Is It Time for Radical Change? - The Case for a Fresh Start in Digital Transformation
Be honest with me now, when your business has digitally transformed, has it really delivered growth or a true step change? Probably not, right?
In the world of business modernisation, 'digital transformation' has become somewhat of a buzzword—promised as the panacea for all corporate ailments. Yet, time and again, I can’t help but feel that organisations find themselves ensnared in the same old patterns of inefficiency and stagnation. So what gives and is there a need for us all to re-think the digital transformation journey?
Much vaunted research from McKinsey of 600 firms that had recently undergone digital transformations in 2022 quantified the gap between expectation and reality – the research found it to be wider than many might have suspected. Only 20% of the companies surveyed achieved more than three-quarters of the revenue gains they had anticipated before embarking on their projects, while only 17% achieved more than three-quarters of the cost savings they’d hoped for.
The Fallacy of Digital Transformation
Digital transformation is often heralded as the ultimate solution to propel businesses into a new era of productivity and innovation. But how often does it truly live up to these expectations? In reality, many of these initiatives resemble more of a band-aid solution—a superficial fix to deep-rooted systemic issues. How many digital transformations have you been party to and if you were really honest with yourself has it delivered on its commitments for increased business agility, optimised business performance and greater customer satisfaction?
The challenge I have seen on several occasions now is whether to conduct the transformation within the current environment or build a new proposition in its entirety outside the current business landscape. Hence there are two viable options:
Greenfield entirely outside the body of the organisation, rethinking, reframing and restarting each business function using modern tools, technologies and capabilities.
Build inside the existing body of the organisation, by stitching together new capabilities and aiming to integrate them with existing systems, architectures and heritage applications that were built nearly 30 years ago in some instances.
Both of these options have their pros’ and cons. However, for me, the way to deliver the greatest step change in the fastest and blockade free way is to embark with option 1. Go-greenfield and hit the restart button.
However, when taking this option, the common misstep I have seen various organisations make is to build a differentiated capability and customer product outside of the body and then seek for ways to re-insert the organ (the new digital product & capabilities) back into the existing business and technology ecosystem. For one reason or another, this is where transformation problems can start to rue their head.
Think of it like performing an organ transplant on a body. A new digital system is surgically implanted into an existing corporate structure. But just as a body might reject a new organ, an organisation's entrenched culture and outdated processes can reject this digital innovation. The result? The new system is suffocated by antibodies of resistance, misunderstanding, and fear of change, until eventually, it's shelved to gather dust—another relic of what could have been. Ergo, traditional controls, policies and heritage mindsets to change, incident, problem and release management stifle any future waves of innovation and the pace of change slows to the usual 4 annual releases per year, as opposed to the daily deployments your business achieved at peak velocity.
One of the most pervasive myths is that digital transformation can be seamlessly integrated into any business model without foundational upheavals. Experience and reality tell a different story. Seamless integration is a fairy tale in the complex ecosystem of large-scale enterprises where old and new tech stacks clash more often than they align.
The Case for Starting Afresh
If incremental changes lead to incremental results at best, what's the alternative? The answer lies in building anew. Imagine constructing a business entirely in the cloud from the ground up, harnessing the full power of automation, artificial intelligence, and data analytics. This isn't just about upgrading—it's about restarting and rebooting how a business operates, breaking free from the constraints of legacy systems and processes and rethinking how your processes should operate. Not operating your processes around the misaligned systems that have never quite fit the requirements of your end users or most importantly, your customers.
The world of enterprise technology is changing at an unprecedented rate. Faster than we have seen in a generation. For many, it soon won’t be what technology stack should we migrate towards, but what technology products should we build. No more forcing square pegs in round holes. No more fudging processes and ways of working to operate around cumbersome systems. Processes designed how humans want to interact with and operate them. Interfacing with applications and products that are tailored for specific needs and uses. Ultra bespoke applications will become the norm and the ability for organisations to launch new products and services or restart their business from the ground up is becoming increasingly possible with tools like Replit, Cursor, Amazon Q Developer and others.
Why would you settle for the approaches of yesteryear, when you can jump forward at light speed with AI powered digital transformation?
Innovating Without Permission
When you start afresh, you innovate without seeking permission from legacy workflows and outdated approval chains that often throttle new ideas before they can even prove their worth. This bold approach not only accelerates the pace of innovation but also embeds a culture of forward-thinking and agility right from the outset. Namely, you don’t have to do it how you’ve always done it, or always sold it!
To effectively foster this bold restarting of your digital transformation journey, physical co-location of teams is crucial, encouraging close alignment of technology and business stakeholders. This setup, while challenging, is necessary to drive dramatic progress in short time spans. It's a bold strategy, not the only way to achieve change, but one that has consistently shown significant results in my experiences.
Building new infrastructure "outside of the body" — outside of existing systems — makes sense. It allows for the creation of a responsive and scalable environment where innovation is not stifled by legacy constraints. The freedom to implement state-of-the-art technology infrastructures without the encumbrance of outdated systems leads to more agile and adaptable business operations.
However, this journey is not just about technology; it's equally about cultural transformation. Embracing such radical change requires bold leadership, conviction, and a shared vision. It demands dedicated resources — teams that buy into the vision and are prepared for a challenging journey. These pioneers often face internal opposition; viewed as technology pirates, they create tension that can either disrupt or transform traditional business dynamics.
Overcoming Migration Challenges
A major hurdle in digital reinvention is the migration from old to new—moving customers and operations to a new technology stack. It's a daunting task, and understandably, organisations are nervous. Migrations are costly, human intensive exercises fraught with risk of reputational damage. However, this is where the creation of a new business, entity, institution or brand outside of the existing infrastructure can make a monumental difference. A new entity acts as a clean slate, free from the baggage of the past. It won’t be everyone’s cup of tea and you will certainly ruffle a lot of feathers along the way. However, if we are obsessive about measuring the right metrics, impact and customer sentiment then organisations can take an evidence based approach to win hearts and minds in a way we never thought possible.
By building something entirely new, we can design systems that are inherently more adaptable and prepared for future technological advancements. We can incentivise customers to join us in this new journey, drawn by lower costs and better service efficiency. The reduced cost to serve, achieved through streamlined automation, AI and smarter data use, means we can offer products at prices that are not just competitive, but disruptive.
We can redefine commercial models and seek ways to drive new revenue streams through monetising data or entering into partnerships we could never have achieved when shackled by the albatross of legacy technology and closed mindsets.
Conclusion
So, are we really content with patching up old systems, or are we ready to think radically and truly transform? The digital landscape is evolving at an unprecedented pace, predominantly fuelled by data & AI. However, many of the tools and technologies from 5 years ago are still not being applied to their maximum potential. Digital transformation is hard and based on my experiences of the last 15 or so years, it hasn’t ever really stopped. Transformation implies a destination and a journey with an ending. I feel like this has been a never ending journey.
What about you?
With the ascent of AI driving new unfound boundaries for organisations, we stand at a crossroads, and only those brave enough to start afresh will lead the charge into this new frontier. I invite you to ponder: Are you ready to embrace a complete digital restart, or will you settle for mere superficial changes? Let's choose the path less travelled, and in doing so, redefine what it means to truly transform.
