Digital Transformation & The State of the Union…

WARNING! This is a long, but necessary article……

Why should you read this?

‘Digital Transformation’ is the latest Industry buzzword. Nobody really knows what it is, but everybody wants it, and they want in now! Your organization is probably using the ‘Transformation’ buzzword too. However, various reports suggest ‘70% of digital transformations fall short of their objectives’, and that is certainly what we are seeing. Recognize this? Read on.

What will you discover by reading this?

This article looks at the state of Digital Transformation and the state of the ‘union’ of all the frameworks and best practices that are used to support and enable all of this transformation ‘stuff’.

We will reveal common reasons for failing as discovered in our global business simulation workshops, global ABC (Attitude, Behavior, Culture) workshops, and confirmed by findings taken from various Industry reports, to help you avoid experiencing these failures.

However, If you already recognize some of these failures we provide links to articles giving tips and suggesting actions you can take to improve your transformation success.

Transformation is an enormous undertaking. This article looks at, in particular, the IT transformation and the importance of training, and developing the right sets of skills, the article will finish with 10 suggestions relating to your training initiatives.

First of all let us look at what we mean

Buzzword bingo! We see the term Digital Transformation also being used to describe Digitization of existing ways of working (Conversion) or Digital optimization to improve existing ways of working (Reorganizing). If we look at the dictionary definition of the word we can see where the confusion is coming from.

When you look at all of these transformation-related words then you have to conclude that everybody is right when they label their latest IT investments as Transformation. However, often what we end up with is a ‘Mutation’.

A Mutation into something we didn’t intend

Various reports suggest ‘70% of digital transformations fall short of their objectives’. (See reports below). One of the key reasons for falling short is because we have never defined the purpose (Why) and the outcomes we are hoping to achieve. The key word here being ‘hoping’ – This is important shortly when we explore the frameworks we adopt.

Transformation becomes the goal in itself!

Whilst we may not know what we mean by transformation, what we do know is the following:

• Digital disruption and the pace of change is impacting all organizations, resulting in increasing demands on IT. (Amount, pace, strategic importance to business).
• The pace of change is driving agile transformations which underpins all forms of transformation (do more, faster with less waste).
• Agile transformation means adopting ‘new ways of working’. (Adoption of practices such as agile, Lean, DevOps, SAFe and ITIL®4 (to name but a few) – with all of the associated training and certification programs).
• Getting new innovation demands to realize benefits quickly means aligning end-to-end teams to deliver value at speed (Value chains, Value streams & removing SILOes).
• All of this represents for IT, a need to ‘Evolve’ (quickly) – from ‘Service Provider’ to ‘Strategic Partner’ which requires a significant change in Attitudes, Behaviors, Culture (ABCofICT) from both IT AND the Business.

Metamorphosis

Considering where many IT organizations are, and where they need to be, perhaps we’d be better off calling it a ‘Metamorphosis (The process of transformation from an immature form to an adult form in two or more distinct stages).

I use the word Metamorphosis as it shows that the change takes place in stages. The majority of IT organizations need to transform from a traditional ‘Service Provider’ role through ‘Trusted Advisor’ to ‘Strategic Partner’. Needing to build Trust and Credibility in order to be seen as a Strategic Partner. Many want to skip over the ‘Trusted’ bit and leap from where they are now to be a Strategic Partner and have a place in the boardroom, and then they wonder why it doesn’t happen. Read on to find out why.

We also see the distinct stages of Metamorphosis occurring in terms of the frameworks and practices being adopted in organizations to support and enable these ‘new ways of working’:

• Organizations first adopt agile (with its value stream of, more or less – ‘Feature-to-Code’) – and find it didn’t solve the problem.
• Then they adopt DevOps (with its value stream of, more or less – ‘Code-to-Deploy ) – It still didn’t solve the problem.
• Then they add SAFe type approaches to scale up and scale out (With its value stream of, more or less –  ‘Strategy-to-Execution’), which embraces agile and DevOps and Lean.

This is where a number of organizations are – they are trying to scale up and scale-out.

Many others are stuck in the middle ground of adopting agile and DevOps. (Which is still primarily DEV focused).

An additional challenge that organizations become aware of as they extend the scope of these end-to-end value streams (‘Feature-to-Code’, ‘Code-to-Deploy’. ‘Strategy-to-Execution’) to finally become ‘Idea-to-Value’ is that part of the Value also comes from the Service Management side of the equation (‘Delivery-of-Product’ to ‘Managing ongoing Service’). They then start complaining that ITIL is slowing everything down. Enter another new framework ITIL4 which also embraces value streams.

In order to achieve this Metamorphosis we need to manage this process of transformation from stage to stage which takes time, patience, and effort and is usually never right the first time so it needs to be iterative.

Yet business executives expect the Metamorphosis or Evolution to occur rapidly. Too fast in fact for many organizations’ ability to evolve. Perhaps another reason that 70% are falling short.

Not only is it too fast, but we don’t have the necessary skills to manage the evolutionary process.

The Organizational Change Management (OCM) skills to manage change and the Organizational Behavior Management (OBM) skills to manage the transformation of the culture. (70% declare that changing culture is their biggest challenge).

Where are we now? And what do we need in order to manage the stages of the Metamorphosis

Where are we now? What are some of these common areas for failing? I started off with findings from our global business simulation workshops with hundreds of organizations struggling with their agile transformations. I then compared our findings with various  Industry reports such as The State of DevOps report, The State of Agile report, The Inaugural report from the Value Stream Consortium, Gartner research ’10 essential Practices for success in implementing the Scaled Agile Framework’, the 6 essential success factors for Digital Transformation success, from BCG ‘Flipping the Odds of Digital transformation Success’ (70% of digital transformations fall short of their objectives), The McKinsey findings ‘How to mess up your agile transformation in 7 easy (mis) steps’, and my own analysis of Global Competence Quickscan results from the Devops Agile Skills Association in the article ‘Skills to remain relevant in 21^st century and enabling High-Performance Digital organizations. And finally, I have included this MIT Sloan Management article from 2018 as experience seems to show it is still very relevant ‘No one knows your strategy, not even your top leaders’.

Don’t PANIC! You don’t need to read them all, I will sum up key findings here (From my own Biased viewpoint relating to Training and Attitude, Behavior, Culture).

Common barriers

Below are some of the common challenges, each with one or 2 supporting statements from some of the sources listed above as well as a conclusion and a link to some learning examples.

1. Not aligning the initiatives to strategic priorities and business outcomes

• MIT Sloan Management: ‘…The CEO was shocked at the results. Only one-quarter of the (business) managers surveyed could list three of the company’s five strategic priorities. Even worse, one-third of the leaders charged with implementing the company’s strategy could not list even one.
• Value Stream management Consortium: Respondents when asked if they ‘measure the actual value realized by new features in their products?’ 72% replied “Rarely”, “Once”, or “Never”.
• Simulation experiences: 70% of teams fail to proactively explore the strategic goals and outcomes in simulation workshops. They are too focused on ‘getting stuff done’.

Conclusion: In the MIT example, these are the very same leaders who all insist that their features have the highest priority, and in the example above IT is HOPING that what is built and delivered adds business value! There is a lack of knowledge and skills in the effective Governance of Enterprise IT (Making the right decisions), and lack of an IT focus on the ‘Value’ in all of these IT initiatives aimed at building end-to-end Value streams. (See learning example: ‘Improving IT and business Value with serious play’. See also ‘What has the business got to do with IT(IL)’ These are two examples of changing business mindsets and behaviors and learning to focus on value.

2 Common cards chosen in ABC Workshops (You can see how long this has been going on. In the Queen of Clubs the technician is holding a floppy disk. This has been the top-scoring card chosen in global workshops 15 years in a row!)

2. The need for executive and middle management commitment and Leadership skills

• • BCG ‘An agile governance mindset that drives broader adoption’
  • Gartner ‘Train Leaders to ensure their understanding of what SAFe is and is not’
  • State of Agile: ‘Not enough Leadership participation’
  • State of Devops: ‘….change takes leadership—at every level, not just at the top’
  • Simulation experiences: More than 80% of managers in the simulations recognize a need to change leadership behaviors to help foster the right mindset and behaviors, to allocate time for reflection & improvement and to provide coaching to teams.

Conclusion: These 70% failure rates and lack of business & IT alignment (see conclusion 1) have been challenges for many years, it would appear that Leadership roles do not have the right leadership skills, styles, and behaviors to lead the ‘Metamorphosis’. (See learning example: ‘Why courage is a core DevOps requirement’) See also ‘Is your organization fit-for-the-future’. These articles contain management discoveries and insights into required behavior change.

2 top scoring ABC cards chosen consistently year-in, year-out

3. Not investing in the right skills sets and talents

(Skills relating to technology, new ways of working (e.g. agile, DevOps) and, more critical, skills in managing organizational and behavior change).

• • BCG: Deploying high caliber talent
  • McKinsey: Misstep 4 ‘Not investing in the talents of your people’
  • State of DevOps: Low end of mid-level evolution ‘33% skills shortage’
  • State of Agile: 42% ‘lack of skills/Experience with agile ways of working’
  • DASA: ‘need to shift from proficiency to Mastery in Leadership, Continual Learning and improving, Business value optimization and collaboration’
  • Simulation experiences: The majority of teams struggle to translate framework theory into practice, more than 70% are unaware of the expected outcomes of their framework adoptions, and teams struggle with skills such as ‘communication & collaboration’ as well as ‘reflecting & Improving’.

Conclusion: Despite the massive investment in training in the latest frameworks and certificates, critical skills are still missing (see conclusion 2, 4 & 5). Our global surveys (GamingWorks) also reveal lack of effort and energy is spent on translating theory into practice and the transfer of learning into new behaviors. 70% do not measure ‘behavior change’ or ‘value and impact’ of their training investments. (See learning example: ‘ITIL Foundation Business simulation – more than simply gaining a certificate’). See also the whitepaper ‘The 8-Field Model’. See the article ‘High performing teams….the Industry buzzword’).

2 top scoring cards, although the cartoons were made for ITIL they equally apply to other frameworks.

4. Culture was, is, and remains a key barrier – as well as organizational resistance to change.

(An open, safe, collaborative culture embracing continual experimentation, learning and improving)

• • McKinsey: ‘70% respondents cited ‘Changing the Culture is their biggest challenge’
  • State of Agile: 43% ‘Organizational culture at odds with agile values’
  • State of DevOps (Dev) ‘…The report findings are clear—what we’ve historically called “cultural factors” are a major barrier to high performance IT’ citing as reasons ” Negative leadership behaviors” “lack of trust”, “resistance to change”, “Insufficient feedback loops”
  • State of DevOps (OPS) ‘…And now, in perhaps the biggest shift of all, the expectation is that we have people skills and can collaborate effectively with different functions’.
  • Simulation experiences: The vast majority of teams struggle with ‘communication & collaboration’ and ‘reflection & improvement’ skills and behaviors and need coaching.

Conclusion: There is a lot of talk about changing ‘Mindsets’ (Attitude) and a lot of talk about the need to ‘Foster a new Culture’ But not enough on changing the Behaviors (ABCofICT). There is a need to translate new cultural values and principles into behaviors. (See learning example: ‘Translating principles into behaviors’). See also this article for the CIO ‘Sim-Sala-Bim! Culture change’.  See results of 15 years’ worth of failing to address ABC ‘Don’t let an ABC Earthquake destroy your organizations Transformation ambitions’. This last article shows many top-scoring ABC cards in the last 15 years relating to ‘implementing’ new frameworks).

2 high scoring ABC cards. The blame culture which can kill ‘experimentation’ and an ‘open, trusting culture’ and ‘them and us’ representing the need to break down SILOes (between business & IT and between Value stream delivery teams – See section ‘The Union of the frameworks’ ).

5. It is not about ‘Implementation’! Continual learning and improving are core capabilities

• • State of DevOps “insufficient feedback loops”
  • McKinsey: ‘Misstep number 7 Not infusing experimentation and iteration into the DNA’ ( Culture)
  • BCG: ‘An agile governance mindset’ that includes ‘adapt to changing contexts’, ‘address roadblocks quickly’, ‘fail-fast-learn’

Conclusion: There is still lack of awareness on this being a core organizational capability, and core cultural value in order to realize the ‘Metamorphosis’ and to maintain agility in continually delivering value. A capability that is both top-down (Strategic to Operational) as well as left-to-right (end-to-end collaboration). In our global surveys (GamingWorks) 70% do NOT have this as a core strategic capability. (See learning example ‘From slogans and buzzwords to behaviors and value’). See also ‘Assessing behavior flows through the organization’.

The Union of the frameworks

Union: ‘…association formed by people with a common interest or purpose.’

In order to support and enable these agile transformations, we adopt the latest ‘new ways of working’ as mentioned above ‘agile, Lean, DevOps, ITIL4’ (to name but a few) and expect them to work in harmony, or form a union. If we look at the definition of union we see an additional challenge: ‘people with a common interest or purpose’. We already saw at the start of the article too little attention on the ‘why’ question – the common purpose.

• These frameworks and approaches were primarily developed by SILOed Industry bodies to manage a part of the end-to-end delivery of value. As such they have different ideas on what the end-to-end means and serve different purposes. ‘Feature-to-Code’? ‘Code-to-Deploy’? ‘Strategy-to-Execution’? ‘Delivery-of-product to Managing-ongoing-Service’.
• The frameworks are sometimes overlapping, encroaching into the domain of another SILO, and were not designed with alignment with other frameworks in mind. Leaving organizations to work out how these puzzle pieces all fit together and triggering the ‘Them and Us’ response as we all start to defend our framework (Framework fundamentalism).
• We often send SILOed teams onto SILOed training to get the latest certificates, then have them come back and convince the other SILOes to adopt their way of working. All this again triggers the ‘Them and Us’ culture (Dev vs Ops, Biz vs IT). Each of the SILOes with their own cultural values and, often, their own SILOed goals and KPI’s. So much for a ‘common interest or purpose’. Perhaps another reason for the 70% falling short of objectives. This is one reason that ‘Collaboration’ is cited as the number 1 required skill in DevOps skills surveys. How good are we at Collaborating? ‘DevOps and Collaborating – Fraternizing with the enemy’.
• Managers and senior leaders often do not attend the training and are often unaware of what the new ways of working will mean in terms of behavior and culture change, and the role that leaders will need to play. Managers are unaware of their role in ‘Walking-the-talk’.

The above can be confirmed by the top-scoring challenge in the State of Agile report which was ‘42% Inconsistent processes and practices across teams’, closely followed by ‘Organizational culture at odds with agile values’ (which organizational culture? As mentioned often Dev teams have different Cultural values to Ops teams). Third in the list of challenges was ‘resistance to change’ (understandable considering the above) closely followed by ‘lack of Leadership participation and management sponsorship’. More reasons for the 70% falling short.

It is clear from many of the conclusions above that despite the massive investment in training in the latest frameworks and practices that the current approach is not enough. Below are 10 suggestions to review your training approach. (not including recruitment and hiring practices).

There is a clear need to extend training to include:

• Both business & IT Leadership – to create an understanding and foster commitment to the effort and iterative approach needed.
• Governance of Enterprise IT within an agile context – to ensure a strategic fit and effective devolved decision making.
• Organization Change Management – to effectively manage change and use resistance as an enabler.
• Organizational Behavior Management – translating ‘mindsets’ and ‘cultural values’ into sustained, desirable behaviors.
• Leadership development to develop the right skills, behaviors and leadership styles lead an agile transformation, to manage in an agile organization, and to sustain and grow agile cultural values.
• Coaching at all levels – to help transfer and embed learning and to embed an iterative cycle of practice, feedback, improve.
• Ensuring end-to-end representation in training – To help break down SILOes and foster collaborative learning. (e.g. participation in a business simulation).
• Ways to translate theory into practice – include ‘Learning-by-doing’, supported by coaching.
• An approach such as the 8-Field model – to ensure learning interventions fit with strategic intentions, the transfer of learning into the organization, and the ability to measure behavior change and impact (Value).
• Linking the outcomes from training to continual improvement initiatives – recognize and embed the need for continual learning and improving.

And finally. After reading all of this, and recognizing many of these challenges and need to change, the question is ‘What will YOU now do’? You may be the only person in YOUR organization reading this. Here is another top-scoring ABC card.

Not my responsibility. It is always somebody else’s responsibility. This is about personal leadership. As Gandhi was attributed as saying ‘Be the change you want to see….’ Here is a final thought on Leadership ‘Leadership starts with you’!

Written by Paul Wilkinson