There’s $400 billion wasted every year in failed digital transformations. Unbelievable. And something like 80% of them that start, fail.
Despite such failure rates, Abbatiello is adamant that digital transformation can be successful. But, it’s going to take a mind-set metamorphosis to put digital DNA at the organization’s core.
For, even though many companies profess to have digital strategies, they don’t fully understand what it’s actually going to take or haven’t pinpointed what they want the business to look like.
There’s also an element of “executive tourism”, believes Abbatiello, as senior managers see things they like in Silicon Valley and seek to cut-and-paste them into their own organizations.
So, they embark on “random acts of digital” in their organizations, rather than create a cohesive strategy. They invest in digital technology and are disappointed when the expected massive change (and returns) don’t appear.
Such companies have low levels of maturity in terms of their digital transformation. Deloitte breaks down the digital journey into four levels of maturity: exploring, doing, becoming and being.
Most organizations lie between exploring and doing and are still focused very much on technology. At the other end sit the companies with digital DNA, where everything in the organization – culture, talent, leadership, as well as technology – is digital through and through.
Carrying on the DNA theme, in the same way humans have 23 chromosomes that determine our characteristics, Deloitte has identified the 23 underlying instructions organizations require to ‘be digital’. Abbatiello explains:
If I want to grow a new market; if I want to bring a new product out, or want to deliver a digital channel, there are different traits I want to focus on.
These traits - 23 in total! -include continuously innovating, being iterative, taking a ‘fail early, fail fast, learn faster’ approach and having a flattening and changing hierarchy.
What they do not include is any mention of specific technology. Abbatiello expands:
When we talk about digital, it’s easy to say that digital is about AI and robotics and cognitive – all of these great technologies we have. And it is. But to really truly be digital, it’s about the intersection of technology and mind-set and mind-set is about taking risks, experimenting, prototyping, agile, collaborative. All these things together are what make an organization digital. At some point the digital thing goes away, until it is really about what it means to operate in the modern world.
It’s too big to tackle all 23 traits at once. Instead, organizations should identify key goals: such as bring a new product to market, and identify the specific traits that will help them achieve that.
HR plays a vital role in making this all happen. Abbatiello is working with one technology client where the CHRO is actually moving into the chief transformation role, driving the digital program in the organization.
While transformation doesn’t necessarily require HR in the driving seat, the digital transformation leader does need a strong partnership with HR to see the changes through successfully. But for that to happen, says Abbatiello:
HR have to show up and be digital themselves and drive digital HR and consumer-grade experience for the company, so the move to digital can evolve.
HR is core to developing and enabling a digital culture and environment, hiring the right talent and developing in-house talent and creating digital leaders. These leaders are key. A great digital leader needs all the same characteristics as a pre-digital leader, but the context is different, notes Abbatiello:
All great leaders need to have the ability influence others – the ability to persuade or convince others of ideas. In the digital world they still need to have influence, but it’s even more important. They are persuading individuals to believe in ideas that may not be even proven yet.
One of the key reasons digital transformation flounders is because the organization has picked the wrong leader to drive through the changes. It requires someone with stamina, proven decision-making capabilities and confidence in their abilities because with digital transformation there isn’t the luxury of time to go through traditional decision-making processes. According to Abbatiello:
What many organizations do is pluck the person an up-and-coming leader to give them a stretch opportunity. But they’ve never influenced before or driven strategy or change in the organization.
At its core, digital transformation is about changing the way we work, says Abbatiello:
Every time I’m with a company, whether it’s oil and gas or banking or technology, everybody asks questions on digital transformation and the first question they ask is: how can we change the culture so we can do this?”
HR is key to making those changes happen.
My main take-away from this conversation with Abbatiello is that digital transformation is not about technology, but a change of mind-set and culture. And that means HR has a massive role to play and must step up.