6 barriers to becoming a digital business - and how to overcome them
- 02 August, 2018 06:30
Culture is organisational 'dark matter' — you can't see it, but its effects are obvious
There's a lot of promise in digital technology, but as many organisations are finding out, actually transforming themselves with these tools is really hard.
A recent Gartner survey found that only a small number of organisations have been able to successfully scale their digital initiatives beyond the experimentation and piloting stages.
"The reality is that digital business demands different skills, working practices, organisational models and even cultures," says Marcus Blosch, research vice president at Gartner. "To change an organisation designed for a structured, ordered, process-oriented world to one designed for ecosystems, adaptation, learning and experimentation is hard. Some organisations will navigate that change, and others that can't change will become outdated and be replaced."
A new report by Gartner identifies six barriers that CIOs must overcome to transform their organisation into a digital business.
A change-resisting culture
Digital innovation can be successful only in a culture of collaboration. People have to be able to work across boundaries and explore new ideas. In reality, most organisations are stuck in a culture of change-resistant silos and hierarchies.
"Culture is organisational 'dark matter' — you can't see it, but its effects are obvious," says Blosch, one of the authors of the report. "The challenge is that many organisations have developed a culture of hierarchy and clear boundaries between areas of responsibilities. Digital innovation requires the opposite: collaborative cross-functional and self-directed teams that are not afraid of uncertain outcomes."
CIOs aiming to establish a digital culture should start small: Define a digital mindset, assemble a digital innovation team, and shield it from the rest of the organisation to let the new culture develop.
“The digital innovation teams must take responsibility for creating and maintaining their own cultures. Over time, successful elements of these teams can be replicated across the organisation, with a focus on ensuring digital innovation, and core teams while having a different culture, work well together.”
People won’t share or collaborate
This is the political dimension of culture, according to Gartner. This is a challenge not only at the ecosystem level but also inside the organisation. Issues of ownership and control of processes, information and systems make people reluctant to share their knowledge. Digital innovation with its collaborative cross-functional teams is often very different from what employees are used to with regards to functions and hierarchies — resistance is inevitable.
"It's not necessary to have everyone on board in the early stages,” advises Blosch. “Try to find areas where interests overlap, and create a starting point. Build a first version, test the idea and use the success story to gain the momentum needed for the next step," says Blosch.
The business isn't ready
Many business leaders are caught up in the hype around digital business.
“The problem is that digital business is far more than just buying the latest technology, or creating a chief digital officer (CDO) role; it requires the organisation to transform to take advantage of it,” says Gartner.
But when the CIO or CDO wants to begin, it turns out that the business doesn't have the skills or resources.
"CIOs should address the digital readiness of the organisation to get an understanding of both business and IT readiness," says Blosch. "Then, focus on the early adopters with the willingness and openness to change and leverage digital. But keep in mind that digital may just not be relevant to certain parts of the organisation."
The talent gap
Most organisations follow a traditional pattern — organised into functions such as IT, sales and supply chain and largely focused on operations. Change can be slow in this kind of environment.
Digital innovation requires an organisation to adopt a different approach. People, processes and technology blend to create new business models and services.
Keep in mind that digital may just not be relevant to certain parts of the organisation
"There are two approaches to breach the talent gap — upskill and bimodal," says Blosch. "In smaller or more innovative organisations, it is possible to redefine individuals' roles to include more skills and competencies needed to support digital. In other organisations, using a bimodal approach makes sense by creating a separate group to handle innovation with the requisite skill set."
Current practices don't support the talent
Having the right talent is essential, and having the right practices lets the talent work effectively. Highly structured and slow traditional processes don't work for digital. There are no tried and tested models to implement, but every organisation has to find the practices that suits it best.
"Some organisations may shift to a product management-based approach for digital innovations because it allows for multiple iterations. Operational innovations can follow the usual approaches until the digital team is skilled and experienced enough to extend its reach and share the learned practices with the organisation," Blosch explains.
“Develop and refine your approach, and as you become more skilled, broaden it and tackle more operational innovation problems,” he advises.
Change isn't easy
“Success with digital technologies and practices isn't as simple as buying a technology. It often requires change across people, processes and technology. This can be difficult and expensive,” says Gartner.
Gartner recommends developing a platform-based strategy that supports continuous change and design principles such as modular, service-based and single view of information.
It calls on organisations to build their ability to innovate with digital over time.
“See these two tracks — building organisational capability and delivering digital innovation — as complementary and evolving over time,” concludes Gartner.
Get the latest on digital transformation: Sign up for CIO newsletters for regular updates on CIO news, career tips, views and events. Follow CIO New Zealand on Twitter:@cio_nz