According to Forbes magazine, digital transformation efforts fail at a rate of 84%.1 The odds are not in your favor, but even if you get your business into shape to compete in the global economy, there is no guarantee the organization will not slide back into self-destructive habits. To remain competitive, it will take constant vigilance and, at CAPCO, we call this process “maintaining shape.”
On a soccer pitch, maintaining shape ensures a team can flex and respond to changing conditions within a game without losing defensive structure or coverage. In digital transformation, maintaining shape translates to emphasizing scalable, enterprise-wide capabilities, developing obsessive focus on end user outcomes, and adopting a truly integrated operating model across business, and technology, and operations. This article will explore what we believe enables financial institutions to maintain shape when undertaking large-scale, digital transformation.
Generally speaking, transforming an enterprise requires three important elements:
- Clear buy-in by the organization and integration into its culture.
- Shattering the glass ceiling of senior leadership relying on outdated techniques.
- The constant encouragement and reinforcement of excellence so it becomes a habit in the organization.
Combined, this will make the organization more nimble and able to deliver better value to customers.
Peter Brucker, author and management consultant, said famously, “Culture eats strategy for breakfast". The statement is doubly true for a digital transformation.2 If people doing the work do not believe in the importance of the change, it will fail. It means more than having an all-hands meeting about the initiative and mandatory training sessions. It requires hiring and empowering the right people to lead the changes. It’s important to have strategic direction, as well as the change agents to help facilitate the transformation. We begin with the Agile Manifesto to outline the values we consider important for the transformation. The 12 principles of the manifesto act as the foundation of how we want the organization to operate.
From this starting point, it is important to take a hard look at the organization and tailor the transformation approach. Since all financial institutions are different, a diverse approach is vital to what an organization might need - whether it is a scaling framework to help deliver a massive software project or individual coaching to help improve performance. Avoiding a one-size-fits-all approach helps the organization absorb the transformation and make it part of the culture.
It is also important to stress that culture only changes when an organization truly understands the following:2
- Culture is created by behaviors which are tolerated.
- Change begins from the top.
- A leader needs to recognize they are “a” voice in the organization rather than “the” voice.
If the organization tolerates missed deadlines, poor quality, and failure to learn from mistakes, then that is what it is going to get. Thus, it is up to leaders to hold people and teams accountable for changing behaviors. Leaders should model those standards to others and not be defensive when asked – themselves –- to adapt and meet organizational or market norms. Finally, if a culture is going to change, leaders need to acknowledge that other voices have a stake in the organization. Front-line workers, marketing professionals, and information technology experts all have a say in making the organization successful and delivering value to customers.
Therefore, to make sure the culture changes:
- Be clear about what behavior is tolerated.,
- Model appropriate behavior for the entire organization., and
- Allow others to have a voice in the transformation.
Breaking the Agility Glass Ceiling
According to the state of Agile 2020 survey, over 75% of organizations use scrum as their agile framework. Unfortunately, many organizations cite that they could be using it better.3 According to blogger William Jan-Ageling, the reason is that upper management typically doesn’t trust their people to deliver value to customers without a command and control oriented structure, so they create plans and budgets and impose them from the top down.4 Anything which deviates from this plan is treated as insubordination and is quickly escalated as something requiring remediation. To many at the ground level, this environment can feel like walking on thin ice. Any mistake can sink you and will require leadership to come to the rescue. The ice being bureaucracy, organization plans, and departmental inertia.
Part of the reason for this lack of trust, is that many leaders in business are trained and promoted based on their adherence to command-and-control style leadership. When asked to change leadership approaches, it feels alien and unnatural. During times of stress, it is easier to return to a more authoritarian approach than to count on team members to come up with solutions. With training and coaching, business leaders can learn the skills needed to lead in a modern delivery organization.
Excellence as a Habit
Philosopher Will Durant, in his book “The Story of Philosophy,” says, “We are what we repeatedly do. Excellence then, is not an act, but a habit.”5 From setting up meaningful radiators of information throughout the organization, to using liberating structures to get the most out of meetings, to helping untangle knotty organizational issues a true change agent can create ways to help remove organizational friction and get the most out of your business.
Creating an environment where excellence is the norm rather than the exception further increases cultural adoption of the digital transformation and it will drive employees to enforce those standards of excellence via peer pressure. Once these habits of excellence are instilled in the organization, they will be able to deal with the inherent uncertainty of our rapidly changing global economy and marketplace.
Guiding an organization through digital transformation is a process similar to losing weight. It is a long, difficult journey with a low probability of success.6 Even if you succeed, you are likely to gain much of the weight back. Adhering to the three guidelines of transformation will provide a better chance of success and making these changes stick. Clear integration of the transformation within the corporate culture, shattering the glass ceiling of Agile, building trust between leadership and staff, finally continual reinforcement of excellence in the organization is how an organization will “maintain shape.”