Shortly before I wrote this article I was chatting to a senior executive at an Insurance company who was complaining about how much their legacy systems were slowing them down. Sure, that is an issue – but it was immediately obvious to me that the real forces at play were not the spaghetti of their technology, but the much less visible cultural challenges of digital transformation.
Digital transformation remains the very top concern of Australia’s business leaders according to the 2019 edition of *Keeping Us Up At Night: The big issues facing business leaders.
How does your company compete with the proliferation of startups that have the audacity to want a piece of your business? Do you feel a sense of real urgency, but keep hearing legacy systems are the barrier to faster transformation? The biggest problem with focussing on legacy systems is that it distracts you from paying attention to the most difficult challenge of all – changing your Legacy Culture.
So how do you identify where your culture is holding you back? With my experience at transforming and leading digital businesses I have some thoughts on where you should start looking.
1. Follow the money.
How investment is allocated underpins so much of what goes on in organisations. The process of distributing money to enable the upgrade of existing assets, or to launch new products, is frequently complicated and operates on an annual cycle. That’s your first pointer – fixed and infrequent timelines for decisions regarding investment in what needs to be continuous transformation are unlikely to be helpful.
We talk about change being the norm, but then invest in change as if it is unusual. Our investment processes for technology seem to assume we are making changes to a house – where there are regular maintenance activities, and major renovations. In reality though, to be truly digital is more like a garden – much more iterative and where failure is much more common. There is sometimes major work, but there is always other stuff going on and the capacity for lots of experimentation.
In the interests of efficiency, many large organisations have separated out the “change the business” activities from “run the business”, which inherently assumes a stable world where change is discretionary.
So many projects end up too big to jump over (read slow and expensive) and a key reason for this is the investment cycle that too frequently allocates funding to a group of single projects. So what does this drive? Well no-one wants to compromise or prioritise and they all want their favourite thing while the hood is open as there is rarely funding for opening it up again.
Without addressing funding, it is difficult to get buy-in to minimum viable product as a concept as there is no clear path to go beyond minimum. Part of the solution is to provide continuous funding for dedicated cross functional teams whose role is to deliver continuous changes. It won’t solve all the challenges, but it will solve some, and it will help throw a spotlight on what other specific processes need to change. But this is disruptive, requiring a fundamental change to how things get done and therefore the organisation is likely to resist it…
2. The immune system repels invaders.
Organisations can resemble immune systems. They are exceptionally good at maintaining the status quo, and rejecting the intruder. Anything (or anyone) that looks, feels and sounds too different to the prevailing standard will be effectively rejected. Stability is valued over disruption. The system is generally stronger than one person, however many organisations have what can resemble a messiah complex – they think one person can fix their issues, and pay little attention to the power of the immune system to repel the invader and the degree to which the culture is self sustaining.
If you wish to disrupt the organisational culture, don’t trigger the immune system. Small changes, made frequently, are the fastest most effective way to shift the culture. Ideally the immune system doesn’t identify the invader until it’s too late!
3. There will be winners and losers.
Choosing to fund priority areas and by definition, not funding others is hard. Too often, compromises are reached that deliver mediocre outcomes universally. Making the tough choice to fund digital over other areas will have consequences and generate reactions. Organisations are set up as competitive environments where participants compete for resources across businesses, leading to an environment of winners and losers. All fight hard to be in or retain a winning position. And when the organisation’s power base begins tilting towards digital away from its previous centre of gravity, expect resistance. Keep going anyway.
4. Everyone has an opinion and expects to be heard.
Big companies are complex ecosystems that have evolved over many years and there is a high degree of dependency between areas. Success has depended on being able to play nicely with each other. For example there is a high expectation that all areas who are potentially impacted by changes will be consulted on everything. However there is a fine balance between consulting because it is essential to success, and consulting to keep people happy and minimise the noise of disgruntled stakeholders.
Like much in business, the 80/20 rule likely applies – be clear on the 20% whose input really is critical and stop there. This will not be well received however anything else will slow you down. You can try to position upfront that this will be your approach, but it may well not be accepted (see disruptive change above..). If you can clearly articulate the customer benefits of what you are doing and have air-cover from above, then get moving.
5. News flash: Desire for control and certainty won’t reduce the risk of failure.
Like parenting a teenager – at some point you realise that just because you say you’re in charge doesn’t make it true! Just because estimates and business cases are precise, doesn’t make them certain, and won’t predict success. It can feel scarier testing a range of things before choosing – but it is actually less so. Reducing the risk of failure is essential. One way to do this is to reduce the size of what is delivered – failure becomes just part of learning. Risk is also reduced by ensuring teams have the skills and permission to operate, getting out of their way, and making yourself available for them to resolve blockages when needed.
In my experience, all organisation cultures are complex and have their own unique history that shapes them. Processes are rarely random and have usually been established for a reason, even though the original reason might be lost in the annals of time. These processes may even still deliver on their original intent, but have evolved over time and there is now a growing pile of unintended consequences.
Your challenge is to work out what in your culture is slowing you down. Without facing into the cultural challenges, your digital transformation will struggle to get the traction you need.