In successful business transformations, it’s critical to objectively understand “what must change.” According to Gartner, “Over 80% of CEOs responding to our annual CEO Survey said they have a digital transformation program underway to make their companies more digital.” The challenge is that most digital transformations fail to live up to their expectations. According to Gartner, “through 2021, digital transformation initiatives will take large traditional enterprises, on average, twice as long and cost twice as much as anticipated.” Large organizations in particular, struggle with modernizing their technology stacks and the costs associated with simplifying and building their IT applications and infrastructure.
Compounding this challenge is the pandemic, which has left most companies with fewer people and less IT budget than a year ago, while they’re still hampered by the same outdated technology and legacy processes they had been dealing with before.
Historically, not only did these transformation efforts take years, cost a small fortune, and end badly, but they also consumed an organization’s most valuable resource—their most talented people. Many suffered from digital exhaustion, gave up in place, or simply moved on.
That being the case, why not just hunker down, conserve cost, and put everything on hold? The simple answer is, there are no timeouts in business. “Global spending on DX technologies and services is forecast to grow 10.4% in 2020 to $1.3 trillion.” Every CEO knows they’re competing in a world of accelerating disruption and unprecedented market uncertainty. They need to transform their businesses to generate new value, to drive new growth and innovation with improved efficiency. But they also know they’ll have to do it with fewer resources, in a more compressed time frame, and with much better outcomes.
What Must Change
To successfully transform your business, “what must change” has to be understood by everybody. If your people don’t understand the obstacle—the thing in the way of them being successful—and you can’t articulate why you believe “what must change,” then they have no reason to believe it and buy-in.
Executive sponsorship is often cited as a key to successful digital transformations, but there’s no direct correlation between their sponsorship and digital transformation success. In fact, you can point to many monumental failures and, in doing so, will often see such exuberance for the outcome, they often missed the point. Don’t confuse the authority of a person’s position with leadership. People didn’t follow Mahatma Gandhi or Martin Luther King because of their titles. They understood why they believed and “what must change.” When people understand and can identify with that belief, they will buy into the change and be advocates because they understand why the change must be made.
If you can’t articulate why you believe in something—how it will benefit customers, the organization, you and your team—then people won’t follow. If they don’t clearly understand what must change, they will revert to doing things the way they know how, and perhaps even fight the change, creating a toxic culture and reinforcing vertical silos. Those reinforced silos will suffocate your ability to transform processes across your enterprise.
Companies are organized in vertical departments for efficiency, but when those departments become rigid and walled-off, they sub-optimize important enterprise processes to the point of becoming barriers to success.
These rigid impenetrable silos are not just people silos, but data silos, process silos, and very often, they become technology obstacles to an agile, collaborative organization. These hidden landmines slow and take out well-intended business transformations. It’s critical to have everyone on the same page, with everyone understanding “what must change,” or these silos will become the obstacles to creating the agile, collaborative, and competitive organization you could become.
The Obstacle
You should focus on transforming obstacles in a sustainable way to allow your company to be more flexible, more resilient. This should be obvious, but as soon as the word “digital” gets uttered, a good number of seemingly rationale people tend to lose their minds. Yes, technology is becoming more pervasive, but it’s still a business transformation, so the first order of business is to “objectively” understand your biggest obstacles. I recommend a book by Ryan Holiday entitled The Obstacle is the Way. My favorite quote from it is, “There is no good or bad without us, there is only perception. There is the event itself and the story we tell ourselves about what it means.” Listen to how one company, Littelfuse, overcame a series of obstacles along their own digital transformation journey.
Your company’s obstacles will vary, depending on your circumstance. A key takeaway from the book is that all large obstacles have large weaknesses, but you must keep an objective perspective. If you tie your emotions to the obstacle, you’ve lost perspective. The obstacles themselves might be the lack of elasticity in your supply chain, the inability to control the complexity in new products, the lack of a collaborative digital thread, a digital twin strategy, and often times, it’s the PLM system itself or other pillar systems. The important point is that you must gather an objective consensus around why you believe these are your obstacles and what must change and then socialize it to gain consensus. If instead you react to threats with technology and focus on applying some industry 4.0 technology on a tactical, isolated problem, or you’re focused on spending more money on software add-ons with a preferred vendor, then you’re likely failing to understand the business obstacle from the start.
Today, most transformational leverage comes from platform technology and not from embracing emerging technology. I’m oversimplifying, but most business processes are extremely outdated. If you take Airbnb and Uber as examples, they gained traction based on mainstream technologies already in the hands of consumers. Leading with the next wave of emerging technologies will not help transform your business, especially if it is not directed at your core problems and is not holistically working across a platform that includes everyone involved in a particular process.
You cannot successfully transform without an objective perception of your biggest obstacles.
Competing Priorities
Just because you have an objective perspective, it doesn’t mean everyone else does. For every transformation, whether it’s the CEO’s vision or you pitching to C-level executives, there are always competing priorities. Every division and every department has its own budget, resources, and problems. The value of “what must change” needs to be understood by every group that a targeted transformation will touch. You must be able to reconcile any disconnects between the transformation and any competing priorities or programs.
Transformation is Continuous
Digital Transformations are typically funded with an end in mind. When Forrester surveyed 1600 business and IT decision makers, 21% thought their transformation was done. A business should only stop transforming when it ceases to exist. Every company is on a transformational journey, whether they know it or not and whether it’s positive or negative. As your business requirements and market realities change, so do your obstacles—and so must your vision. The best organizations embrace the fact that digital transformation is ongoing, which means their ability to transform must be sustainable.
Transforming in Stages
A good practice is to continually revisit the obstacles you face and modify your strategic transformation roadmap by breaking it down into stages. The advantage of transforming in stages is that you’re more likely to succeed because you mitigate risks by focusing on short duration and obtainable objectives. Additionally, with each success, you create momentum with more adoption across the enterprise. Unlike larger, big-bang transformations, you’re far more likely to see a quicker return on your investment and achieve better time to value. And you can base these stages on a unified platform approach, enabling your transformations to be built in a sustainable manner—producing a more resilient business with the agility to pivot and defend or attack quickly.
A Digital Transformation Platform
There are many advantages to basing your digital transformation on an open, unified, digital platform that brings together different groups that in the past had been disconnected—allowing them to work together.
According to Jeff Hojlo, program director, Product Innovation Strategies at IDC:
"The notion of a unified digital platform that connects all organizational domains inside and outside the company has never been more important. For the manufacturing organization that wants to be resilient and flexible across its business, for future disruptions including potential pandemics, this digital platform approach will remain critical. It's a simple truth that individuals and organizations are at their best when they collaborate and innovate together."
The Aras Platform comprises an integrated suite of applications that enables a digital thread. Anyone with the appropriate access control can access data anywhere on the digital thread with enhanced visualization, traceability, and collaboration. Aras is the only PLM vendor with a suite of applications built on an industrial low-code platform, which enables the users to sustainably customize anything, but also build whole enterprise applications to fill any gaps you may have. And Aras has been upgrading subscribers at no extra cost for years. You can start your transformation any place and be guaranteed that that Aras platform will evolve as you do and lower the cost for your transformation. According Neil Olivier, Director
of Corporate Services at NuScale Power:
“With Aras, we believe we will realize the benefits of the digital thread sooner, at lower cost, with a platform that can transform with NuScale. The unique architecture easily adapts to meet the changing processes and business requirements of our company and industry. Customization is not only allowed, but encouraged, with solutions tailored to our needs, rather than tailoring our processes to the software.”
And most importantly, the Aras Platform not only has an architecture which is flexible, scalable and upgradable, but it’s based on an open approach that delivers the long-term resilience companies require.
Understand what must change, transform in stages, and know your digital transformation is ongoing, and resilient.