Digital transformation is accelerating
In 2020, the pandemic triggered a very remarkable acceleration of ‘digital’ and ‘cloud’. In October, McKinsey put this in a telling perspective. It expressed this acceleration in compressed lead times. Changes that used to take several years, suddenly took a few months:
In just a few months’ time, the COVID-19 crisis has brought about years of change in the way companies in all sectors and regions do business. According to a new McKinsey Global Survey of executives, their companies have accelerated the digitization of their customer and supply-chain interactions and of their internal operations by three to four years. And the share of digital or digitally enabled products in their portfolios has accelerated by a shocking seven years.
The crisis demanded a rapid response. Of course companies put temporary measures in place first. However, they also made sure the changes would last:
Nearly all respondents say that their companies have stood up at least temporary solutions to meet many of the new demands on them. Much more quickly than they had thought possible before the crisis. What’s more, respondents expect most of these changes to be long lasting, They are already making the kinds of investments that ensure they will stick.
Furthermore, the investments to enhance digital capabilities were given top priority:
When we asked executives about the impact of the crisis on a range of measures, they say that funding for digital initiatives has increased more than anything else.
A growing need for speed!
As others accelerate, it is important to keep up. However, speeding up can be challenging. Recently Gartner’s Lydia Leong shared her insights. Her post was provocatively titled “To become like a cloud provider, fire everyone here“. As a Distinguished Analyst covering cloud computing, she wrote:
A recent client inquiry of mine involved a very large enterprise. They informed me that their executives had decided that IT should become more like a cloud provider; like Google or Facebook or Amazon. They wanted to understand how they should transform their organization and their IT infrastructure in order to do this.
There were countless IT people on this phone consultation. I’d received a dizzying introducing to names and titles and job functions, but not one person in the room was someone who did real work. I.e., someone who wrote code or managed systems or gathered requirements from the business, or even did higher-level architecture. These weren’t even people who had direct management responsibility for people who did real work. They were part of the diffuse cloud of people who are in charge of the general principle of getting something done eventually, that you find everywhere in most large organizations (IT or not).
I said, “If you’re going to operate like a cloud provider, you will need to be willing to fire almost everyone in this room.” That got their attention.
Change is often a challenge and increasingly a problem:
Large enterprise IT organizations are almost always full of inertia. Many mid-market IT organizations are as well. […] Business, though, is increasingly on a wartime footing — and the business is pressuring IT, usually in the form of the development organization, to get more things done and to get them done faster. And this is where the dissonance really gets highlighted.
Recipes to escape the maze, lose ballast and speed up
Fortunately for the companies that struggle, last year also delivered a flood of publications from consultants. Many offered recipes on how to accelerate change. That is good news, because many companies will need a different cookbook to maintain a heightened pace in the post-pandemic economy. Because then only the competitive pressures remain to chase them.
I came across some refreshing observations in another McKinsey article. It related to a pre (!) pandemic experience from a global retailer. The company sought to advance much faster than it typically did. The advice is generally applicable and useful:
- Be realistic, yet ambitious — Base targets on understanding what is really possible, not on what you happen to be familiar with. Keep in mind: low aspirations lead to modest, or even negligible, outcomes.
- Be pragmatic and develop a brisk pace — Make speed the dominant driver of decisions and behavior. Prioritize and focus to get stuff done. Increase the frequency of your routines: daily and weekly, rather than monthly. Learn faster.
- Be clear on responsibilities and assign ownership — Give teams the space to execute the job to be done. Don’t assign just tasks but give them the responsibility and the flexibility to solve issues, and to be creative to find new solutions.
These three tips are easy to grasp and appear easy to apply. In our engagements we often work with these principles in mind. However, we experience it can be quite challenging to create such ‘conditions’. For the project, for the team and for individual participants. Because ‘this is not the way we do things around here’. Exactly. That’s the point.