transformation

Business Agility and Digital Transformation

What is Business Agility?

  • Business is “the activity of making, buying, or selling goods or providing services in exchange for…”
    • Corporations –> Money
    • Non-profits –> Social Causes
    • Education –> Knowledge
    • Government –> Citizen Services
    • Military –> National Defense
  • Agility is the “ability to move quickly and easily.”
  • Business Agility is the ability to move quickly and easily to:
    • Make products and services
    • Buy products and services
    • Sell products and services
    • Provide products and services

to employees and customers along with the ability to effectively and efficiently collaborate with partners and vendors.

What is Digital Transformation?

  • Digital is “electronic and especially computerized technology.”
  • Transformation is “an act, process, or instance of transforming or being transformed.”
  • Digital Transformation is the process of transforming:
    • How things are made
    • How things are bought
    • How things are sold
    • How products and services are provided
  • through electronic and especially computerized technology.

What is the Relationships between Business Agility and Digital Transformation?

  • All organizations are digital in one way or another. Some are more digital and some are less but fundamentally they utilize a mix of the following to achieve their desired outcomes and capabilities:
    • People who use technologies
    • Processes enabled by technologies
    • Technologies to capture and synthesize data
  • In order for your organization to survive and thrive in today’s hyper competitive business environments, your organization should have:
    • People who can quickly make decisions on how products and services are created, bought, sold and provided
    • Processes that reduce time between data capture to informed decision-making
    • Technologies that capture, manage and disseminate data quickly to decision-makers

Note that without Digital Transformation, achieving Business Agility is a hallucination!

Understand your Present to Create your Future

  • Do an honest and comprehensive analysis of how business is done currently
  • Holistically understand how current people, processes, technologies, products and services (business and technical) are affected by Strategies, Politics, Innovation, Culture and Execution (SPICE) factors
  • Determine if current capture of KPIs, SLAs and other metrics (e.g., employee incentives) are just for collection or are these measurements truly bringing change within the organization

SPICE Factors

While it is great to imagine and document your future, but any shortcuts you take in the assessing your present will come back to haunt you in the future!

Analysis

Today (Where you are)

  • Create a list of roles and responsibilities for everyone in your organization, partners and vendors
  • Map hybrid business processes that show people-technology interactions
  • Determine what data is being captured, managed and disseminated during people-technology interactions
  • Determine the relevancy of the data for informed decision-making
  • Assign a cost to each business process
  • Assess how quickly and easily your organization can respond to employee and customer needs
  • Determine the various obstacles that result in poor execution of strategy
  • Understand organizational and individual biases

Tomorrow (Where you want to be)

  • Eliminate overlapping and redundant roles and responsibilities that don’t provide value to your organization
  • Create governance, functions, teams and business processes that optimize use of data across people and technologies
  • Create metrics that result in effective decision-making and lessons learned to improve those metrics
  • Communicate effectively to eliminate any preconceived notions of your transformation journeys
  • Create test labs for all employees to test business models, enhance current capabilities and new capabilities
  • Create a new culture through norms, standards, communications and incentives and know that not everyone is motivated by the same things
  • Continuously self-evaluate your maturity level and make use of lessons learned

Asking Questions

  • Strategy
    • Who is affected by transformation?
    • What siloed/outdated/imaginary/undocumented processes are affecting strategic execution?
    • What technology and non-technology tools are used to make strategic decision?
  • Politics
    • Who is distorting transformation communications?
    • What processes and data are leading to transformation easily being vetoed?
    • What technologies decisions are empowering transformation?
  • Innovation
    • Who is assessing frontline employees, external customers, similar industries and different industries to bring innovation to the organization?
    • What processes are in place to raise people’s ability to contribute?
    • Are there technologies to test out new capabilities and business models?
  • Culture
    • Who is motivated to participate in transformation journeys?
    • What kind of processes are in place to encourage culture change?
    • What kinds of technologies are used to assess culture and changes?
  • Execution
    • Who is setting the expectation at all levels for the transformation journeys?
    • What processes are in place that obstruct strategic execution?
    • What technologies are in place that obstruct strategic execution?

Transitions

  • Organizational Structures
    • Optimize organizational structures based on a mix of functions, products, services and geography
    • Create formal and informal strategic linking through processes and coordination
  • Governance and Processes
    • Create governance structures and processes to evaluate how data can be captured, managed, modeled, assembled and deployed
  • People
    • Find people from top, middle and frontlines to champion transformation journeys
    • Show how transformation actually makes people’s lives easier
  • Program Mission
    • Views transformation journeys as an investment portfolio of multiple projects and operations
    • Connects business and technical operations to business capabilities and outcomes
    • Measures relevant metrics and abandon irrelevant metrics that cannot be connected to business value
    • Creates alignment of IT with non-IT functions (e.g., Accounting, Administration, Business Development, Customer Service, Finance, HR, Management, Manufacturing, Operations, Productions, R&D, Sales etc.)
    • Creates effective feedback loops across the organization

 

SPICE for Business Transformation

Imagine an organization where people, business processes, products, services and technologies are in sync. Where an organization performs at its most optimal levels and miraculously everyone is happy and contributing for the wellbeing of the organization. No, I am not talking about a fictional scenario in a far off land. I am talking about an organization harnessing all the power of its capabilities to achieve Business Transformation. And I believe that there is a lot organizations can achieve if they view Business Transformation as a holistic and all-encompassing endeavor. So, today I am going to talk to you about how SPICE can make your organizations better.

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I help organizations pursue a better version of themselves. In this pursuit, I collaborate with front-line employees, middle management and the C-suite to understand issues beyond the obvious so that individuals and organizations can achieve their objectives. Over the years, I have held many titles but the underlying theme is to always do and look for Business Transformation opportunities.

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Business is “the activity of making, buying, or selling goods or providing services in exchange for money” for corporations. For non-profits, business is the pursuit of social causes. For educational institutes, business is the pursuit of knowledge. For governments, business is the pursuit of citizen services and for military business is national security.

Transformation is “a process”.

Now, that you have a baseline understanding of what Business Transformation is and how it helps, the next time when you hear this term you would be aware that it is not just another buzzword and not just another business initiative that would disappear with time.

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Now, imagine a person named John who is walking through an unknown and dark tunnel with just a flashlight in his hands and he is carrying some baggage behind him. John does not know what is in the baggage. He continues to use the flashlight to look ahead to find his way out. His resources are limited. Thus, his objective is to reach the correct end of this unknown and dark tunnel as efficiently as possible.

Would John make it?

According to some experts, if this person were an organization pursuing Business Transformation then he would have failed 70% of the time. Think about this for a second, this means that only 30% of Business Transformation endeavors are able to achieve their full potential. Why is this?

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While there could be a variety of reasons for this high failure rate, I have observed that the number one reason for this is related to a typical conversation within organizations.

How many times have you said or heard someone say, “the business” wants this and “the business” wants that and that “the business” doesn’t understand that systems cannot be developed overnight. Ingrained in this sort of thinking is the idea that somehow IT is different from “the business”.

Somehow there is this “Us” vs. “Them” mentality.

If we think about it, all organizations take advantage of technological advancements. Paper, which was once considered a technology itself, is now used in every organization today in one way or another. Today, all organizations are digital in one way or another even if they don’t realize it yet and to think that they are not stems from this “Us” vs. “Them” mentality.

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Perhaps it is time to change the conversation! Perhaps it is time to think about IT as not something that is outside of “the business” but it is part of “the business”. To have this conversation, there has to be mutual understanding that neither “side” should downplay the importance of the other. This requires an understanding that all technical and non-technical aspects of the organization are there to support the end objectives of business transformation and that collaboration works much better than just mere animosity.

When I started assessing and improving organizations in 2003, I didn’t know what it was called. All I wanted to do was help organizations apply the full potential of their capabilities beyond what they perceived them to be which included but not limited to IT capabilities. Over the years, this took on new meaning for me as the conversation quickly changed from just doing my duties to fundamentally reshaping organizations inside out.

A couple of years ago Business Transformation, IT Transformation and Digital Transformation started to pick up steam and it took off. A lot more individuals and organizations started to pay attention when they saw their bread and butter business models being shattered in light of the new economy. Startups like Uber took on the Taxi Services around the world and now are expanding into other means of transportation as well. In response, Taxi Service companies pushed back hard by either through legislation and government policy or creating their own taxi mobile apps. If the taxi service companies think that they can compete with Uber with just their own taxicab apps then they are hugely mistaken. This is just one example that illustrates how one industry became complacent and within a short period of time a competitor emerged with a new business model that directly tied its operations to technology and the rest, as we know it, is history.

So, if you think about it, Business Transformation is not a standalone activity but a holistic one. Thus, if the people, business processes, products, services and technologies are ignored or not paid enough attention then Business Transformation becomes just another pipe dream.

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As I see it, organizations that are committed to figuring out the Business Transformation journey have to ask 5 fundamental questions from an internal perspective and an external perspective. These questions are:

  1. Who is helped by Business Transformation efforts? Is it management? Is it employees? Or maybe its customers and shareholders? Perhaps answering this entails understanding customer experiences issues and long-term value propositions to shareholders.
  2. What does Business Transformation teach us? Is it better internal communications? Is it Governance and Standardization? Or is it Branding? An organization that showcases and does actual Business Transformation has better stories to tell about improvements and thus can attract customers who see value in an organization that is trying to do better.
  3. Where does Business Transformation start? Does it start in IT? Does it start in Marketing or Operations? Or does it start with customers, vendors and partners? When a customer comes to you and requests a system to be developed, do you ignore this request since your organization does not develop these types of systems or do you explore this further and figure out how you or a partner could help your customer?
  4. When should Business Transformation be considered? How about when an employee has a conversation with a customer? How about when established competitors are eating your lunch? Or should it be considered when new innovations and methods arise?
  5. Most importantly, why do Business Transformation in the first place? Is the organization looking to become optimized and have better cohesiveness? Or is it better long-term value and creating positive societal ripples such as the creation of Corporate Social Responsibility groups that look into Green Technologies to save electricity and in turn save the plant as a consequence.

These are all important questions to ask before, during and after the Business Transformation journeys. But if there are no effective feedback loops then most Business Transformation journeys would be just a one-time initiative and not something that makes organizations become self-improvement entities.

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By this time, most of you might be thinking “well ok I get it that Business Transformation is more than what meets the eye but so what?!!”

What does Business Transformation really have to do with Business Architecture?

A valid question. I want you to think about this…

Do you see Business Architecture as just a plan, as just a design or a model, maybe perhaps a guide, or a way to create documentation, or for the purposes of alignment? Or do you see Business Architecture as a way to accomplish a vision and even to improve an organization’s mentality.

The fundamental reason we do Business Architecture in the first place is to fully leverage the technical and non-technical capabilities of the organization to transform itself. You don’t create a plan or a model or a guide to just document it but you do create it so that these insights can be used to make the organization better otherwise why do it in the first place anyways!

Thus, Business Architecture and Business Transformation are highly intertwined. An effective Business Architecture would open up avenues for Business Transformation so that when it comes to responding to market demands, strategy does not get lost in translation when it comes time for execution.

slide09-spice

I have spent many years recognizing patterns in my own engagements, academic literature and case studies and have determined that there are fundamentally 5 factors that affect the journeys towards Business Transformation.

These 5 factors are Strategies, Politics, Innovation, Culture and Execution or simply called the SPICE Factors.

I represent these factors in a pentagon shape. On its edges are the 5 factors which start from Strategies on the left hand corner and going clockwise until Execution. In the middle of the pentagon shape, there is a loop in yellow indicating that Business Transformation is a continuous process and not just a single project or initiative. Besides each SPICE factors there is a performance indicator to represent that each of the factors have to be measured. This measurement can entail Key Performance Indicators and even Service Level Agreement checks.

The red pentagon indicates where the organization is today (aka the current state) while the green pentagon indicates where the organization wants to be tomorrow (aka the future state). In the middle, the yellow arrow from the red pentagon to the green pentagon indicates transition and indicates what the areas that need to be taken into consideration namely people, business processes and technologies. By extension, these areas influence the products and services provided by the organization.

I am going to go through each of these 5 factors and make you think about how each of these factors can affect Business Transformation within your organizations.

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The first SPICE factor is Strategies. Strategy is a careful plan or method for achieving a particular goal usually over a long period of time. Depending upon how far out your organization can think, a long period of time can be 1 year, 3 years or even 10 years. Of course as you go further out in time, your strategy gets complex as you might not be able to anticipate what is going to happen.

There are many levels of strategies within the organization such as Financial Strategy, Marketing Strategy, Operations Strategy and IT Strategy to name a few. Additionally, strategies can be top down, bottom up, cross-functional and hybrids. But fundamentally, I put strategies in three big buckets namely Organizational Strategy which affects Executives (e.g., performance compensation, M&A etc.), Team Strategy which affects Middle Management (e.g., Operational Improvement, Tool Selection etc.) & Individual Strategy which affects front-line employees (e.g., career trajectory, hiring etc.).

In addition to these strategies and the types of people that they affect, it gets more complex and the real relationships actually look more complicated. Upon further depth, we realize that all of these types of strategies have an internal perspective and an external perspective.

For example, from an internal perspective, organizational strategy looks at things like the type of organizational structures such as functional, matrixed, product-based or hybrids. Depending upon what structure your organization has or wants to evolve into, there would be repercussions. In a functional organizational structure, focus on areas of expertise is increased but what is lost is the cross collaboration which leads to silos. On the other hand, in a matrixed project-based structure, the individuals are only needed for the duration of that project and then they go back into a pool to be picked up or not. What incentive do people have in this type of structure to get the job done efficiently? Something to think about.

Depending upon what the end goal is, these strategies can

  1. Affect performance compensation for executives
  2. Create or destroy middle management fiefdoms
  3. Affect Hiring, Training and Layoff of frontline employees
  4. Create and destroy bloated expectations

The last point is interesting since a strategy with bloated expectations or no expectations at all can lead to misalignment namely between IT Strategy and other Organizational Strategies. Lets think about this…

  1. Was this misalignment always there or somehow it evolved over time?
  2. Why did this misalignment happen in the first place?

A root cause understanding from technical and non-technical views can reveal something that might have been taken for granted. For example, IT teams creating and acquiring tools that have no relationship to the Organizational Strategy or perhaps revealing the purchase of technology by non-IT teams which again has no relationship to the Organizational Strategy.

In short, there are 3 key points to consider for Business Transformation in terms of strategies:

  1. The real an unreal organizational structures matter more that you might like to believe
  2. Plan to plan and measure performance both at an organizational level as well as at individual levels
  3. Alignment is a two-way conversation that is not a top-down demand but should be a collaborative approach

Having said that, as corporate citizens of the organization, we have to realize that Strategies are not shelf-ware.

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Merriam Webster defines politics to be the complex of relations between people living in a society. For our purposes, here society would refer to your organization. No one wants to talk about politics in the organization and yet there are decisions made everyday that are political in nature. 

Politics in organizations is about power; the power to frame a problem; the power to influence decision and the power to make decisions. While we are all aware of the official power that is the power of your superior within the organization but most have also encountered unofficial power where regardless of the title an individual is able to persuade others. Some people call this leadership while other call it manipulation.

In organizations, while it may seem that all similar titles should hold the same power but that is certainly not the case. Even with VP titles, not all VPs are the same. Some have more power based on the number of people they manage, based on the revenue generated by their teams and even based on the relationships they have with others within the organization. So, the next time you look at an org chart and see all VPs at the same level you will know that an organizational chart is just a fairytale representation and not reality. Why this matters? This matter because the next time you are looking for champions to support your projects keep a vigilant eye on who has power and how much of their power is used to make decisions.

The display of power is more relevant today in the age of big data than ever before. As you know, most Big Data initiatives revolve around gathering massive amounts of data and then finding patterns. The thought behind is that once we can figure out patterns then we can make better decisions. This however is not the complete picture. Beyond the usual Vs of Big Data, I believe there are 4 Vs that are critical but missing in most conversations.

These Vs are Vitality meaning how important the data is, Versatility meaning how data could be applied to various scenarios, Vocality meaning the supporters of data-driven approaches and lastly Veto meaning the ultimate authority to accept or reject big data conclusions. As you might have noticed, Vocality and Veto are about Power.

The idea of power also applies when you are creating an ERP System. The executives who have official and unofficial powers can become champions or become obstacles. One way to remedy this is to get them involved early on; have a discussion, find out pain points and get feedback. So, when it is time to standup an ERP system, the people have been engaged from the begining and it is not a surprise. Also be prepared that business process optmization should be done first prior to any large scale systems because otherwise all you are doing is automating broken business processes and thus when it is time to optmize them it would become much harder to do so. Other examples of displaying of power would be in Cloud Computing and Shadow IT.

In short, there are 2 key points to consider for Business Transformation in terms of politics:

  1. The official and unofficial power considerations matter and can make or break a project
  2. Create a Power Map to know where a power resides, assign quantitative values to them to set a baseline and then verify with projects that those baselines are correct

Remember, politics needs to be understood especially in the case of organizations.

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Innovation is defined to be the act or process of introducing new ideas, devices or methods. Innovation can be a new product, a new way of hiring people, a new way of doing business processes, a new service and it can also be a new technology. If there are so many ways of being innovative, why organizations and individuals struggle in this area?

For most, innovation is something that is considered difficult since people don’t know where to start or how to continue. Innovation comes from inspiration and I believe that organizations and individuals can be inspired by things around them. The left picture represents the possible sources of organizational inspiration for innovation. These sources include:

  1. First, the organization’s internal customers. By internal customer, yes I do mean anyone who is within the boundaries of your organizations and yes that includes your employees. Employees who can see beyond the immediate needs and are able to connect the dots should have an avenue to express it. Thus, there should be some sort of innovation process that captures the wisdom of these employees.
  2. Second, the organization’s external customers. We are all aware of the external customers who are outside the boundaries of your organization but they too can provide feedback to improve your products and services.
  3. Third, within your own industry, which includes looking at what competitors, partners and/or startups are doing something that could be applied internally.
  4. Fourth, outside your industry. Think about the field of Project Management that emerged from the construction industry but now it is used in Software Development.
  5. Lastly, the integration, customization and combination of inspirations from the above four ways. Think about the evolution of writing from cave walls to stone tablets to paper and then eventually to computers.

The picture on the right represents the possible sources of individual inspiration for innovation. These sources include:

  1. First, your direct circle of influences namely your friends and family. Have you considered talking with them about problems that you might be facing and what they would recommend?
  2. Second, your indirect circle on influence namely your co-workers, educational and professional associations. Perhaps what you are having trouble with they have already solved or at least they can give you a nudge in the right direction.
  3. Third, increasing your understanding of areas that interest you which includes reading books, blogs, news articles and talking to people who have experience in that area.
  4. Fourth, increasing your awareness of areas that you are not that knowledgeable in which includes different types of readings, experiencing cultures beyond your own, conversation with diverse people, observing the plant kingdom and observing the animal kingdom.
  5. Lastly, the stitching, applicability and combination of inspiration from the above four ways. Think about the invention of Velcro by observing cockleburs in the plant kingdom.

Thus, it would be naïve for organizations to think that they cannot fully take advantage of innovation at the organizational and individual levels.

They have to remember that innovation is the lifeline.

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Culture is a way of thinking, behaving, or working that exists in a place or organization. Often times when there is a discussion of culture within organizations we immediately think this is something fuzzy and it is only equated with people. While people definitely create a culture but there is more to this than meets the eye.

You see culture is not just one thing but a combination of things. Most organizations don’t have one culture but they have a mix of sub-cultures. The way people are treated creates a sub-culture. For example, how are people within the organizations at all levels incentivized and rewarded? The way people dress creates a sub-culture. For example, if executives dress differently vs. non-executives this visibly creates the culture of in-crowd vs. outsiders. The posters in public locations, the discussion between Mac. Vs. Windows, IT behind closed doors and even an individual can create sub-cultures within an organizations.

All of this matters because culture is not just having a foosball table or other “perk”, it is creating an environment where employees are appreciated not just by talk by the executive but by tangible actions through incentives, rewards and performance goals.

Culture is at the base of the SPICE factors for a reason.

Culture can make a strategy just another paper-exercise, culture can drastically affect politics, culture can resist organizational innovation, and culture can prevent effective execution of operations and all of this means that culture can diminish any hopes for Business Transformation.

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Execution is the act of doing or performing something. If you notice in the above-mentioned factors, all of them need to be executed; measured and performed otherwise all we are doing is just wasting our breath and paper. As I see it, execution also has an organizational level and an individual level. Both of them are highly intertwined. If there are no structures and processes to determine and quantify execution issues then how would you know where your baseline is and if you don’t know where your baseline is then how would you know if your Business Transformation efforts have been successful or not.

Note that execution is highly based on biases and perceptions of organizations and individuals as discussed earlier. They have to be considered and if needed be persuaded to be changed.

Rewards and incentives can not only change behavior but it can enhance cohesion and collaboration across the organization.

Lesson learned are useless when all they are is a paper exercise of capturing what happened wrong or right but not an input for other projects so that they can avoid similar mistakes or repeat successes.

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All the factors that have been discussed are not something that are done in isolation but they all come together to create an organization that is able to transform it self based and stay ahead of the game.

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As we can see from the live survey, the most important area for Business Transformation is People and the most important factor for Business Transformation is execution.

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Now, let’s go back to our dear friend John (aka your organization). With his understanding of the SPICE Factors and his awareness of how the SPICE Factors can affect people, business processes, products, services and technologies, don’t you think he would have used his flash light to find out what was in the baggage. Perhaps some of the baggage was dead weight that he needed to get rid of and perhaps in the baggage there were additional resources he could use such as food, liquids and even a map. But the only way John would find out would be to look behind and just check his baggage!

All I am saying is…help John find his way and help him succeed!

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5 Questions to Ask About Your Culture

Peter Drucker, one of the most influential management consultants in the world, is often attributed to coining the phrase “Culture eats strategy for breakfast.” Organizations that can harness the power of culture can create environments where everyone can contribute towards the attainment of strategic objectives. However, most organizations are unable to create such environments and hence their pursuit of strategic objectives never fully comes to fruition. The three main reasons for this failure are:

  1. The fallacy that culture is considered something fuzzy thus unquantifiable
  2. The lack of a holistic approach to forming/enhancing positive attributes of the inherent cultures
  3. The half-baked idea that culture equates to only people

An organization’s culture is a way of thinking, behaving and working within the physical, virtual, legal and mental organizational boundaries. What an organization thinks about its place in the world is shown by its vision, mission statement and (un)displayed values which directly influence internal and external stakeholders. How an organization behaves is shown by leadership examples, levels of (un)trustworthiness, encouragement and discouragement of cross-collaboration and camaraderie. How an organization works is shown by its (un)biased business processes, (non)adoption of technological advancements, (un)approved frameworks/methodologies/approaches, employee (non)recognitions, (un)real career ladders, risk averseness, salaries, (non)physical locations, clothing and subcultures.

Culture is not just one thing but it is a collection/combination of different things/subcultures that can be observed and also measured. Thus, how organizations measure, incentivize and reward from the selection of the right people to optimized processes and efficient use of technology becomes crucial towards achieving organizational objectives. In order to understand and effectively bring cultural change, the following questions need to be asked:

Strategic Perspectives on Culture:

 

Currently

In the Future

1.

Who is incentivized at the executive level to transform culture?

Who should be incentivized at the executive level to transform culture?
2. What governance structures are in place for strategic cultural transformation? What governance structures should be in place for strategic cultural transformation?
3. Where is technology integrated into transforming culture? Where should technology be integrated into transforming culture?
4. When and how often cultural transformation objectives are communicated? When and how often cultural transformation objectives should be communicated?
5. Why cultural transformation is critical to achieving strategic objectives?

Why transformation should be critical to achieving strategic objectives?

Tactical Perspectives on Culture:

 

Currently

In the Future

1.

Who is incentivized at the middle management level to be champions of transforming culture?

Who should be incentivized at the middle management level to be champions of transforming culture?
2. What business units, functional areas and teams are included to bring about transformation? What business units, functional areas and teams should be included to bring about transformation
3. Where technology hinders in cultural transformation? Where technology might hinder in cultural transformation?
4. When is the start and end of cultural transformation communicated? When should the start and end of cultural transformation communicated?
5. Why cultural transformation is critical to achieving tactical objectives?

Why cultural transformation should be critical to achieving tactical objectives?

Operational Perspectives on Culture:

 

Currently

In the Future

1.

Who sees cultural transformation as an obstacle?

Who might see cultural transformation as an obstacle?
2. What business processes provide views on the organization’s culture? What business processes should provide views on the organization’s culture?
3. Where is technology part of your understanding the organization’s culture? Where should technology be a part of understanding of the organization’s culture?
4. When were you informed about the cultural transformation objectives? When should you have been informed about the cultural transformation objectives?
5. Why cultural transformation is critical to achieving your daily tasks?

Why transformation should be critical to achieving your daily tasks?

Culture transcends most of our thoughts and how we function within organizations and outside of it. This overarching affect of culture can create biases in terms of what people we hire, what processes we put in place, what technologies we choose to use, who we talk to and what we care to observe. By asking the right questions and putting the right measurements in place, we can have a quantifiable understanding of the baseline cultures and enhance it for the better. In doing so we have to be cognizant of our own biases, biases of others and any prevailing biases that result in cultural stagnation.

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35 Concepts that Affect Organizational Transformation Efforts

Organizational transformation entails understanding where the organization is today and where it wants to be in the future in terms of people, products/services, processes and technologies. In order to accomplish this transformation, we have to determine the organization’s ‘eligibility’ by assessing its strategy, politics, innovation, culture and execution (SPICE) factors. The SPICE factors help us determine (1) the underlying motivations of why the strategy was developed, (2) who are the power players in the organization, (3) who is really responsible for innovation, (4) who is an example of corporate culture and (5) who would help in carrying out this transformation across the organization.

As the organization begins its transformation journey, one glaring fact that is revealed is that the most crucial element to accomplishing change cannot occur without people. People are your organization’s lifeblood. People are the biggest champions of change or the biggest obstacles to it. Thus, in order to bring transformational changes in the organization, we have to understand the following concepts that affect individuals and group dynamics:

A. Inclusive Transparency

1. Cumulative Error – Your message of transformation can be distorted along the way and could be translated into many things (e.g., layoffs, outsourcing etc.). To address this:

2. Deep Time – People believe that the past was shorter than the future. For organizational transformation this means that if the future does not have a due date then there is the tendency to think that transformation can happen at a later time. To address this:

  • Have transformation due dates
  • Share what happens after the transformation
  • Assess motivators that change the discussion from ‘I will do it tomorrow’ to ‘Lets create the future today’

3. Externalities – Everyone affects everyone even if they don’t know it. For organizational transformation, this means that even the most isolated action in the organization can hinder change. This could be merely someone saying that they don’t believe transformation is going to be successful without giving any constructive feedback. Essentially, by saying this what people have done is created an opinion that be the seed to create doubt in others. To understand this:

  • Determine who are the spoken and unspoken champions and obstructionists
  • Empower champions and ask the obstructionists why they are resistant
  • Actively address the concerns of the obstructionists

4. Inference to the Best Explanation – The truth behind something is often reasonable and the best explanation. For organizations transformation what this means is that while there are many truths behind the failure of a transformation activity but often times it is the simplest explanation of what happened that prevails. Of course we have to be cognizant that this explanation is bias-free and objective. To determine this:

  • Read between the lines
  • Concentrate on what can be improved rather than who did it

5. Shifting Baseline Syndrome – Depending upon various variables, being ‘normal’ differs from one person to another. For organizational transformation, this means that the perception of what needs to be achieved can drastically vary from executive to the individual contributors. To address this:

  • Create and reiterate the objectives of the organizational transformation efforts
  • Re-inform periodically what they are doing has a role in the organizational transformation efforts

6. Subselves and Modular Minds – People have multiple versions of themselves which changes and morphs based on who they interact with. For organizational transformation, this means that to get to the truth behind the truth be ready not to take things at just face value. To understand this:

  • Don’t ask what is wrong in front of the superiors
  • Create a repercussion-free zone where people can openly discuss what they think is going on anonymously

B. Bite Sized Information

7. Cognitive Humility – People have a finite capacity of absorbing and retrieving information. Due to this finite capacity, people look for information that sits well with their own perceptions. For organizational transformation efforts, this means that if it is perceived that something similar has happened in the past with no great results then your current transformation effort would be considered just another ‘talk’. To address this:

  • Acknowledge the success and failures of the past transformation efforts
  • Discuss openly what lessons have been learned from the past transformation efforts and how those lessons are used in your current efforts
  • Create balanced specific action plans for individuals and groups, which are directly tied to their motivations (e.g., money, time-off, time to work on unique projects, competition etc.)
  • Create measures that assess the performance of the action plans and determine various ways to measure and not measure them
  • Be transparent and share small and big success so that the transformation efforts stay top of mind
  • Don’t be afraid to add people to the transformation leading team who you didn’t consider at the beginning
  • Design your team so that they are a cross-section of every function (e.g., management, finance, accounting, marketing, operations, information technology etc.) and every level (e.g., executive, senior management, middle management, front line individual contributors etc.) within and outside (e.g., vendors, customers etc.) the organization

8. Cognitive Load – At any given moment in time, people can only handle small amounts of information to make decisions. If there is too much information then there is a high likelihood of stagnation that often results in indecisions. Perhaps that is why video game designer give the player bare minimum information (e.g., lives remaining, mission completion status etc.) so that they can accomplish what they need to and move on to the next task. To address this:

  • Provide the least bit of information with the most impact (e.g., # of functional units transformed, # of processes captured and verified etc.)
  • Create anticipation (e.g.., only X time left until its time for their function to be transformed)
  • Share right information with the right people at the right time

9. Constraint Satisfaction – With too many options we become paralyzed and thus in order to get things to get moving we have to have some constraints around them. These constraints can come from within or outside the organization for the purposes of transformation efforts. To address this:

  • Don’t try to boil the ocean but instead create ponds then lakes and then rivers
  • Have deadlines and make people work towards them
  • Allow short meetings and give power to people to cut them off when productivity declines

10. Cultural Attractor – People are attracted to ideas and thoughts that are easily digestible. Simplicity is the name of the game even in organizational transformation efforts regardless of how complex it really is. To address this:

  • Clearly define what is that you plan to accomplish
  • Create a 140-character description, a 1 pager and a 10 pager
  • When creating process maps, eliminate complex symbols/notations and only use the basic ones to convey information
  • Setup process map meetings in a way that people become encouraged to participate since its so simple that anyone could do it
  • When evaluating technologies, don’t just read the systems documentation but inquire people how would they define the purpose of the information system that they use

11. Name Game – We are biologically programmed to name things and classify them but often times this can lead to not understanding what is behind that name. For organizational transformation, this means that create activities names that are easily identifiable. To use this:

  • Use acronyms that have meaning as well (e.g., organization needs SPICE for transformation)
  • Classify names and descriptions of activities and achievements in a way that it is clearly understood what is being attempted and what has been accomplished

12. Umwelt – People often accept reality without going into depth. For organizational transformation, this means that due to the increasing pace of business people have developed certain shortcuts in their minds of how things work. To address this:

  • Challenge the thinking of everyone and everything around you
  • Show proof that their thinking might be based on outdated information
  • Document concerns to have a solid understanding of the cultures and subcultures

C. Big Picture

13. Contingent Superorganisms – After people have achieved what they want to achieve individually then they automatically become more open to helping others and larger audiences. That is why at a certain point in time, people like to give back and create a legacy of selfishness. For organizational transformation, it becomes really important to figure out who these people are. These are not necessarily those who are perceived to be accomplished (e.g. superstar executive etc.) but it could anyone from the lowest rungs of the organization to people outside the organization. To address this:

  • Find out what motivates people outside of work and use those external motivations to see if the same passion is displayed at work. If not, ask the individual how that can happen
  • Understand that status quo often means being burnt too many times
  • Keep an active lookout for those who put the group before themselves and would volunteer their own time to be a part of the transformation. Don’t just use these people but recognize them in various ways (e.g., employee recognition, bonus, paid family vacations etc.)
  • Be cognizant of people who are getting involved because of their superiors
  • Be vigilant and recognize that sometimes the person being recommended is not the best

14. Copernican Principal – People often feel that their role is insignificant compared to the big picture. These thoughts can lead to people being tuned out and just punching the clock rather understanding their value in the organization. To address this:

  • Visually show how their individual contributions are changing the organization for the better
  • Don’t be afraid to apply this concept for customers as well and show how their contributions (e.g., buying products/services, giving feedback etc.) is helping create a better organization

15. Focusing Illusion – People often focus on the ‘only if’ and live in its illusion. For organizational transformation, this means that people often mistake transformation as a big bang activity while it is a slow a steady approach to constantly improving organizations. To address this:

  • Share the plan of organizational transformation would across various organizational functional units
  • Constantly remind and show that organization transformation is about the ‘here and now’

16. Holism – The idea here is that in the big picture, the little details do count as well. For organizational transformation this means that no information is minuscule enough that it has no affect of transformation. In fact even the minuscule information if not understood and addressed can lead to a snowball effect that can come from the left field when it comes to the transformation journey. To understand this:

  • Recognize that due to education, work and life experiences some people prefer to stay within their own silos without knowing how others actions affect them and how their actions affects other beyond their functional responsibilities
  • Create a ‘one-view’ map that shows the major connections between all the silos and how indirectly they are helping and hindering each other
  • Create a forum where interdependencies can be understood and improved and go beyond functional boundaries and few peoples
  • Help people connect the dots and display it everyone can see it

17. Positive Sum Game – Everyone wins. For organizational transformation, this means that transformation objectives should be balanced in a way that all teams that are involved get benefits out of it. For some this benefit would be having a better idea of how the business works, for some this benefit would be doing more with less, for some this benefit would be transitioning to another career. To create a positive-sum game:

  • Listen to all parties to come with positive sum solutions
  • Act in the interest of all parties and show this at the begin, middle, end and after the organizational transformation efforts

18. Powers of Ten – By understanding scaling laws you can have a better idea of where anything sits in the bigger scheme of things. For organizational transformation, this means that you should ask and assess and assign actual values in terms of magnitude of transformational activities. To do this:

  • Ask various functional areas to represent the importance of their work for the organization. Then ask another functional area to assess what has been reported. After this brings the functional areas together to discuss the difference which are often times based on known and unknown biases (e.g., IT are only order taker, accountants are just bean counters etc.)

19. Self-Serving Bias – People perceive themselves to be better than others. For organizational transformation, this means that for success people would take credit but for failure they would blame others. To address this:

  • Create surveys to reveal people’s biases towards themselves, others, their functional unit and other functional units
  • Emphasize that successfully transformation efforts benefit them individually and the organization as a whole
  • Document any concerns that are revealed to get a sense of the idea of culture in the people’s minds

D. Patterns Matters

20. Cycles – Everything is cyclical. For organizational transformation efforts this is a disaster repeating itself in terms of hiring the same kind of people, redundant processes and outdated technologies. To address this:

  • Determining candidate cultural fit does not mean to hire or rehire from the same pool (e.g., age, gender, geographical location, race, birth place, language pronunciations, how they look etc.) of people
  • Identify processes that have a black hole meaning that they are being carried out without any regard to their usefulness
  • Recognize patterns in organzational transformation efforts
  • Understand that technologies that are being used are not necessarily the best to get the job done but are those that people are just comfortable with and hence continue to use them

21. Double-Blind Control Experiments – This method is used to identify the underlying biases people have without even recognizing them. In organizational transformation this can mean the difference between on board or just being an observer to see what happens. Use this method to:

  • Determine how do people actually feel about transformation efforts anonymously
  • Determine if there are varying tendencies (e.g., preference to work with younger folks rather that older folks, difference between 9-5 versus getting the job done, text versus visual display of information etc.)

22. Fixed-Action Patterns – Certain behaviors and attitudes displayed by people are not necessarily biases but have been learned and reinforced over time so it becomes a habit. To leverage this:

  • Observe what people do and then ask why they did it. Get to the underlying factors of their actions
  • Train people so that transformation is not a one-time event but a continuous improvement initiative

23. Hidden Layers – As time progresses people develop layers between what is reality and what is perception. These layers help develop habits that can be restarted even after without practice years later. For organizational transformation, this means that success and failures are learned over time and can be used to affect the organization. To figure this out:

  • Find out who has been involved in any kind of transformation even it was outside the current organization
  • Assess what habits led to success or failure keeping in mind biases

24. Predictive Coding – People are a product of what happens to them and over time this becomes a pattern recognition system to engage or avoid. For organizational transformation, this means that people’s thoughts and eventual actions are based on what has happened to them. To leverage this:

  • Positively reinforce the benefits of transformation not only though talk but through action
  • Get to the root of people’s behavior and actions to turn them into a positive
  • Understand that you cannot turn everyone into a champion but as long as they are not an obstacle then you have come closer to a positive result

E. Team Creation

25. Effective Theory – If you can’t measure it then you can’t improve it. For organizational transformation, what this means is that while it is useful to have plans and work towards achieving the objectives of those plans but they are meaningless if it is not being measured. To assess this:

  • Properly define what successes and failures looks like
  • Know what to do when successes and failures are encountered
  • Don’t measure for the sake of measuring

26. Expanding In-Group – The world is a global village and there is more interconnectedness than anytime else in our history. This interconnectedness can lead to looking at solving problems from different angles. For organizational transformation, this means that the more diverse and cross-over that you have in your teams, the better it would be able to solve problems on a bigger scale. To leverage this:

  • Create hybrid teams from various parts of the organization
  • Inform team members that they are all equal in the team and everyone has a veto
  • Give the same problems to different teams and see what solutions they come up with. Combine these teams to create solutions that have a holistic view of the organization and understand the internal and external values of creating such solutions

27. Fear of the Unknown – People’s known and unknown biases can make them inaccurately determine their risks and benefits. For organizational transformation, this can mean the difference between making a big gain versus remaining in the status quo. To accomplish this, do:

  • Create metrics on how to conduct risks and benefits analysis individually and for the organization
  • Train people in making sound judgments without rhetoric and biases

28. Rational Unconsciousness – People make conscious and unconscious decisions despite their awareness of its weaknesses. For organizational transformation, this means that despite people’s knowledge of what is the right thing to do people unconsciously continue to do the opposite. To address this:

  • Ask people what they want from this transformation and then observe it what the want is consistent with their actions
  • Enlighten these people by discussing what you have observed
  • Create the opportunities for people to grow and adjust to the new reality

29. Structured Serendipity – Luck is found through a concerted effort in achieving objectives. For organizational transformation, this means that a structure should be put in place with the ability to be flexible and adapt if necessary. To do this:

  • Create specific milestones and their relevance to individuals and organizations
  • Show that through structure they are able to achieve their objectives efficiently and effectively (e.g., faster innovation, removal of redundant processes

F. Experimental Boundaries

30. Failure Liberates Success – Encourage failure and experimentation. For organizational transformation, give your teams the ability to refine, reiterate and rethink problems to solutions. To influence this:

  • Task your teams to think of as many problems as they can about a solution. Ask the other teams to create solutions to those problems and then make these teams sit together to figure things out
  • Create ways for teams to rinse and repeat SPICE factors
  • Measure the various ways to find optimum solutions
  • Don’t just go for the lowest hanging fruit. Go after big things and challenge the foundations to make it stronger

31. Kaleidoscopic Discovery Engine – When it comes to insights and innovation, people are always learning from each other. For organizational transformation this means that there is constant learning activity going on within and outside the organization. Sometimes these activities can excel the transformation journey if they are given enough thought. To leverage this:

  • Get innovative ideas at an individual level. These range from (1) direct circle of influence, (2) extended circle of influence, (3) areas that people are interested in, (4) unrelated ideas and (5) stitching, applicability and combination
  • Get innovative ideas at an organizational level. These range from (1) internal customers, (2) external customers, (3) within the industry, (4) outside the industry and (5) integration, customization and combination.
  • Build and refine upon what has been learned
  • Document what was learned and what was the result

32. Pessimism Meta-Induction – Every theory is up for debate and discussion in light of new evidence. For organizational transformation, what this means is that the organization has to be constantly challenged to question the status quo not only periodically but also ad hoc to check if stated objectives are being achieved. To accomplish this:

  • Create an open discussions forums where all topics related to organizational transformation should be discussed in a transparent manner
  • Follow-up on issues and concerns with corrective action plans

33. Randomness – There are certain things that we cannot control. For organizational transformation, this means that regardless of how pristine and well thought-out your plan for transformation is it is bound to run into unanticipated obstacles. To plan for this:

  • Have time and money set aside for contingency purposes
  • Accept failure as an option and have a way to document and measure it so learn from it
  • Welcome wrenches in discussions so that you can address them before it is too late to address them

34. Skeptical Empiricism – Don’t believe by merely observing but by careful thought. For organizational transformation, this means that most people get easily swayed by what they observe and thus mechanisms should be put into place where they are free to challenge the status quo with evidence and deep thoughts. To remedy this:

  • Show proof of what you are trying to accomplish and how it would have a positive effect on them
  • Document what is going on to get a feel of the underlying culture activities
  • Create action plans to address these different observations when they happen

35. Uncalculated Risks – People often worry about the big stuff but don’t take into account the little stuff that can affect their risk-taking. For organizational transformation, this means that being less precautious on the little stuff can slowly thwart efforts. To address this:

  • Create a risk matrix for big and small items
  • Create a mechanism for measuring all risk tolerances

Now that we have understood the varying concepts that affect organizational transformation efforts, let’s ask the following questions:

Currently

In the Future

Who is involved in organizational transformation activities within and outside the organization? Who should be involved in organizational transformation activities within and outside the organization?
What outcomes the organizational transformation activities are revealing? What results are expected for organizational transformation?
Where does organizational transformation begin? Where should organizational transformation begin?
When does organizational transformation become important? When should organizational transformation become important?
Why people work on organizational transformation? Why people should and shouldn’t work on organizational transformation?

When you are asking the above questions, keep in mind that organizational transformation entails all aspects of the organization. Without people transformation, without process transformation, without product/service transformation and without technological transformation, there is no transformation at all but just another illusion of transformation.

References:

  1. 5 Questions to Ask About Business Transformation
  2. 35 Scientific Concepts That Will Help You Understand The World
  3. 5 Questions to Ask About Your Information
  4. 5 Questions to Ask About Your Business Processes
  5. 5 Questions to Ask About Your Information Supply Chain
  6. 5 Observations on Being Innovative (at an individual level)
  7. 5 Observations on Being Innovative (at an organizational level)