Technological change just keeps on accelerating. Digital disruption of conventional business practices can be an opportunity for those companies that adapt and innovative quickly, or a threat to those that don’t. Think of the impact of Uber, AirBnB and Amazon.
The time for an enterprise to change and adapt is shrinking. The planning horizon is becoming shorter and the risk of a long-term change initiative not returning planned benefits is becoming greater.
Sadly, history is littered with money wasted on transformation programmes. Multiple recent surveys of executives revealed that barely 30% of transformations are successful in achieving the originally anticipated benefits. At the same time, IDC reports that 40% of all technology spending will go toward digital transformations, with enterprises spending in excess of $2 trillion in 2019.
What is the secret of transformation success? How can organisations be sure their digital transformation programmes will not waste resources?
To find out, let’s look at three organisations that have achieved transformation effectively and explore some common factors.
Toyota deploys Kaizen and Kaikaku
Toyota was one of the first companies to develop Lean principles in car manufacturing and became a market leader in the US as a result. It reorganised the whole car plant around reducing waste and improving the quality of the car produced. Workers were encouraged to adopt a “Kaizen” approach of continuously improving how they went about their jobs, relentlessly exploring how to make the flow of parts better.
Toyota also recognised that radical change (Kaikaku) is sometimes needed, with outmoded methods needing to be ditched 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 led to increased focus on how the whole plant was working together to contribute to the end-product.
Spotify and DWP deploy agile squads
Spotify, the music streaming service, organises its cross-functional teams into tight Squads to increase focus on single features. Squads are then grouped into Tribes working on the same platform, such as mobile, to share good practices.
Using agile development methods, features are innovated in fast cycles of releases. If a feature is not successful with customers, improvements are rapidly made. Spotify enjoys a reputation for improving people’s experience of music and is highly flexible to adapt as the market matures.
The UK Dept of Work and Pensions (DWP) also deployed agile squads, this time focusing on specific customer groups. The DWP learned from early attempts to transform the hugely complex UK benefits system which had shown that building on small successes is better than big bang change.
For example, the DWP focused on how the claim, validation and payment process could use appropriate tools and customer interaction to make the best experience for recipients of the Carer’s allowance. The new digital approach enjoys a 93% satisfaction rating.
A common mindset
Examining these successful transformation stories reveals a few golden nuggets of insight, all rooted in Japanese-originated Lean principles.
- They balanced when to continuously improve and when to radically change
- They have a culture of teamwork, empowerment and problem solving
- Their leaders were decisive and supportive
- They reduced uncertainty by testing innovations quickly and were not afraid to experiment
- They maintained a clear focus on improving the end customer value.
Waste was reduced through a mindset of maximising end-customer experience, ruthlessly prioritising resources only on value-added activities and relentlessly seeking improvements.
Building on the lessons
Digital transformation is a major undertaking and potentially a significant investment. Traditional programmes that attempt to plan all the change at the onset do not often succeed. We must think differently to enable new ways to serve customers and unlock the potential of rapid developments in digital technology.
NTT DATA has many years of experience in helping organisations to overcome the challenges of transformation. Our approach is built around a digital triangle framework that captures the key learnings from successful transformations and builds on Lean principles.
Transformation starts by envisioning the customer experience. 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.
It’s a simple approach that is proven to work time and time again. To find out more, please contact us at contact_uk@nttdata.com