Planning, execution and leadership are three critical aspects of large scale technology change. Here’s what you need to know about them.
What is digital transformation? An overview for engineers
Technology advances are impacting almost every area of life today. Their combined impact is often referred to as the fourth industrial revolution, which accurately implies the extent of the change that is taking place.
In the first industrial revolution, we saw fundamental changes in where people lived (most people moved to cities from the countryside) and how and where they worked (from fields to factories). Family life and education were radically changed. How people were governed, how trade took place between nations and the standards of living they enjoyed were very different in 1850 than they were in 1780, when the first industrial revolution began in the UK.
Sound familiar? We are seeing changes in all of these areas today and more, and they are happening faster and across the globe. Most organizations understand that they will not survive by continuing to do things the way they do them today. Organizations designed for very gradual change are struggling to adapt to the fourth industrial revolution, which requires a radical response.
And that response has a name: digital transformation.
Digital transformation is necessary but difficult. According to the McKinsey consulting company, 69 percent of digital transformation projects fail. If they can’t radically change, organizations will fail as well. The reasons for failure are varied, but they all stem from the fact that most organizations were designed to focus firmly on repeating tomorrow what they do today. Most organizational leaders have never led a transformation.
I’m here to help. As the author and instructor of the Watspeed Digital Transformation Certificate Program at the University of Waterloo, I’ve studied organizations big and small to learn what makes for a successful transformation—and how to avoid problems that lead to a digital dead end.
My work includes three important pillars. The first relates to planning. What should you be doing with information-based technologies? How do you develop your strategy and what should it include?
The second pillar is execution. How do you put it into practice? We’ve studied and worked with a range of organizations from a variety of sectors. What are the main implementation challenges they face, and how can they be addressed?
The third pillar, and arguably the most important, is leadership. How should digital changes be led? How can today’s leaders and managers increase the probability that their digital transformation will be successful?
Read on to learn more about these three important pillars of digital transformation and how to succeed in each.
Planning your digital transformation
While many leaders of organizations today have a strong sense of urgency about digital transformation, you must carefully consider the changes with rigorous planning processes. This involves making difficult and appropriate choices from the wide range of technological options that exist along with how they will be applied in your organization.
One of the most common weaknesses is a failure to adequately consider the existing and desired future operating model. This is the set of principles, processes and practices that are used to integrate and manage operational activity to meet your performance objectives. Common models include Scientific Management, Lean and Agile. Often technologies are implemented in ways that are inconsistent with the model being used, and this can have significant negative impacts. Taking time to understand your operating model and ensuring that your strategy is consistent with it is essential.
The starting point for strategy development is an understanding of external factors—what is happening now and what do you expect will happen in the future? This should include understanding competitors, technology and societal trends. Your own future vision will build on your existing internal capabilities, which must also be analysed and understood.
For example, a manufacturing company in the automotive sector with global operations was viewing a changing automotive environment on a range of fronts: new products and services with electric cars and other technological advances, new market conditions with the rise in protectionism and new requirements from the large automotive companies they supply.
These external factors, along with the company’s internal capabilities, including high skill levels in an aging workforce, were the foundation for applying technology to their global product development activities, using advanced data analysis and online collaboration. The decision on the technology to use and how it would be applied was based on the business possibilities and needs.
In the digital transformation program I developed at the University of Waterloo, we use several powerful strategy development tools, including some we’ve developed ourselves. These tools are now used in many organizations because they encourage confidence in managing digital transformation. The process you use to plan will have a significant impact on your implementation—it should maximize the involvement and commitment of, and collaboration between, all organizational stakeholders.
A good basic understanding of the information-based technologies available and of your options in applying them is necessary to develop your strategy. Today, all organizations should have an education plan that develops basic technology awareness and supports knowledge and skill development. Most do not.
Executing your digital transformation
Why do so many digital transformation projects fail? We studied a wide range of reports and visited many organizations to understand the reasons. They encompass people and culture, technology and process integration, innovation and privacy, security and regulatory requirements.
Successful digital transformation requires that organizations have wide employee participation in continuous improvement, to tackle implementation challenges and to maximize the value of new technologies. This is difficult. It must be built into your transformation plans.
Alignment across the organization requires careful planning and coordination during your implementation. Supportive collaboration is necessary in planning and execution. Siloed organizational structures and cultures are a major barrier to digital transformation. Most technologies you introduce will impact processes in more than one area and require choreographed change. Silos work against this.
The digital transformation roadmap milestone matrix that we developed is used to facilitate holistic technology implementation plans. A major manufacturing company applied the tool to develop their roadmap to implement new engineering software. Their plans included the software selection process, training engineers to use it, integrating existing engineering data, establishing effective governance of their project and efforts to support the cultural change needed to fully exploit the new technology.
Leading your digital transformation
The priority for most organizations is the ability to deliver their product or service today. Consequently, this is their top priority when recruiting leaders. Most leaders were not appointed because of their ability to lead large, radical technology-based change projects.
Changing culture is frequently cited as being necessary and yet difficult in digital transformation. Digital mindsets are used to describe the change in thinking that organizations believe is needed for digital transformation. This usually includes being able to work with others, data, change and technology in better ways and remaining conscious of the impact on society. Achieving this mindset will usually involve training and changes in processes that support its development and sustenance. You can use our digital mindsets assessment tool to help.
A manufacturing company that participated in our program identified engineering communications as a major weakness impacting large scale technological change. They understood that expenditure on technology would be wasted if their business practices were not ready for it.
It is also important to recognize that large scale, rapid change will often have a substantial societal impact, whether that is on the jobs of employees, on the local community or the environment. Understanding and managing the impact of the technological change is the responsibility of all who are part of digital transformation.
Successful digital transformation is essential for the survival of most organizations today. They know this. Leading the planning and execution of the radical change required is difficult for most leaders and managers, and yet they are the only people who can do it. While some existing leaders may not be able to adapt to the needs of the new world, others are the only people with the knowledge and experience of their organization’s market, people, processes and technology that is necessary for effective digital transformation. They urgently need support, tools and guidance to develop the capability and confidence to do it for themselves.
That’s why my colleagues and I have developed a range of original, practical tools and techniques to enable digital transformation in engineering, manufacturing and other diverse sectors. You can find many of them on Engineering.com. If that sounds interesting to you, try starting with Digital Transformation 101: How to Choose the Right Technology.
