ activity.

In short, you can’t just blame the tech guys if the tech isn’t fit for purpose.

3. Transformation is about balancing evolution and revolution

Over breakfast, we invited Carin Campanario (Technology Innovation Strategist at TUI) and Serge Taborin (Chief Digital Officer at Capita) to expand on their personal experience of delivering ‘evolution vs. revolution’ and where they are in their own transformation journeys.

Carin explained that the business’s first priority was to deliver ‘brilliant basics’, ensuring TUI always matches consumers’ basic expectations, for example booking a preferred seat on a flight. But even meeting a basic expectation like this can be a transformation challenge, as it’s not just about a simple design fixes, but rather it requires knitting together legacy systems with new platforms, all with as little downtime as humanly possible – something that’s no mean feat given that travellers also expect to be able to book at any time of the day or week.

On top of these ‘brilliant basics’, TUI also seek out smart opportunities to surprise and delight, for example by offering AR viewing experiences of excursions that can be added to your TUI itinerary if you’re a Premier customer. This not only exceeds customer expectation, but does so in a way that can directly drive additional spend on upgrades.

Serge from Capita used the example of ‘Horizon 1,2,3’ thinking to explain how companies need to balance evolution with revolution in order to stay relevant now, next and in the future.

Horizon 1 describes the first transformation milestone of improving on existing products, whilst Horizon 2 is all about creating new features and functions based on user needs. However, these types of transformation still fit within the existing business model and structure. By contrast, Horizon 3 is about developing new products and business models capable of capturing new markets and driving new behaviours. And – as expectations rise ever faster – it’s only this type of thinking that can truly futureproof an organisation.

This analogy inspired debate around whether many companies ‘deserved to die’ and needed to be actively planning for their own demise, for instance by starting a side company of the future - a kind of corporate-backed internal start-up that could eventually take over the core business.

Serge highlighted that, though genuinely new ‘Horizon 3’ style thinking is needed in all big corporates, it’s important to remember that this type of thinking will experience a high failure rate (with only 1 in 10 initiatives likely to succeed).

Carin explained that a good way to frame this challenge was think of it as running a ‘2-Tier business’ where some teams focus on fixing problems with legacy systems and delivering quick wins, whilst other teams are given space and access to the kinds of expertise needed to invent the truly new. By working in this way, one company can eventually ‘leapfrog’ the other.

4. Agile is a method, not an endgame – and you need your own flavour.

One common bugbear was that the whole topic of ‘transformation’ can be too easily dominated by the ‘A-word’ – Agile.

At Great State, we regularly help our clients to adopt agile processes but only where appropriate. Indeed, Agile can create as many problems as it solves. On this point, all of our survey respondents noted that working in an agile way can cause friction with the rest of the organisation - particularly those inherently more risk-averse i.e. legal, government relations and finance departments.

Everyone at the breakfast agreed that it’s better to develop ‘your own flavour of agile’ to suit your organisation, rather than being a purist and rigidly enforcing Agile methodology – only to discover you’re not actually not moving forward.

In essence, it’s no good talking about constant sprints if you take your eye off winning the marathon.

5. Making ‘transformation’ a discipline is dangerous (don’t pin it on a siloed team)

Several clients asked about problems related to company structures and job titles: Should people have ‘digital’ job titles? Can transformation succeed if it’s carried out by a discrete digital transformation team?

A consensus emerged that ‘digital’ can be a harmful label if it means that the board views it as a completely separate thing to the core business.

Moreover, if you hire a specialised digital transformation team to work only with ‘digital’ people, you risk further compounding the problem and placing digital skills and tools in their own ‘silo within a silo’.

The same problem (of holding digital talent at arm’s length) can occur if you create digital ‘Centres of Excellence’ where people are expected to either work in isolation or suddenly ‘become digital’.

Wrapping up

It’s clear that all kinds of company – traditional and modern – face challenges of transformation and all need to balance their ambitions of evolution and revolution in order to succeed.

It’s also clear that they won’t succeed if they place digital in a silo, point the finger at the IT guys, or just go all in on becoming ‘agile’.

Instead, it’s about developing a clear vision that’s not just shared by senior management, but which company leaders are actively incentivised to deliver.

This vision can be ambitious or pragmatic, so long as it’s compelling and easy to understand by everyone in the organisation. It’s only with this kind of ‘North Star’ that you can galvanise and focus an entire organisation to change.

If you’d like to learn how we can help you transform your business with a practical strategy, please get in touch.