“Not all digital transformation initiatives have been successful. Make sure you don’t miss any blindspots!”

The new technology opportunity for ambitious leaders is real.

Never before in the long history of digital transformations has success been more rewarding and the penalty for mediocrity more punishing. Never before in the history of leadership has the possibility been greater for smart movers and a bigger challenge for every digital transformation executive and leadership team.

During the COVID lockdown, my colleagues and I, in program abeyance and with time on our hands, set out to solve one of the biggest "mysteries" in the digital transformation business.

It began innocently enough. A new Client — a CFO and Executive sponsor, asked us what they could do to secure their success. Everyone naturally asks this as they kick off, to which there is no shortage of good answers. He was insistent, however, that his point was valid. Many of his peers, anxious as he was to deliver against commitments, had undertaken the same due diligence, employed the same consultancies, selected the same vendors, and asked the same question, received the same assurances, yet by definition, according to the surveys, greater than 75% were at the time mistaken.

His question was more pointed — what is in his blind spot now? What was in the blind spot of countless numbers of his peers who mistakenly believed they were prepared to propel their program to success?

It was a good question. We researched it thoroughly. It's true; until now, based on the still reported high failure rates, there remains a greater than 75% chance that strategy and digital transformation teams will fail despite doing all they can to succeed.

The digital transformation blindspot is real; it is an industry-wide issue and cost's countless millions in wasted resources, not to mention disappointment and dashed careers.

The good news is that it can be fixed. Our research has uncovered the primary cause of this blind spot, which is also the solution. It is both counter-intuitive and simple to action.

As a primer, this blog will introduce the context for the Digital Transformation blindspot and suggest actions to overcome the hidden barriers preventing your organization from moving faster into the digital age.

Don’t be blinded to the right path forwards.

Let's be clear on what we mean by success and failure: We're not referring to the 10% of disasters that make the news or the other 10% of triumph stories that every digital advocate extols. Mediocrity — being on the wrong side of average in terms of technology, data, and customer and consumer behavior change — is enough to be defined as long-tail failure — or slow death. The new definition imposed upon us by exponential advancements in technology and data, and the ensuing rapid evolution in customer/consumer behavior drives a widening chasm between those organizations that can adapt to rapid technological advances and those that can't or won’t.

To be clear, being good or average on a historical basis, in times of rapid technological advancement, doesn't cut it.

At the time of the industrial revolution, good organizations that had a competitive advantage through water and steam technology continued optimizing their advantage through these capabilities, just as electricity was making its way onto the scene. In time, with rapid advancements, electricity, firstly with private substations, enabled a total reconfiguration of the production line, the factory, and the whole business. At the time, it may not have been obvious and certainly desirable to those with vested franchises in the entire water/ steam ecosystem to make a move to shaky new practices. By the time it was obvious, that modern electrified plants produced far more, at a lower cost, it was too late for those with newly optimized steam plants to transition over.

We are in such an era today where older generations of digital technologies and software must not be confounded with the impact of widespread digitalization, cheap computational power, huge data sets, and connected, networked people, machines, and devices, all autonomous, augmented, automated, — and intelligent.

Being bold has its risks, being blind, ad-hoc, indifferent, or just plain mediocre by intent, is equally so. For the most — being mindfully deliberate is the best path forwards — and is the first blindspot to overcome.

Urgency, Complexity, and Overload Compound High-Pressure, High-Stake Decisions

Irrespective of your transformation strategy, with bigger or smaller bets, the change game is similar, as the raw ingredients and digitalized destination are the same. Your starting point, conditions, and ambition are unique to you. This is where the distinction and your differentiation lie. By making rapid underfire decisions that seem ok at the time, you commit to your digital transformation journey and your chosen approach.

Your transformation program is a journey that can cost many hundreds of millions for the largest of organizations and millions at the smaller end of the scale. Many fall into believing they can keep experimenting until they get it right, but this is a fallacy. Finite scarce resources of time, human capital, and money are wasted. Either way, it's a bet the farm scenario — where you invest all your scarce capacity — human and financial capital to change. The problem is if you miss the blindspots, believing you will discover them all by experimentation, by the time you realize you’re failing, you're committed — it's too late. Just like the water/steam factory owners, when electricity-driven plants became pervasive, or horse-drawn taxi owners when the combustion engine arrived, they were fine, until suddenly they weren’t. On the wrong side of average, you're on the change circuit in a decaying death spiral, unable to muster the resources to course correct.

Caution: Unbridled Experimentation and Agile Are Not Your Answer

For the avoidance of doubt, we can put unbridled ad-hoc experimentation and the Agile debate to rest. If you’re ad-hoc, informal, emergent, and experimental with your digitalization strategy, you will create compounding chaos in aggregate that will sink you. If you're agile as a process, you'll discover sooner what doesn’t work — but it’s only in the design and build phase.

Being myopic, rushing in, and experimenting in an agile way is a delusion most costly on the scarcest of resources. Simply said, there are fewer opportunities to experiment and fail available. The bigger the transformation, the less experimentation power you have. You must discover how to make bigger wagers with greater accuracy at a lower unit cost and risk while retaining your capacity to adapt, as the future is unknown — until you can create it, at least.

Consider this by way of example. Disruptive technologies and changes in consumer behavior are forcing the automotive industry to evolve. New entrants are penetrating the market, traditional actors are changing their business models, and advances in technology and data are driving everything. This presents both challenges and opportunities for the industry.

Imagine the transition from automobile ownership to a bundled any-car experience under a subscription, electric and autonomous vehicle adoption, and so on. Everything about this industry is undergoing significant transformation in value centers, business models, operating models, manufacturing and service delivery processes, new and reconfiguration of supply-side OEM and sell-side value net actors, distribution, channels, consumer behaviors, and so on.

The challenge is that traditional automotive companies are at risk of being disrupted by new entrants who can better capitalize on these changes. The opportunity is that those same conventional companies have the resources and the experience to successfully navigate these changes if they are willing and able to embrace them.

What do they all have in common — they need to master foundational ingredients for digital capability — data, technology, human, machine, and device — autonomy, automation, augmentation, networked, and continuous adaptation. What they also have in common is a shared destination. What they do not have in common is their respective starting points, one with a legacy cash cow business of immense scale and capital and the other with a green field business model in a green field area — figuring out how to fund innovation, get reach scale, profitability, and so on.

Their digital operating platforms upon which their respective processes, operating, and business models rely and their ability to adapt efficiently and effectively as organizations are as important as the ability to engineer, adapt, and update software-enabled hardware products like the cars they produce.

With these lines drawn — the traditional business facing this magnitude of Change and disruption cannot be just average, any more than the digital startups with whom they compete.

Deep Dive On The Digital Transformation Blindspot

The digital transformation blind spot causes companies to believe they have everything in place when, in reality, it is statistically proven by the widely published and cited digital transformation failure rates that they don't. We've demonstrated through our research that the blind spot exists and how it leads businesses to make poor judgments at critical moments — the worst thing for them is that no matter how much due diligence they do at the beginning, due to their blind spot, they will not detect the underlying issues and causes of their failure without some additional assistance.

We're already seeing some promising outcomes due to our support for those who have discovered their blind spots. Below is a summary of our key findings:

Strategy Execution = Speed + Value + Sustainability

The Strategy Execution Line-of-Sight to Value objective balances the traditionally difficult speed, value, and sustainability trade-offs for high-priority change efforts, securing high-quality outcomes in five strategy-to-execution competencies. Five archetypes: Innovators, Adaptive Leaders, Unbridled Entrepreneurs, Opportunity Seekers, and Laggards, are identified that use different approaches to balance speed, value, and sustainability to achieve strategic outcomes.

When it comes to the digitalization of your enterprise, and the transformation this entails, each of us has something to learn from this philosophy:

“Slow is Smooth and Smooth is Fast” Navy Seals

Innovators

We all know who these are. They are the leaders that dominate their field, mostly by a wide margin, across one or two key dimensions, be it market share, profitability, etc. Apple takes all the mobile profits. Android has the biggest market share, and so on. Innovators, dominate their markets and pace them with an incessant flow of updates. The others — fast followers, and imitators, do well by addressing a targeted niche of the established market. The lion's share of total revenues and profits normally go to the top three in a segment/category. These organizations are characteristically making the markets. They invest, they innovate, and they pioneer and eventually scale. They also decay. It takes a huge amount of cost, effort, talent, and skill to retain dominant leadership over time. The innovators today are masters of inventing, developing, deploying, and commercializing digital assets. They are the pioneers, market makers, and net beneficiaries to date, of the digitalization era, but nothing is forever, especially in digital.

As a footnote: to illustrate the point with one of the most perfect examples at the time of writing — Google issues a CODE-RED. The leader in search, and master in AI, is itself at risk of being trumped by IA. The majority of their revenues and profits come from search advertising, and they dominate the search and adverting market. Chat GP3, with its “chat” interface, can give better, clearer answers directly. If this can happen to Google, it can happen to anybody…

Adaptive Leaders

Adaptive Leaders focus on speed without sacrificing value or sustainability. The best adaptive leaders define their markets. They make decisions quickly, but they also have the organizational agility to course-correct if something isn't working out. They can move fast to push the envelope but also know how to adapt and strengthen quickly.

Unbridled Entrepreneurs

Unbridled Entrepreneurs are strong business leaders, often within markets with full P&L responsibility, who are under pressure to drive results. They feel the pain from the competition and market of lacking technology or see the opportunity technology offers, and need to embrace it urgently.

They will not be held back and constrained by corporate bureaucracy and will wait for no one. They may operate under the better to act now and ask for forgiveness later motto. These are the spirited leaders in markets working the front-line challenges. They deliver on growth. Their innovative spirit can generate bottom-up insights and learning, which is both desirable and encouraged.

The challenge comes when dealing with unified digitalization, where the benefits manifest not just in the individual scope of the job to be done and market, but in aggregate at the connected digital fabric layer. This fragmented disconnected entrepreneurial culture, towards digital technologies, can result in many thousands of disconnected and overlapping programs, which in aggregate drive huge costs and complexity in weaving the digital backbone to make it sophisticated, simple, effective, maintainable, scaleable, and adaptable.

Opportunity Seekers

Opportunity Seekers recognizing the need for Change are motivated by the potential for gain. They're risk-averse, but they'll make calculated bets when they believe they'll pay off. They are cautious and methodical and know how to grab targeted possibilities when they emerge as the catalyst for Change. They move forward in starts and stops, unable to perform at speed consistently. Despite their best efforts to make good decisions, they recognize that lack of knowledge, experience, and skill restricts them from making optimal trade-offs to achieve rapid, sustainable results.

Laggards

Laggards are those that continue to focus on the past or have an unrealistic outlook on their future. They are less likely to react to change and have trouble moving ahead. They move at a deliberate pace but can be disrupted. In addition, they find it difficult to flourish in a constantly-changing world. They are risk-averse and resistant to change and only want to make adjustments required for the company's long-term health. They are unwilling to embrace new ideas, which leaves them vulnerable to failure.

The Five Strategy-to-Execution Competencies

A laser-like focus on a line-of-sight to value.

A company needs to focus on a straight line to value to be successful. They must define and prioritize a value map and establish an optimal pathway to sustainable, impactful delivery. Additionally, they must quickly and effectively mobilize the right people, skills, processes, and capabilities around a value map. Finally, they need to be able to monitor, course correct, and learn along the journey to value.

Concentrate on building a continuously changing capability.

Recognize the necessity of establishing new ways of working to achieve digital transformation goals. Leading indicators are used to decide funding allocation and inform the performance-based culture. People, processes, and technology adapt in tandem to allow the company to accomplish its objectives. Nowadays, the ability to continuously adapt to changing conditions is an essential competence that every organization must have to survive and grow amid various disruptive technologies, new business models, and ever-changing consumer expectations.

Define their distinct process for continuous Change.

Adaptive businesses recognize their continuous change process as a critical competitive advantage to grow and prosper. The business must adapt to react to changing market conditions, and the underlying processes and technology enabling operations and serving digital products and experiences must adjust accordingly. A key question to consider is how will the company's process for continuous Change allows it to adapt to new market conditions and keep pace with customer expectations.

Treat Business Technology and Change as one.

To address the present divisions and silos between Business, Technology, and Change, it is critical to recognize and construct the connection between all three layers of the end-to-end transformation process. Technology must be synchronized with business to allow value to flow in an organized, controlled manner. Teams must also align Customers, employees, and other stakeholders' end-to-end value streams. The underlying change process is how the business and technology adapt in a synchronized way to deliver value at speed — sustainably.

Prioritize using a constraints-based methodology.

Constraints exist in every process, and overcoming limitations is the only way to achieve lasting Change. Many organizations attempting transformation have no idea what's essential to make a significant difference, so they end up working upstream or downstream of a bottleneck, resulting in waste, delays, and additional expense, or, worse yet, working on activities that are not directly related to delivering value. A solid approach for confidently recognizing and optimizing constraints is required to ensure long-term value at speed by precisely identifying and optimizing the transformation effort.

Prioritize Speed + Value + Sustainability = Outperform the Competition

Informed by the pace and magnitude of Change in their industry and their respective capabilities and ambitions, different organization types set different strategies in response to digitalization. Those who move boldly and prioritize speed, value, and sustainability of Change, can capture an advantage in volatile, rapidly changing environments. Adaptive Leaders are more likely to achieve outsized financial targets, strategic goals, and the delivery of new, innovative goods and services. Adaptive Leaders are investing in moving even more rapidly, while Opportunity Seekers are building their foundational capabilities to drive adaptive Change. In contrast, laggards need to be more inspired to improve through digital transformation and execute Change slowly within their organizations. They are likely to be disrupted or, at the least, lose market share over time.

Adaptive Leaders Advance with End-to-End Alignment and Value Delivery

Adaptive leaders are more confident in their teams' ability to focus on the appropriate projects, and team members are more confident that their efforts align with strategy. Digital transformation, by definition, entails developing and operating digital platforms with connected core systems to create sell-side and buy-side collaborative eco-systems that cut through many functional and organizational silos to improve the end-to-end process and change capability while maximizing sustainable value capture.

Winning Practices Set Adaptive Leaders Apart

Our research uncovered five foundational practices that Adaptive Leaders use to rapidly drive strategy execution in response to change and overcome the digital transformation blindspot.

Recognizing a realistic perspective on current reality and your unique path influences your success.

Many digital transformations fail because no matter how bold or constrained their ambitions are, organizations fail to capture a sense of their current reality on any level that matters. Like a stretch target for any individual or organization, if ambition is not regulated by current reality, it's anchored in the future with no means to close the gap, as the span is too stretched or undefined.

For example, many digital transformation programs driven by a strong "away-from" motivation are keen not to waste time uncovering today's real pains until the delivery starts and fall into the trap of being future-paced on a dreamed reality that is not anchored in current reality. By the time the program is in mid-flight, the validity of the dream, contrasted with the reality of the business, sets in.

Another example is when leadership and project teams don't recognize their uniqueness, which matters much more than they would like to believe throughout the launch phase. Because their start point, constraints, and goals are different — a standard system, a similar company, and a hoped-for reality as created by vendors, guided by systems integrators, and previously accomplished by similar peers is not something by definition that can be achieved with the same best practice playbook. Your uniqueness makes this journey unique to you.

Suggestion: Ensure you avoid falling into the future reality dream trap by taking a different look at your unique and distinct attributes, matched against the best practice for common ground. Overweight your characteristic features as qualities to address and underweight the commonality.

Augment today's priorities while engaging in Futures thinking

Adaptive Leaders are aware of the need to invest in and orchestrate change injections to achieve long-term strategic results. They are brave and innovative, yet they maintain an eye on today as a means to get into tomorrow. Adaptive leaders realize there is a premium on expediting current events over an uncertain future. Unlike Laggards, Adaptives recognize that attempting to approach an unknowable undefined future is another trap that can only fail. And, like Leaders, they are comfortable with the inherent tension that living in two timeframes creates.

Suggestion: Create a "team of the present" that drives the current event while engaging a "team of the future" to work bridgeable and on long-term conditions. This ambidextrous team can help shape what's possible and necessary as you close the gap in your current reality.

Sustainability is the key to unlocking the continuous change continuum.

Adaptive Leaders understand and nurture the first principles required to win. They recognize the key to being an adaptive leader is not just continuous Change but investing in the foundational principles that enable this capability. Crucially they capitalize on the opportunity this principle offers — due consideration to what get's built. Laggards see Change as they always have and project their past learnings and experiences on executing business technology change into the future, blind to how impotent and dangerous their common sense agile strategy is. Without the right frame of reference, it's an easy mistake to make, making this another classic Blind Spot.

Suggestion: Lock in success by not only driving Change but also institutionalizing the principles that make Change possible in the first place and leveraging them to create an adaptable future. Doing so will allow you to operate at digital speed and achieve greater performance over time.

Change is a Journey, not a Destination: Continuous improvement in a never-ending cycle of Change.

The ability to continuously evolve, understand where they are on the BizTech change continuum, and use that knowledge to improve drives adaptives' leadership advantage. Laggards who lack Adaptive Leaders' fundamental knowledge, inadvertently treating Change as a destination, build what they are trying to prevent — a monolithic disconnected change architecture, making this another Blind Spot.

Suggestion: Use the principles of Change to clearly understand where you are now, where you want to be, and how to get there. Recognize you're on a journey, don't build for the destination, but consciously drive changes that improve your condition today.

Digital Transformation is a Leadership Journey, Not a Project.

Many overlook that digital transformation success requires a different kind of leadership. Adaptive leaders are humble, coachable, open to feedback, and willing to learn. They also hold themselves and their team accountable for results.

Laggards see Project management and agile practices as a process that can be learned and perfected as the key to success and proceed to do so. They fail to recognize they need to focus on learning and perfecting the right processes that change through time—making this yet another blind spot. On the other hand, Adaptive Leaders recognize the importance of building and refining capability over the process and treat leadership and Change as a journey, continuously adapting their change process capabilities and honing them into sharp competitive differentiators. It never ends. The good news is that leadership, like any skill, can be practiced and developed over time.

The key to adaptive leadership is to start with yourself. If you are not an adaptive leader, you should start developing those skills. The journey will be worth it.

Suggestion: The problem with treating digital transformation as a project is that it's an ongoing journey, not something that can be completed in a finite amount of time. This means that organizations need to shift their mindset from "project thinking" to "journey thinking. "Consider taking an adaptive leadership assessment to understand better your development needs in this area. Then, create a plan to address those needs through coaching, mentorship, and training.

Service innovation unlocks product innovation unlocks capabilities.

Adaptive Leaders see technology through a different lens and act accordingly. They recognize that commercially available technology (COTS) and developments are strategic enablers to accelerate and optimize their R&D investments effectively. They collectively understand this so-called "hub and spoke" platform solution that forms their modern digital backbone, which can comprise many parts, must be assembled, orchestrated, adopted, and adapted to provide them the sustainable competitive edge they seek. They understand this undertaking requires commercial services and technology innovations to materialize their reality. Laggards, on the other hand, see the technology vendors' vision as a proxy for their thinking and accountability and, with no critical thinking, beyond an RFP of commodity features, proceed to adopt this vision through traditional services approaches. This is another Blindspot.

The laggard's project agile processes and mindset are a direct result of their over-reliance on historical data and an unwillingness to take risks. This mindset extends to their strategic planning processes, where they agonize over each commercial decision, ensuring a low probability of failure. The result is significant upfront investments, long timelines, and or commercial shortcuts using the vendor and SI agenda, and high risk. In the end, these projects often come in over budget and behind schedule; if they are completed at all — they fail to meet needs and expectations against adaptive leadership standards.

Suggestion: When it comes to commercial technology, adaptive leaders take a different approach. They recognize that commercially available technology (COTS), in addition to their developments and services innovation, is a strategic enabler to accelerate and optimize their R&D investments effectively. Apply critical thinking to ensure you're not buying into the vender agenda, buying traditional services wrapped in agile clothing, and not falling victim to the blindspots as mentioned above.

Conclusion

The Blind Spot of Digital Transformation and Long-Tail failure: What You Need to Know highlights the importance of adaptive leadership to succeed with digital transformation.

We've demonstrated through our research that the blind spot exists and how it leads businesses to make poor judgments at critical moments. The worst thing for them is that no matter how much due diligence they do at the beginning, due to their blind spot, they will not detect the risks underlying long-tail failure without some additional assistance.

Unfortunately for Laggards, reticence and arrogance exacerbate the digital transformation blind spot. It encourages businesses to believe they are safe to kick off when, in reality, it is statistically proven by the widely published and cited digital transformation failure rates that they are ill-prepared. This causes them to be susceptible to long-tail failure, which occurs when anything less than excellent results cause can cause a death spiral from which there is no recovery.

Adaptive leaders are better equipped to succeed because they have different mindsets. They recognize that technology is a strategic enabler and that commercially available technology (COTS), in addition to their developments, can accelerate and optimize their R&D investments effectively. They understand that this undertaking requires commercial services and technology innovations to materialize their vision.

We’re looking for qualified organizations and leadership teams keen to co-create their adaptive leadership experiences and learnings with us. Our team of experts has a wealth of experience in digital transformation, organizational change, leadership development, learning & development, and human resources management. Our Mission is to industrialize the advanced technology driven change process. Whether at the start of your adaptive leadership journey or well underway, we can work with you to develop a tailored program that meets your specific needs. Contact us today to find out more.

About TechShifts

The O2O (Opportunity 2 Operations) standard operating procedure is our industrialised technology adoption model and our trademark approach for reimagining our clients' digital transformation experience, combining data, technology, and AI to create positive experiences that cultivate your outlook, mindset, and capabilities to address modern technology driven Change sustainably…. We curate encounters utilizing data, technology, and AI that favorably influence your attitude toward Change while also encouraging you to be able to adapt successfully.