Cutting down waste in Digital Transformation Programmes
The rate of change in technology is faster today than ever before and customer expectations are changing just as quickly. We see this in the rapid improvement in consumer devices like mobile phones and use of cloud enabled services. On the one hand, new technology presents opportunities for products and services in ways not dreamt of before. On the other hand, traditional businesses are finding themselves vulnerable to disruption from new business models enabled by these new Digital technologies – Uber, AirBnB and Amazon are classic examples.
The time for an enterprise to change and adapt is shortening. How can outcomes from a 2 – 5 year transformation programme be planned with any confidence when a new competitive offering dramatically shifting the landscape could be launched at any time? From Public Sector to Telecoms to Financial Services to Manufacturing, the planning horizon is becoming shorter and the risk is becoming greater of a long-term change initiative not returning planned benefits.
Sadly, history is littered with money wasted on transformation programmes. These two facts demonstrate the scale of the opportunity:
· Multiple recent surveys of executives have confirmed that barely 30% of transformations are successful in achieving the originally anticipated benefits.
· IDC reports that 40% of all technology spending will go toward digital transformations, with enterprises spending in excess of $2 trillion in 2019
There has to be a better way
What do Toyota, Spotify and the UK Dept of Work and Pensions (DWP) have in common to transform with low waste? Looking at these successful transformation stories reveals a few golden nuggets of insight and they are all rooted in Japanese originated Lean principles.
· They balanced when to continuously improve and when to radically change
· Had a culture of teamwork, empowerment and problem solving
· Leaders were decisive and supportive to change mindsets
· Uncertainty was reduced by testing innovations quickly and they were not afraid to experiment
· Maintained clear focus on the end customer value they had to improve
Waste was reduced through a mindset of maximising end-customer experience, ruthlessly prioritising resources only on value-added activities and relentlessly seeking improvements.
Enter Kaizen and Kaikaku
Toyota was one of the first companies to develop Lean principles in car manufacturing and became market leaders in the US as a result. They reorganised the whole car plant around reducing waste and improving the quality of the car they produced. Workers were encouraged by leadership to adopt a “Kaizen” approach of continuously improving how they went about their job, relentlessly exploring how to make the flow of parts better.
They also recognised that at times radical change (Kaikaku) is needed and outmoded methods needed to be thrown out to make way for new ideas. This was balanced with a way of working that displayed progress and quality levels for all to see (Kanban boards). Information is powerful and this lead to increased empowerment and focus on how the whole plant was working together to contribute to the end-product.
Developing a Lean culture took time and represented a shift from departmental targets and “over the wall” thinking, to one of optimising workflow to improve the value perceived by the customer.
Deploy Agile squads
Building on these culture shift ideas, Spotify, who provide a ground-breaking music streaming service, have organised their cross-functional teams into tight “squads” to increase focus on single features. Squads are then grouped into Tribes working on the same platform eg mobile phone, to share good practices. Using agile development methods, features are innovated in fast cycles releases. This high cadence has the benefit that if a feature is not successful with customers, improvements can be rapidly made, Spotify enjoys a reputation for improving people’s experience of enjoying music and is highly flexible to lead/adapt as the market matures.
The DWP learnt from early attempts to transform the hugely complex UK benefits system, that building on small successes is better than “big bang” change. They too deployed agile squads that are focused on particular customer groups. For example, a new digital approach for the “Carer’s allowance” enjoys a 93% satisfaction rating. They focused on how the process of claim, validation and payment can be made in a way, with appropriate tools and customer interaction to make the best experience for this target group.
Building on these learnings
Transformation starts with envisioning the customer experience and measuring progress towards this vision then becomes the overarching barometer for success throughout the programme. The design process is focused on continuously improving the value this experience brings to customers using appropriate technology.
New technologies such as Artificial Intelligence, Intelligent Automation, Data Experience and Omnichannel are enablers for radical business change. But designs, experience and visions all come with a degree of uncertainty. Experimenting with innovations in short cycles is encouraged to yield information to reduce uncertainty and help make more informed decisions early in the programme. Once the recipe for success is found, efforts can scale up quickly and deploy in volume.
Let’s not waste time
Changing to realise a digital future is a major undertaking for any enterprise and potentially a significant investment. Traditional monolithic programmes that attempt to plan all the change at the onset have not always proven very successful. This forces us to think differently, to enable new ways to serve customers and unlock the potential of rapid developments in Digital technology.