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Successful Digital Transformation starts with a well defined Strategy
The document outlines the importance of a well-defined strategy for successful digital transformation, emphasizing the need for clear goals, measurable outcomes, and alignment across the organization. It describes the process of creating and implementing a strategic plan that adapts to changing conditions while managing both tangible and intangible assets. Key components for success include understanding the mission and vision, effectively measuring performance, and ensuring that strategy is communicated and accepted throughout the organization.
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Successful Digital Transformation starts with a well defined Strategy
- 1. + Successful Digital TransformationStarts with a well defined Executable Strategy for Success Leading successful Digital Transformation projects can not be successful without a Strategy for their success. This briefing shows how to develop and apply a Strategy for Program Success through clear and concise descriptions of the strategic outcomes, Measures of Effectiveness and Performances, and identification of Value needed to meet business goals in a timely manner for the needed budget. 1 11 July 2018 09:10 – 10:10 Glen B. Alleman Niwot Ridge LLC
- 2. What is aStrategy for Digital Transform ??? 2
- 3. + What is DigitalTransformation? 3 Digital transformation is the profound transformation of business and organizational activities, processes, competencies and models to fully leverage the changes and opportunities of a mix of digital technologies and their accelerating impact across society in a strategic and prioritized way, with present and future shifts in mind. https://www.i-scoop.eu/ https://www.simplethread.com/what-is-digital-transformation/ “Digital transformation closes the gap between what digital customers already expect and what analog businesses actually deliver.” “Digital transformation means Digital First
- 4. 4 Strategy Strategy is creatingfit between a firms business elements that allow trade–offs to be made for the benefit of its customers. If no trade–offs are made, the resulting decisions support operational effectiveness but not strategy
- 5. + A hypothesisrequires a test of its validity These tests require units of measure meaningful to the decision makers Measures of Effectiveness Measures of Performance Technical Performance Measures Key Performance Parameters The strategy must address Risk created by Uncertainty Reducible (Epistemic) Uncertainty Irreducible (Aleatory) Uncertainty In the presence of these uncertainties, estimates must be made of the efficacy and impact of business and technical decisions. The hypothesis is … Digital Transformation can measurably improve the business and technical performance of the firm. Strategy is a Hypothesis 5
- 6. + Define thestrategic direction toward the goal and vision of the transformed business. Align the Organization to each of the strategic initiatives. Implement the Strategy according to a plan that produces measurable outcomes. Continuously improve the efficacy of the tactics that implement the strategy. Continuously measure and adapt the strategy to emerging business and technical conditions from feedback of the measures of effectiveness and performance. Success of Digital Transformation starts with Strategy that is translated into an executable project with tangible measures of progress to plan. Five Steps to Digital Transformation 6
- 7. + Some More Definitions Strategy is the creation of a unique and valuable position, involving a different set of activities. Serving the few needs of the many ‒ Jiffy lube only provides auto lubricants Serving the broad needs of the few ‒ Bessemer Trust only targets high end clients Serving the broad needs of the many ‒ Cinemark operates in cities of 200,000 population or more Strategy requires you to make trade‒offs when competing ‒ to chose what not to do Gains in one area can only be made at the expense of another area Strategy involves creating FIT among the companies activities Strategy and leadership are inextricably linked 7
- 8. + It mustbe flexible, No credible Plan is written in stone Environments change The plan must change with it Everyone involved in its creation, since the Plan impacts everyone in the organization Planning is not a once–a–year exercise, or a piece of paper that's created and never looked at again The Plan is actionable and relevant to the company's vision / mission It's geared toward customers, not towards internal activities The Plan is updated for every change to the strategy of the firm Planning is a Continuous Improvement Process Criteria for a Digital Transformation Strategic Plan 8
- 9. + Step 1: DetermineWho We Are … 9 Start with who we are now? Prospector Analyzer Defender Reactor … then who we want to be?
- 10. + There areFour Organizational Strategies Prospector’s continually search for innovative market opportunities and experiment regularly with new responses to emerging trends Analyzer’s operate routinely and efficiently through formal structures and processes, while simultaneously watching competitors for promising new ideas which they then rapidly adopt Defender’s given their narrow product market domains, are highly expert in their organization's area of operation but do little to seek out new opportunities outside their primary domain Reactor’s are unable to respond effectively to known change and uncertainty in their organization's environment † “The Balanced Scorecard: To Adopt or not to adopt?” Kevin Hendricks, Larry Menor and Christine Wiedman, Ivey Business Journal, Nov/Dec 2004 10
- 11. + Step 2: Focuson the Mission and Vision Mission Action What is the organization about? ‒ What do we do? ‒ Who do we do it for? ‒ What is the benefit? Vision Results of Action What does the organization want to become? ‒ What are the results of our actions? ‒ If we achieve our mission what will the future look like? Mission and Vision provide the anchors for developing a strategy. Without a Mission and Vision, the underlying performance metrics have no foundation on which to stand. Why are we measuring this activity? Ask the Mission and Vision for the answer. 11
- 12. + Creating ValueThrough Strategy An unambiguous sense of direction that permeates the organization. Strategic and operational plans that reinforce each other. Decision–makers understand how their roles contribute to the total enterprise and their accountability is clear. There are no simplistic ideas about how customers and competitors will respond to actions of the enterprise. Empowerment is throughout the enterprise. Conflict and differences of opinion are not suppressed. Interaction of market knowledge with creative product ideas produces a steady stream of innovation. Existing and retired employees are the most effective source of new employees. Other companies want to do business with us. When asked “if the enterprise was a school, would you pay tuition for your children to attend?” The answer would be “yes.” “The Market–Based Adaptive Enterprise: Listening, Learning and Leading Through Systems Thinking, Vincent P. Barabba, in Proceedings Russell L. Ackoff and The Advent of Systems Thinking, March 1999 It is VALUE we’re after with a Strategy that enables … 12
- 13. + Strategic Readiness ... (few) can assert with confidence that the intangible assets of their organization are fully activated, integrated with their corporate objectives, and ready for effective deployment on the competitive landscape Intangible assets are only assets when they are ready for deployment. If they cannot be used effectively, their strategic readiness is reduced and their value to the organization is impaired. In order to deliver value we must first be Ready to deliver value 13
- 14. + Success withStrategy means Managing the Intangible Assets of the Firm Managing Tangible assets is a straight forward infrastructure management and control problem It’s the Intangible assets that must be managed Strategy converts Intangible assets into Tangible assets Strategy, NOT Technology, drives Digital Transformation 14
- 15. + Stay Focusedon the Outcomes General Mission Strategic Themes Desired Outcomes Metrics Strategic Initiatives What do we do? Why is it important? What results do we want? How will we know when we’ve achieved these results? What specific actions do we believe will lead to these results? Connecting specific actions with the strategy of the firm is the role of a Balanced Scorecard Identifying the strategic initiatives that support the organizational strategies is the key beneficial outcome of deploying a Balanced Scorecard in Digital Transformation 15
- 16. + Strategy isAbout Rearranging the Tangible assets to improve the Value of the Intangible assets 16
- 17. + An Exampleof this Intangible from Tangible conversion 17 Walt Disney World has entirely aligned and integrated their organizational capital and culture with their strategic goals of delivering superior customer service to secure customer loyalty, promote repeat purchase, and fulfill their corporate mission. Few who have visited Walt Disney World would dispute the fact that the “cast” (the Disney name for employees who are “on stage” doing their work) is entirely infused with serving their customers. This is a prime example of organizational capital alignment with strategic corporate goals.
- 18. + What arethe Goals of Transforming Intangible to Tangible Assets for Digital Transformation Strategy? Look past the competitors Ask the customer what they want to see from the Digital Transformation Use executive influence to avoid a technological solution as the Strategy for Digital Transformation Align the culture of the firm with the Strategy, not the other way around 18
- 19. + What’s Next (1) Maturity model of digital transformation Building a strategy using Balanced Scorecard – moving beyond the platitudes of strategy Principles of the Balanced Scorecard Why use the BSC Examples of Strategies Measures of Effectiveness and Measures of Performance Connecting the strategy with execution ‒ both are needed Technical Performance Measures Key Performance Parameters 19
- 20. + What’s Next (2) Managing the execution connected with the Strategy ‒ measures of performance connected to measures of strategic outcomes Example connections between execution and strategy KH IT Other ITR scorecards Baltimore Public School Building the strategy of digital transformation Beyond the obvious Show the mechanics Show the measure of success 20
- 21. + Increasing Maturityof Transformation Strategy 21 Ad Hoc Opportunistic Repeatable Managed Optimized Digital RESISTER Business and IT digital initiatives are disconnected and poorly aligned with Enterprise Strategy, and not focused on customer experiences Outcomes Business is a laggard, providing weak customer experiences and using Digital technology only to counter threats Digital EXPLORER Business has identified a need to develop a digitally enhanced, customer‒driven business strategy, but execution is on a project basis. Progress not predictable or repeatable Outcomes Digitally enabled customer experiences and products are inconsistent and poorly integrated Digital PLAYER Business‒IT goals are aligned at Enterprise level around the creation of digital products and experiences, but not yet focused on the disruptive potential of digital initiatives Outcomes Business provides consistent but not truly innovative products, services, and experiences Digital TRANSFORMER Integrated, synergistic business‒IT management disciplines deliver digitally enabled product / service experiences on a continuous Outcomes Business is a leader in its markets, providing world‒class products, services, and experiences Digital DISRUPTER Enterprise is aggressively disruptive in the use of new digital technologies and business models to affect markets. Ecosystem awareness and feedback is a constant input to business innovation Outcomes Business remakes exiting markets and creates new ones to its own advantage and is a fast‒moving target for competition IDC Digital Transformation Maturity Model, 2015
- 22. + Strategy isActually Just Good Systems Engineering 22 Used with Permission, from The System Value Cycle (SVC) view expressed as a Problem Suppression System (PSS) by Ring (1998)
- 23. + Strategy tells uswhere we are, where we are going and when we arrive what will be the tangible beneficial outcome in units of measure meaningful to the decision makers Balanced Scorecard is a Powerful Mechanism for Defining Strategy 23
- 24. + What Doesa Balanced Scorecard Do? A Balanced Scorecard defines an organization’s performance and measures whether management is achieving desired results. The Balanced Scorecard translates Mission and Vision Statements into a comprehensive set of objectives and performance measures that can be quantified and appraised. 24
- 25. + A Generic ITBalanced Scorecard 25 Budget Perspective Budget Management Resource Management Internal Processes Perspective Stakeholder Perspective Application Quality Time to Delivery System Capabilities Stakeholder Relations Recognition of Value Service Attributes Relationships Operations Management Stakeholder Management Innovation Processes Regulatory Processes Human Capital Information Capital Organizational Capital Learnings & Growth Perspective Image Project Performance Culture Leadership Alignment Teamwork
- 26. + Getting to aBalanced Scorecard 26 Develop Strategic Goals Mission VisionClarify mission & Vision statement Strategic Goals Derive Sub–GoalsSub–Goals Map Sub-Goals to each quadrant of the Balanced Score Card Apply GQ(I)M to: – Identify measurement areas – Develop measurement goals – Pose relevant questions – Postulate indicators – Identify data elements For each BSC Quadrant Performance Data Elements Module TroubleReports Indicators Balanced Scorecard Strategy Map Derived from “Developing Enterprise–Wide Measures for Tracking Performance,” Software Engineering Institute GQ(I)M Goal Question Indicator Measure Budget Perspective Budget Management Resource Management Internal Processes Perspective Stakeholder Perspective Application Quality Time to Delivery System Capabilities Stakeholder Relations Recognition of Value Service Attributes Relationships Operations Management Stakeholder Management Innovation Processes Regulatory Processes Human Capital Information Capital Organizational Capital Learnings & Growth Perspective Image Project Performance Culture Leadership Alignment Teamwork KPI’s, Targets, CSF’s for each Objective
- 27. + An ActualDigital Transformation Balanced Scorecard 27 InternalProcessesProject Expectations CompetencyCompetency ContributionContributionCredibility Operational ExcellenceOperational Excellence Project / IT AlignmentProject / IT Alignment Solutions LeadershipSolutions Leadership Business Results Provide appropriate technology to enable success - P2 Provide appropriate technology to enable success - P2 …enable firm to accelerate market deployment - R3 …enable firm to accelerate market deployment - R3 …enable profitable operations - R1 …enable profitable operations - R1 ……reduce overall operating costs - R2 ……reduce overall operating costs - R2 “Keep my systems running” - E1 “Keep my systems running” - E1 Deliver solutions on schedule - P6 Deliver solutions on schedule - P6 Manage requirements - P7 Manage requirements - P7 “Understand my operation” - E3 “Understand my operation” - E3 Improve processes for efficiency and quality - P4 Improve processes for efficiency and quality - P4 Strategically deploy services - P8Strategically deploy services - P8 Reduce the cost of providing services - P1 Reduce the cost of providing services - P1 Centralize IT resources - P5 Centralize IT resources - P5 Enhance customer relationships - P9 Enhance customer relationships - P9 Provide innovative solutions - P3 Provide innovative solutions - P3 “Implement timely and cost- effective solutions” - E4 “Implement timely and cost- effective solutions” - E4 “Manage to corporate goals” - E2 “Manage to corporate goals” - E2 Peopleand Tools Provide employees with the tools and knowledge they need - S4 Provide employees with the tools and knowledge they need - S4 Develop and retain critical skills - S1 Develop and retain critical skills - S1 Recognize team and individual performance - S3 Recognize team and individual performance - S3 Build a high performance culture - S2 Build a high performance culture - S2 Leverage knowledge and best practices - P10 Leverage knowledge and best practices - P10 “Do the right things, do them well, do them with less, to…” InternalProcessesProject Expectations CompetencyCompetency ContributionContributionCredibility Operational ExcellenceOperational Excellence Project / IT AlignmentProject / IT Alignment Solutions LeadershipSolutions Leadership Business Results Provide appropriate technology to enable success - P2 Provide appropriate technology to enable success - P2 …enable firm to accelerate market deployment - R3 …enable firm to accelerate market deployment - R3 …enable profitable operations - R1 …enable profitable operations - R1 ……reduce overall operating costs - R2 ……reduce overall operating costs - R2 “Keep my systems running” - E1 “Keep my systems running” - E1 Deliver solutions on schedule - P6 Deliver solutions on schedule - P6 Manage requirements - P7 Manage requirements - P7 “Understand my operation” - E3 “Understand my operation” - E3 Improve processes for efficiency and quality - P4 Improve processes for efficiency and quality - P4 Strategically deploy services - P8Strategically deploy services - P8 Reduce the cost of providing services - P1 Reduce the cost of providing services - P1 Centralize IT resources - P5 Centralize IT resources - P5 Enhance customer relationships - P9 Enhance customer relationships - P9 Provide innovative solutions - P3 Provide innovative solutions - P3 “Implement timely and cost- effective solutions” - E4 “Implement timely and cost- effective solutions” - E4 “Manage to corporate goals” - E2 “Manage to corporate goals” - E2 Peopleand Tools Provide employees with the tools and knowledge they need - S4 Provide employees with the tools and knowledge they need - S4 Develop and retain critical skills - S1 Develop and retain critical skills - S1 Recognize team and individual performance - S3 Recognize team and individual performance - S3 Build a high performance culture - S2 Build a high performance culture - S2 Leverage knowledge and best practices - P10 Leverage knowledge and best practices - P10 “Do the right things, do them well, do them with less, to…”
- 28. + To Constructand Implement a Strategy with Balanced Scorecard, we need to … Articulate the business’s vision and strategy Identify the performance categories that best link the business’s vision and strategy to its results (such as financial performance, operations, innovation, employee performance) Establish objectives that support the business’s vision and strategy Develop effective measures and meaningful standards, establishing both short- term milestones and long-term targets Ensure companywide acceptance of the measures Create appropriate budgeting, tracking, communication and reward systems Collect and analyze performance data and compare actual results with desired performance Take action to close unfavorable gaps 28
- 29. 29 For Digital Transformationto Succeed, the Strategy must to move from Vague ➜ Definitive
- 30. + Only 5%of the workforce understands the strategy Informed action is virtually impossible without sound knowledge of the organizations strategy Only 25% of managers have incentives linked to strategy Incentives linked to short-term financial targets, leads to less than rational decision making at the expense of long term sustainable success 85% of executive teams spend less than one hour per month discussing strategy Without a clear and concise blueprint for success – the strategy – manage will focus on financial and operational details 60% of organizations don’t link budget to strategy Based on strategy, what initiatives distinguish us from our competition? Vision Barrier Management Barrier Why Strategies Fail† 30 People Barrier † Norton and Kaplan and, in Balanced Scorecard Diagnostics: Maintaining Maximum Performance, Paul R. Niven, John Wiley & Sons and Strategy Safari, Mintzbert, Ahlstrand and Lampel, The Free Press, 1998. Resource Barrier
- 31. + All Five ComponentsNeeded for True Success Five Components of Strategy Deployment 31 SuccessVision Action PlanResourcesSkills Incentives ConfusionAction PlanResourcesSkills IncentivesVision AnxietyVision Action PlanResourcesIncentivesSkills Gradual Change Vision Action PlanResourcesSkills Incentives FrustrationVision Action PlanSkills Incentives Resources Vision ResourcesSkills Incentives Action Plan False Start
- 32. + Tell whatDone looks like in any units of measure meaningful to the decision makers See progress to plan in units of measure meaningful to the business The stakeholder point of view The internal process perspective The Learnings and Growth Perspective The budget perspective Without a Strategy for Digital Transformation, we can’t … Just a Reminder Why we need a Strategy 32
- 33. + Considerations fora Successful Digital Transformation Strategy 33 Identify market, evolutions, and pain points Access and Benchmark where you are Analyze and prioritize significant evolutions Map current status with major evolutions and opportunities Assess skillset, culture, and readiness to transform Focus on Core intangible assets Base strategies on where you want to go Include external and internal help Develop a Roadmap to the destination Design for Innovation, optimization, agility, and scale Optimize Information and Data Maturity Connect technologies and data in function of the strategy Get clear leadership buy in Gap bridges with customers and stakeholder Set goals and performance measures Build Ecosystem and Platform Focus on long terms with intermediate goals Start where it makes sense Learn, Measure, re‒assess, scale Repeat and Innovate Hyper Awareness Informed Decision Making Fast Execution 3 Core Capabilities for Success
- 34. + Moving from Strategyto Tactics 34 Performance Goal Key Performance Indicator (KPI) Critical Success Factor (CSF) Strategic Objective Be The Preferred Supplier Of Business Applications Traceable to Increased Customer Revenue Provide on-time, on- budget, on- specification for our enterprise applications Budget Variance Schedule Variance % Requirements Variance BPI ≥ 0.95 CPI ≥ 0.97 Function Points Delivered ≥ 90% Target Provide scalable platform for acquisition and growth of our customer base Cost of Delivery Impact Performance Impact Global Operational Baseline Declining Cost per Customer SLA Compliance ≥ 0.98 24/7/365 Non-Stop Operations What How Measures Vision Positively Impact Financial Performance Why Top Down Making the effect-and-cause connection between Strategy and Key Performance Indicators is the role of an Balanced Scorecard automation system Flow Down from Strategy to KPIs
- 35. + Strategy Tactics =Line of Sight 35 Budget Perspective Budget Management Resource Management Internal Processes Perspective Stakeholder Perspective Application Quality Time to Delivery System Capabilities Stakeholder Relations Recognition of Value Service Attributes Relationships Operations Management Stakeholder Management Innovation Processes Regulatory Processes Human Capital Information Capital Organizational Capital Learnings & Growth Perspective Image Project Performance Culture Leadership Alignment Teamwork Performance Goal Key Performance Indicator (KPI) Critical Success Factor (CSF) Strategic Objective Be The Preferred Supplier Of Business Applications Traceable to Increased Customer Revenue Provide on-time, on- budget, on-specification for our enterprise applications Budget Variance Schedule Variance % Requirements Variance BPI ≥ 0.95 CPI ≥ 0.97 Function Points Delivered ≥ 90% Target Provide scalable platform for acquisition and growth of our customer base Cost of Delivery Impact Performance Impact Global Operational Baseline Declining Cost per Customer SLA Compliance ≥ 0.98 24/7/365 Non-Stop Operations What How Measures Vision Positively Impact Financial Performance Why Bottom Up Making the cause-and-effect connection between Key Performance Indicators and Strategy is the role of an Balanced Scorecard automation system Flow Up from KPIs to Strategy The Strategy Map describes the cause and effect connection between each Strategic Objective The Metrics Map describes the relationships between the Key Performance Indicators, Critical Success Factors, and Performance Goals in support of a Strategic Objective Bi-directional traceability between tactics and strategy
- 36. Strategy without Tactics isthe Slowest Route to Victory Tactics without Strategy is the Noise before Defeat ‒ Sun Tzu 36
- 37. + Each OrganizationMust Seek Its Own Path to Digital Transformation 37 https://www.trisotech.com/wp-content/uploads/Trisotech-Poster-Strategy-to-Operations.pdf
- 38. + Golden Circle(GC) Business Motivation Model (BMM) Value Proposition Canvas (VPC) Business Model Canvas (BMC) Strengths, Weaknesses, Opportunities, Threats (SWOT) Brulton Hexagon Empathy Map (EM) Customer Journey Map (CJM) Capability Map (CM) How, Who, Why, What, Where, When (HWS) Balanced Scorecard (BSC) Input, Guide, Output, Enable (IGOE) Suppliers, Inputs, Process, Outputs, Customers (SIPOC) Value Map (VM) Responsibility, Accountability, Consulted, Informed (RACI) Case Management Model and Notation (CMMN) Business Process Model and Notation (BPMN) Decision Model and Notation (DMN) Modeling Digital Transformation 38
- 39. + Why Strategies Fail It’s not about Vision It’s about … Commitment to perform Failure to link money to a strategic outcome EXECUTION 39
- 40. + Vision Barrier Only 5% of the workforce understands the strategy. Informed action is virtually impossible without sound knowledge of the organizations strategy. People Barrier Only 25% of managers have incentives linked to strategy. Incentives linked to short-term financial targets, leads to less than rational decision making at the expense of long term sustainable success. Management Barrier 85% of executive teams spend less than one hour per month discussing strategy. Without a clear and concise blueprint for success – the strategy – manage will focus on financial and operational details. Resource Barrier 60% of organizations don’t link budget to strategy. Based on strategy, what initiatives distinguish us from our competition? Why Strategies Fail 40 The four primary barriers that lay the seed of strategy failure ...
- 41. + Strategy Maps:Converting Intangible Assets into Tangible Outcomes, Robert Kaplan and David Norton, Harvard University Press Balanced Scorecard Diagnostics: Maintaining Maximum Performance, Paul Niven, John Wiley & Sons Rethinking Performance Measurement: Beyond Balanced Scorecard, Marshall Meyer, Cambridge University Press Implementing the IT Balanced Scorecard, Jessica Keyes, Auerbach Publications Strategic Performance Management: Leveraging and Measuring Your Intangible Value Drivers, Bernard Marr, Butterworth‒Heinemann Strategy: Beyond the Hockey Stick, Sven Smit, Martin Hirt, and Chris Bradley, John Wiley & Sons, 2018 Knowledge is of two kinds. We know a subject ourselves, or we know where we can find information upon it. When we enquire into any subject, the first thing we have to do is to know what books have treated of it. This leads us to look at catalogues, and at the backs of books in libraries. — Samuel Johnson (Boswell's Life of Johnson) Resources 41
- 42. + Resources “Systems Engineeringin a context of systemic cooperation (SCOOPs); Development and Implications,” Mike Yearworth, Janet Willis Singer, et al, 2015 Conference on Systems Engineering Research, Procedia Computer Science 44 (2015), pp. 214‒223. ”Strategy, Not Technology, Drives Digital Transformation,” Gerald Kane, et. al, Sloan Management Review, July 14, 2015 Execution The Discipline of Getting Things Done, Larry Bossidy and Ram Charan, Crown Business Business Process Improvement Workbook ‒ Documentation, Analysis, Design and Management of Business Process Improvement, James Harrington, Erik Esseling, and Harm Nimwegen, McGraw Hill Digital transformation strategy: the bridges to build, i‒scoop, https://www.i- scoop.eu/digital-transformation/digital-transformation-strategy/ “Maturity model for assessing Industry 4.0 readiness and maturity of manufacturing enterprises,” Andreas Schumacher, Selim Erol, Wilfried Sihn, Procedia CIRP 52 ( 2016 ) 161 – 166. Performance‒Based Project Management ‒ Increasing the Probability of Project Success, Glen B. Alleman, American Management Association. 42
Editor's Notes
- #3 The widely accepted view that strategy and execution are separable activities sets companies up for failure in a fast-paced world. When a firm embarks on a Digital Transformation, Strategy and Executive must be connected. Strategy must be in tune with the execution processes of value creation in the real world of Digital Transformation, marked by volatility, uncertainty, complexity, and ambiguity (VUCA). This means Strategy must be conceived as a hypothesis rather than a plan. Like all hypotheses, it starts with situation assessment and analysis — strategy’s classic tools. Also like all hypotheses, it must be tested through action. “Your Strategy Should Be a Hypothesis You Constantly Adjust,” Amy C. Edmondson and Paul J. Verdin, Harvard Business Review, 9 November 2018
- #4 First, Digital Transformation is driven by rapidly-changing technologies. Its successful adoption depends on a sound strategy. Businesses that have successfully embraced Digital Transformation do not adopt individual technologies to solve their individual problems. They have a defined strategy and clear objectives for digitalization in place that aim to guide the transformation of their overall business, instead of ad hoc functions. The ability to digitally reimagine the business is determined by a clear strategy supported by leaders who foster a culture able to change and invent the new. While these insights are consistent with prior technology evolutions, what is unique to digital transformation is that risk taking is becoming a cultural norm as more digitally advanced companies seek new levels of competitive advantage.
- #6 A hypothesis is a supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation. Strategy is built on a chain of hypotheses, because Strategy is all about the future. As progress is made, the same thing is done when the Strategy is translated into the Strategic Plan used to execute the Strategy.
- #7 There are various concepts of IT strategies (Teubner 2013), that define the current and the future operational activities, the application systems and infrastructures, and the organizational and financial framework for providing IT to fulfill business operations within a company. Digital transformation focus on transformation of products, processes, and organizational aspects owing from new technologies. Their scope is broadly designed and includes digital activities at the interface with or fully on the side of customers. Independent of the domain, digital transformation strategies have certain elements in common. These elements can be ascribed to five activities across four. dimensions: Use of technologies Changes in value creation Structural changes Financial aspects
- #8 Here’s some more background on strategy The emphasis is on creating Fit between the activities and assets of the firm. For Digital Transformation this means that fit must include the customers experience as well.
- #9 When down right, Planning is a process of continuous improvement, with the Plans and the Strategy they represents kept current. The strategic planning framework used for this work contains: A Vision A Mission defined short term and long terms strategic timeframes 5 to 7 strategic objectives 3 to 5 optional key characteristics of the organization The strategic objectives and key characteristic are derived from the Vision, the Mission, and essential characteristics The strategic objective and key characteristics are used to assess the entities in each of the strategic timeframes. Once the Strategic Framework is established, it is a simple matter to assess the work activities of the organization against the framework and determine what, if any, changes need to be made to the current work portfolio. Each significant work initiative/project, either product or process, should be assessed periodically against all of the strategic initiatives and key characteristics. The assessment determines how the work initiative align with each strategic objective and key characteristic. The assessment does not assess progress toward completion of the work initiative. This progress assessment takes place through the Measures of Effectiveness, Measures of Performance, Technical Performance Measures, and Key Performance Parameters of the initiatives implementing the strategy
- #10 In one paradigm there are four types of firms
- #11 Determining which type of firm you are is critical to identifying what strategies will be needed for the Digital Transformation. It may be you’re one or more if these types. Depending on the market, there is no right or wrong type to be. But determining who you are must take place before a strategy can be determined
- #22 This maturity follows the SEI Capability Maturity Model Integrated (CMM). This approach can be universally applied to other domains outside of software development as it is here. Ad Hoc ‒ processes are usually ad hoc and chaotic. The organization usually does not provide a stable environment. Success in these organizations depends on the competence and heroics of the people in the organization and not on the use of proven processes. Opportunistic ‒ processes are designed an deployed to meet an immediate need, without an overarching framework Repeatable ‒ processes are well characterized and understood, and are described in standards, procedures, tools, and methods. Managed ‒ Quantitative objectives for quality and process performance are established and used as criteria in managing processes. Quantitative objectives are based on the needs of the customer, end users, organization, and process implementers. Quality and process performance are understood in statistical terms and are managed throughout the life of the processes. Optimized ‒ Processes are continually improved based on a quantitative understanding of the common causes of variation inherent in processes.
- #23 This chart comes for Jack Ring, who is a Systems Engineering thought leader. In the end, everything we do from development to strategy is about systems and the engineering of those systems. Much can be learned from the principles of Systems Engineering. In many cases the principles of Systems Engineering are missing. The missing practices and processes can be traced to the Rot Causes of many project failures. It is worth investing in learning about and practicing Systems Engineering. One starting point is the professional society for systems engineers www.incose.org
- #24 There are many way of building strategies. One is Balanced Scorecard
- #26 Here's an example of a Balanced Scorecard for an Enterprise IT organization that supported a large environmental cleanup project. Digitizing the site was a critical success factor for the closure of the plant. Determining what processes, services, and technologies needed to be transformed was started by taking a customer centric view of the role of IT. The work of the customers was to clean up the nuclear waste at Rocky Flats Environmental Technology Site (RFETS), adhere to the Federal, State, and Local laws, assure Environmental Health and Safety regulations were followed, show up on time and on budget for the closure. A digital transformation was needed, since the site was operate in a legacy manner prior to our arrival. Center IT, hardwired everything, no personal devices, no automation, no instrumentation. In the end a wireless umbrella captured all data, provided mobile voice and security and real time monitoring of all the work activities as well as the electronics collection, storage, and use of petabytes of data.
- #27 Here are the steps to developing a Strategy for a Digital Transformation using Balanced Scorecard