INTRODUCTION

My destination is no longer a place, rather a new way of seeing.

—Marcel Proust

The lights dimmed as the participants attending the Next Wave of Digital Transformation Conference filed out of the auditorium. The first day of the conference had drawn to a close, and the networking reception was about to begin.

“If I could just find some people to talk to,” thought Ian as he scanned the room. He was an engineer by training, and his career had recently taken an interesting turn. He’d been tapped to look after digital for his employer, a global engineering company where he had worked for the past 20 years. His company had agreed to let him attend the conference so he could figure out how to get started.

Ian caught sight of Elena, who had made a presentation earlier that day. Elena was one year into the chief digital officer (CDO) role at a Dutch bank, and she had indicated that she was open to sharing her experiences. She was already speaking with another participant, who introduced himself as Andrej. Andrej had been recently promoted to the role of chief information officer (CIO) of a consumer goods company, before which he had been the company’s CDO.

Ian was keen to learn from both Elena and Andrej about managing large, complex digital transformation projects. After a round of introductions, they asked him about his new role.

“It’s strange,” Ian began. “All the signs are positive, but I have an uneasy feeling.”

“What do you mean?” asked Andrej.

“Well,” Ian continued, “I was asked a month ago by the chief operating officer, my boss, to look into digital. He wasn’t very specific about it—only that we needed to do something digital quickly. Sounds good, right? He also told me that he’d make whatever resources available, within reason, to ‘transform the company into a digital business.’”

“So far, so good,” said Elena. “What’s the problem?”

“The problem is, I don’t think my boss, or any of the management team, really understands what digital transformation is. I’ve talked to the CIO, the head of finance, and the key executives who actually run the business, and they’re all supportive, but they don’t really engage with me. When I press for details, not much comes back.

“I sense there’s a lot more going on in digital than I’m aware of. I don’t have a good sense of all the projects that exist across the company. We have a website and an app—actually we have multiple sites and apps—but no one seems to know how much business they generate or if they’re profitable.

“Overall, I feel that everyone is tolerating me, but not really committing to the transformation. They nod their heads when I talk about disruption and transformation, but I sense that the message is not really landing. I don’t know if it’s because they don’t believe in it or they don’t believe in me to deliver it.”

“Basically,” Ian continued, “I think they would be happy to just keep doing what they’re doing without any interference from me. It’s OK for me to be around, as long as I don’t get in their way.”

“How big is your team?” asked Andrej.

“That’s another thing,” replied Ian. “It’s really small. I inherited a small team of five people with a wide range of skill sets—a project manager, a communications person, an agile coach, and a couple of IT people. My boss tells me that I can hire anyone I want, but I’m not sure what skills we need. Plus, there’s no governance structure around digital to build around. To be honest, I’m not really sure what I am supposed to do next.”

“That sounds familiar,” said Elena. “When I joined the bank a year ago, we were going through a major business transformation. The company was change-weary, and it was hard to motivate people to embrace digital. It took me a while to get a handle on things, like you mentioned, Ian. I had to conduct an audit to figure out where we were on digital. So I built a team and identified a set of projects to work on. I was starting to get some traction when COVID hit.”

“What was that like?” asked Ian.

“Well, from being a bit player in the corporate landscape, suddenly everyone was looking to me for answers. Luckily, I had built a good relationship with our IT folks, and we worked closely together to accelerate our video banking project, which really saved us. I also took the lead on our work-from-home project, which took a lot of time and energy. Thankfully, it went well. We got 7,000 people up and running from home offices in about two weeks. Video banking and working from home really helped to build my credibility within the bank.”

“Sounds like COVID worked out well for you, at least professionally,” said Andrej.

“Yes, it probably did,” replied Elena, “but at the same time, it raised unrealistic expectations about how digital projects typically go. More recently, some of our digital initiatives have failed, and the old resistance is back. We’ve sort of stalled. I spend most of my time these days on the organizational side rather than technology, like building momentum for change, redesigning processes, working with the business and HR on incentives, training employees on digital skills, and trying to build the case for new business models. I’m also spending a lot of time with customers, trying to understand what they need and, most importantly, what they’re willing to pay for.

“My biggest challenge these days is actually taking digital pilots to scale. We have lots of great digital projects in some kind of incubation stage, but I can’t seem to get them to scale, which is driving me nuts! In some ways, it gets easier, Ian. But in other ways, it’s a lot harder. Even with some successes over the past year, I don’t feel as if I am completely on top of things.”

Andrej chimed in, “It gets better—at least it did for me. We’ve gone through a lot over the past three years, and it wasn’t always successful. In fact, we made a lot of mistakes. But I think we’re finally on the right track. I spent a lot of time, early on, convincing my colleagues of the need to transform. First, they didn’t really see the threat—it wasn’t in their nature to deal with disruption. Second, they weren’t convinced that digital could provide the answers. Most of them thought of digital as fancy IT tools, including the IT department by the way!

“It took a couple of shocks to the business to convince them that all was not well with the status quo. And that was before COVID. For us, in the consumer goods space, COVID was actually positive for our business. Our challenge was how to scale up quickly to meet the additional demand. Digital really helped us a lot. Thankfully, we had set up a strong digital team with clear governance and well-defined relationships with other departments, like operations and IT. We’re now able to develop new digital tools, evaluate them, and integrate them into our business at scale. Well, most of the time.

“My biggest challenge at the moment is how to transition digital transformation from a program, which is what it’s been for a few years now, into the regular way of doing business. I don’t think it makes sense any more to separate digital. Pretty much everything we do nowadays in our industry is digital. We need to make ourselves much more agile, more collaborative, and more data-driven than we are today. Digital tools and technologies are necessary for this, so we need to integrate them into the core of our business. But if we want to become a digital business, we also need to redesign our organization and operating model, so we’ve still got some way to go.”

THERE IS NO ONE-SIZE-FITS-ALL SOLUTION

Ian, Elena, and Andrej are not real people. They are composites of many people. But in our consulting work, our executive education activities, and our research, we have interacted with many thousands of executives like them—people struggling with the realities of managing digital projects and transforming their organizations.

If there is one thing we have learned over the years, it’s that digital transformation is hard. We wish there were a magic formula, a single methodology, or a road map to follow, but despite what you may hear from consultants or read in other books, there isn’t. Trust us.

Digital transformation is a journey with many twists and turns. At each turn, a new challenge presents itself. Some of these challenges are related to technology, but more often than not, the barriers to successful transformation are organizational. They concern people, organizational structure, culture, incentives, governance, vision, and a host of other thorny challenges.

Our analysis of 11 research-based studies of digital transformation performance suggests that 87 percent of programs fail to meet original expectations.¹ Those are not great odds! So our best advice is that if you don’t need to transform, don’t. Unfortunately, not transforming is an option for fewer and fewer organizations. The opportunities (and the threats) are large enough that you are left with little choice but to embark on some form of digital transformation. It’s hard and the odds aren’t great, but most likely, you won’t have a choice.

Although we can’t promise success, we believe we can improve the likelihood. In other books we have written, we have broken down the dynamics of digital disruption and recommended useful tools and frameworks to navigate the transformation journey. We were not alone. Academics, consultants, and analysts across the world have provided frameworks and insights to help guide the digital transformation process. Yet many executives are still struggling.

In this book, we take a different approach. After a decade of digital transformation experience, we have captured the best practices from practitioners—best practices that can help others hack their way through these difficult transformations.

HOW TO USE THIS BOOK

Many digital leaders face similar challenges—and we hope to address the most relevant ones here—but each journey has different goals and priorities that heavily influence the digital road map. With this book, we acknowledge that each digital transformation journey is unique and has to follow its own path to success.

Consequently, to make this book most useful, we have structured it in a way that fully supports your individual circumstances. Different readers have different levels of digital maturity and goals, and there is no one silver-bullet digital road map that works for all organizations. As a reader and digital leader, it is your responsibility to accept each challenge and adapt it to your organization’s context. Based on our extensive research and countless conversations with digital leaders, we know that each of the challenges described in this book will be more relevant for you at different times. But only you know about the when and how.

Approach this book as your to-do list. Start by identifying the most pressing to-dos (i.e., challenges) for your organization, and regularly update the list as you progress. There is no universally right order. It all depends on your organization’s digital journey.

Let’s look at Ian, Elena, and Andrej again. They need practical advice directly linked to the challenges they face. And because they are at different phases of the transformation journey, their challenges are not the same.

Our research and experience have convinced us that digital transformation programs go through three natural phases: initiation, execution, and anchoring. Each phase has its own distinct challenges that business leaders will need to carefully navigate to succeed. (See Figure I.1.)

Figure I.1 From initiation to building a digital organization

The initiation phase may not be the largest in terms of activity—we estimate that it takes about 10 percent of the overall effort—but the whole digital transformation program is put at risk if it’s not completed properly. The initiation phase is all about building a solid foundation and setting up the digital program for success. There are three principal components within this phase: building momentum, setting objectives, and understanding the landscape.

Building momentum includes creating a sense of urgency for transformation and aligning the key stakeholders on the need for change. In particular, the top team needs to be aligned internally and solidly behind the digital transformation program. It also needs to ensure that appropriate funding and resources are allocated to the program.

Setting clear objectives is a critical step to avoid the common problem of focusing on “digital for the sake of digital” rather than pursuing a larger, business-focused set of objectives.

Finally, understanding the landscape is about forming a clear assessment of the digital maturity of the organization and capturing an accurate picture of the current portfolio of digital technologies and projects.

The execution phase is by far the largest and most challenging part of any digital transformation program. We estimate that it represents approximately 70 percent of the overall efforts. It also creates the most value for the organization. Most digital transformations are won or lost here!

Due to its size, we have divided the execution phase into two parts: building and integrating. Building is about getting the transformation off on the right foot. It includes important elements such as setting up the right digital governance and building a balanced portfolio of digital projects. A successful building phase means that regular experiments are conducted to test what works and what doesn’t. It’s about establishing quick wins and creating instant, visible impact from digital projects. The building phase can operate in relative isolation from the rest of the organization.

The integration phase is probably the hardest because it requires that digital projects and digital teams be assimilated into the existing organization. Sustainable results can only be achieved when this happens. This phase requires a great deal of stakeholder management and team alignment across different functions, such as operations, HR, marketing, and IT. Many activities are included within this phase, such as setting up clear KPIs (key performance indicators), building digital skills among employees, integrating digital technologies into legacy products and processes, fine-tuning new business models, and working with external partners.

The third phase, anchoring, is the beginning of the end of any digital transformation. We estimate it represents about 20 percent of the overall effort. As digital tools, systems, and processes become embedded within the normal way of doing things, the need for a separate digital program or infrastructure is diminished. Anchoring is about deeply embedding digital tools and technologies within the organizational fabric, and scaling them so that digital business becomes just business. This phase involves building a foundation of digital capabilities within the employee base so that new developments in technologies or business models can be quickly integrated without the need for a separate digital program. It includes embedding an appropriate level of digital governance so that digital becomes a natural part of the organization’s work. Anchoring is fundamentally about creating a future-proof organization able to leverage and scale digital tools and technologies to capture opportunities and respond to threats as they arise.

These phases are also not carved in stone. They have porous boundaries, and there is a lot of back-and-forth between them. For instance, a new technology innovation, such as machine learning, can force digital leaders in the execution phase to rethink the governance of their program to ensure they can share a rare, and expensive, skill set. Equally, other conditions might change. The arrival of a new CEO, for example, might lead to a rethink of the digital transformation ambitions and/or the urgency of the change. Again, it’s up to you to keep the to-do list up to date and reprioritize continually.

Let’s revisit Ian, who’s a few weeks into a new position. He is firmly in the initiation phase. Expectations are high, and the future looks bright, but unless he is careful, he could easily fail. The first part of the book, dealing with the digital transformation setup, would be most useful to him. He might be wise to peruse some of the earlier chapters in this book, such as “Creating a Clear and Powerful Transformation Objective” (Chapter 1), “Building Urgency When Your Business Is Doing Well” (Chapter 2), or “Taking an Inventory of Existing Digital Initiatives” (Chapter 5), among others.

Elena’s needs are different from Ian’s. On the job for almost a year, Elena has navigated many of the challenges that Ian is currently struggling with. There have been some wins, but also losses. She is getting into the core of the execution phase. In addition, Elena is at a very fragile point in her tenure: our research has found that the average “life span” of a CDO is just over 2½ years.² She needs to go beyond the technology to embed transformation deep into the organization. Most digital transformation practitioners these days are some version of Elena, and so the challenges she faces make up the bulk of the book. She might be most interested in chapters such as “Accelerating Digital Using Agile Methods” (Chapter 10), “Managing Digital Transformation Responsibly and Sustainably” (Chapter 16), or “Convincing Customers to Pay for Digital Services” (Chapter 18).

Andrej is a digital transformation veteran. But this doesn’t mean that he’s out of the woods. Unfortunately, we have seen multiple cases of successful digital leaders becoming unhinged by a failure to embed digital initiatives into the wider organization. He is transitioning from the execution to the anchoring phase. Andrej’s challenge is how to move from digital transformation programs to a digital organization. These challenges are less tactical than Ian’s or Elena’s, but they are no less critical. We have written the latter sections of the book for all the Andrejs out there. These later chapters include advice on challenges such as how to build scaling capabilities for your digital initiatives (Chapter 27) and how to set up KPIs to measure progress and success (Chapter 28).

You may see yourself as an Ian, an Elena, or an Andrej, or you may recognize each of them in your current situation. Whatever part of the digital journey you may find yourself on, there are plenty of hacks that are available to maximize your chances of success.

GETTING STARTED

We recommend that you peruse the table of contents and start with a challenge that sounds very relevant to the phase you’re in, perhaps one that you’re facing right now. Go to that chapter and read through its recommendations. In each chapter, we reference additional chapters that tend to go hand in hand. As you browse through the chapters and challenges, your initial to-do list will grow and priorities will become clearer.

Each chapter has a consistent format to ensure that you can easily extract learnings and insights as you move through the book. After describing the challenge and providing a short summary of the chapter’s most important recommendations, we break down the content into these elements:

Why It Matters. We present the justification for including the challenge in the book—in other words, why it’s a big deal to the success of digital transformation. This section often includes facts and statistics to illustrate the relevance of the challenge.

Best Practices and Key Insights. This is the largest section in each chapter. It outlines our evidence-based advice on how to address the challenge. We provide recommendations and best practices for typical use cases, supported by examples. We often back up this advice with a tool or framework that you can apply in your organization.

Hacker’s Toolbox. In this section, we provide a set of super-practical tools and advice that you can apply to create immediate impact.

Self-Reflection Questions. Here, we provide a set of questions that can be used as a checklist or validation of the recommended approaches.

YES, IT CAN BE DONE

The metaphor of an airplane is often used to describe digital transformation. As long as you load the plane with fuel, get to the runway, and take off in the right direction, you’ll be fine. This metaphor does not reflect our experience. For us, digital transformation is more like a trek in the mountains. Preparing well for the journey is necessary, but not sufficient. You can never let your guard down. Successful trekking requires paying constant attention to the environment, as well as avoiding obstacles, adapting to changing conditions, managing the expectations of those around you, and, most importantly, persevering.

Think of this book as a Swiss army knife for digital transformation. Feel free to dive in and out at any time, depending on which phase you’re in and the specific challenges of the day. But keep it close, for you never know where the next digital challenge may come from!

The goal of Hacking Digital is to decode the how of digital transformation. Yes, it’s hard, but it’s not impossible. We have seen a lot of failures, more than we care to remember, but also many successes. In this book, we offer a suite of best practices, insights, and recommendations to help you tackle your most burning digital transformation challenges, stack the deck in your favor, and move closer to becoming a digital organization.