There’s a lot being written about digital transformation. Customer experience transformation. Future of Work transformation. Oh, and let’s not forget innovation. No matter the type, they all seem to be failing. McKinsey reported that "just 26 percent of respondents say the transformations they’re most familiar with have been very or completely successful at both improving performance and equipping the organization to sustain improvements over time" in 2015; two years later, they found that "companies are no more successful at overhauling their performance and organizational health than they were ten years ago."
I'll share my theory, formed after countless conversations with senior leaders over the years and numerous customer-journey/root cause analysis projects. I can trace it all back to silos and the mechanistic, product-centric mindset inherited by Henry Ford.
Insanity is doing the same thing over and over again, expecting a different result
Bottom line, you can’t solve a problem with the same thinking that created the problem in the first place. And all of the ills plaguing business today – decreasing customer and employee loyalty, lack of agility, inability to keep up with change – can be traced back to Henry Ford’s legacy. He created a mode of business that was scalable and created efficiencies on a manufacturing floor. Unfortunately it fails to efficiently create the experiences that customers expect to buy today, and it fails to adapt quickly in response to changing market dynamics.
Silos and a product-centric mindset are the "enemies from within" facing nearly every business, and must be conquered to survive.
- Silos: Your transformation effort is likely to fail if it’s siloed from other types of transformation efforts, or reinforces the silos instead of busting them wide open. Each common transformation effort - digital, innovation, future of work, or CX - is typically led out of different departments. Uses a different maturity model. Has a different culture goal. Is supported by consulting and analyst firms that are specialists in each type of transformation. McKinsey found that 47% of respondents, if they had to do it over again, would focus on executive alignment, and that's just for a single type of transformation. Few are focused on linking it all together... and the ones that are, don't need transformation.
- Product-centric: We need to put the humanity back into business. At a generic level, McKinsey identified that people issues are the primary ones to address in any transformation effort. More specifically, emotion -- how someone feels when they do business with you or work for you -- is the only outcome that matters, as it drives all the business metrics you care about. And disappointment, frustration and anger are the only possible emotional outcomes when a customer is faced with a bunch of disconnected products and touchpoints managed by different departments... no matter how snazzily digital it may be.
A next-gen business combines human with machine
There’s only one transformation that’s needed: to become a next-gen business that is both digital and human-centric. (Wo)man and machine. One that appeals to the next generation of customers and employees, which not only requires different ways of organizing but also a totally different mindset that is embodied by Millennials, who think digital and collaboration first.
When steel was invented, people didn't continue building wooden-style bridges. They recognized that the new material enabled them to build a fundamentally different kind of bridge that was lighter and stronger. Today, technology is enabling a fundamentally new kind of business. Digital Natives see this opportunity and have set their high expectations accordingly. And just as bridges aren't ends to themselves, but are built in service to a human need to get from point A to point B, businesses aren't ends to themselves but exist to serve a human need.
The first big question is, what human need is being served by your digital transformation efforts? And, more importantly, is it the same human need that's being served by every other initiative, department, business unit, employee, and partner?
Too often I have witnessed different teams doing their own fragmented research and setting their own agendas without connecting the dots on the human-centric outcome that they all should be delivering on together as an organizational whole. Or worse, doing no research at all, focusing instead on the mechanistic qualities of their efforts. Digital and innovation strategies are often totally disconnected from customer experience strategy (if there is one), and employee value propositions have little relevance to customer value propositions.
And then we wonder why 70% of employees cite lack of alignment as the reason why they haven't achieved the business strategy.
The only constant besides change
We need to start connecting the dots and focusing on the common outcome-based denominator to have a chance at survival and success; herding cats is not the most efficient way of doing business. Ideally that outcome is something that is unchanging -- so that it can serve as a north star that guides all aspects of the organization -- and is differentiated in the market.
- Unchanging: The only constants are change and what makes human beings tick. Human needs haven’t changed for thousands of years, and they certainly won’t start changing tomorrow. Millennials aren't unique; they just have elevated expectations and different priorities.
- Differentiated. Human needs also provide differentiation: the company that doubles down on delivering confidence and security is a very different business, appealing to a distinct customer segment, than the one that's doubled-down on adventure, control or achievement. Each of these represents a different definition of value held by a given customer or employee segment.
When you can anchor your entire business and operating model on delivering a need-based outcome like feeling secure, or adventurous, or in control, it provides a differentiated, lower-cost value platform for digital, innovation, customer experience and future of work to align against. These initiatives inform each other and become mutually reinforcing. The entire platform grows stronger, serving as the unchanging north star in the midst of constant change; instead of herding cats, you can lead an armada towards a shared destination.