What are the top 20 mistakes firms make in digital transformation? The first mistake is to ask that question. It implies that the transition to digital-age management (Figures 4 and 5) is a question of execution within an existing state of mind. It’s not.
The ongoing transformation associated with management involves a re-imagination of the discipline of management itself. It’s a new set of assumptions, a fresh set of values, a deep change of heart. As shown within Figure 1, it’s reflects one simple powerful idea: loving your customer as yourself, rather than operating as industrial-era management came to represent, on the basis that “greed is good, ” to quote Gordon Gecko .
The greed implicit in maximizing short-term shareholder value is not a mistake: it’s a fundamentally aberrant form of behavior. When most big companies in a society engage in it, endorse this, and even celebrate it, we are not really dealing with a simple error that can be corrected. We are dealing with the segment associated with society that has lost its way.
Fortunately, change is happening fast. It turns out that greed in business is self-defeating. A preoccupation with increasing short-term aktionär value not only harms customers, staff, and ultimately society. It actually results in a decline in long-term shareholder value .
By contrast, firms that will love their customers as themselves plus dedicate themselves to creating value for customers are the fastest growing and the most financially successful .
True, before firms and their managers have this change of heart, they do tend to commit a set of debilitating errors. The errors are not really fixable in themselves: these people flow from a wrong orientation. The particular errors are usually symptoms associated with a deeper malaise,
Mistake #1: Failure To Grasp What Digital-Age Management Is Like
Managers often fail to understand the particular concept of re-imagined management, examples are available, along with new goals, new principles, new processes, new interconnections, new attitudes and presumptions. Everything will be different. Yet, they can read issue after issue of Harvard Business Review without coming across this particular different, comprehensive conception of what digital-age management now entails.
Error #2: The Mission Statement Does Not Give Primacy To Customer Value
The particular most obvious mistake is to neglect to have a mission statement that commits the firm to creating worth for customers, as opposed to maximizing short-term shareholder value. Twelve associated with the 30 firms in the Dow Industrial Index commit this mistake .
Mistake #3: Failing To Implement The Client Offering
My bank, with regard to instance, claims that the mission is usually “to be my trusted partner. ” The reality is that when I visit the bank, they have no clue who I am, and make no effort to find out. A transaction with them is like breaking into Fort Knox. I have to produce multiple credentials. They keep throwing multiple new products at me, which get in the way of the things I want in order to do with the bank. It feels like anything but the partnership.
Error #4: Investments That Make Customer Experience Worse
Verizon has the admirable goal associated with “delivering superior customer experiences” and uses automated systems to achieve that. But as Columbia professor Rita McGrath explains . “The better your automated client service options, the worse your customer service experience”.
Mistake #5: Failure To Take Seriously The Need To Change
Firms are complacent. They are still making money and boosting sagging profitability through share buybacks. Their firm is growing slowly, if at all. They are exploring digital transformations, but the results are generally disappointing, and so assign it lower priority. They fail to see the peril that other firms are moving faster, quicker, and more efficiently, plus will soon eat their own lunch.
Error #6: Working On Piecemeal Modify
Industrial-era administration fits together as a coherent and internally consistent system. It is like the auto-immune system of the body: when one part of the entire body starts to malfunction with, say, an infection, the particular other parts of the body combines together to defeat the infection. Similarly, when one of an industrial-era company starts working in a different way within the name of improvement, the other principles plus process of the firm kick in to defeat the particular change. We see this in HR . All of us see this in Agile . Now we see how “ financial accounting screws up HUMAN RESOURCES. ”
Mistake #9: Leading By Consensus
Yet, the choice of leading through consensus versus fiat is also a false one. Any institution-building comes from having a clear vision and culture that works to motivate progress both top-down and bottom-up.
Error #10: Failing To Go All-In
There is often a failure to realize that this isn’t a framework or a playbook. It’s a lot more than following rules. It has to come from the gut. This is a different way of living. It is drawing on everyone’s creativity in order to pursue the common goal.
Mistake #11: Failure To Be World Class
Back in 2008, Microsoft was innovating on three-year cycles. At the time, Satya Nadella because a mid-level manager was shocked to find that some other firms innovating on one-week cycles. He and others like team leader Aaron Bjork, led the movement to practice world-class management plus technology .
Mistake #12. Failure In order to Discard Baggage
Many firms stagger on with their losing business models, because they are still making some money. One key step that will Satya Nadella made shortly after becoming CEO of Microsoft was ditch Windows as a business model as well as the Nokia phone, into which Microsoft had pour billions. This meant huge amounts of staff could be redeployed to winning ideas.
Mistake #13: Create Alter Showcases
In 2014, whenever Joe Kaeser became TOP DOG of Siemens, he grasped the monumental impact associated with digital technology and arranged out to possess Siemens exploit it. Yet instead of bringing technologies to the whole firm, one group was chosen where the new technology would be tested, from which it would spread. The particular problem is definitely that it lets the rest of the company from the hook.
Mistake #14. View The Change As A One -Time Fix
In many companies, the question is “When will this particular be over? When we will get back to normal? ” The right answer in genuine transformation is, “Never! ” This is the new regular. This can be a re-imagination of the particular discipline associated with management.
Mistake #15: Use Technology To Create Sweatshops
Digital technology can be used in order to save time and make work better. This can furthermore be used to terrorize personnel and create the most invasive management conceivable. It can also be used to “feature factory”, where company build feature after feature, without focusing in what customers really need. It’s focusing on quantity, instead of quality.
Error #16: Limit The Modify To IT
Firms like Novartis invest heavily in digital technologies and expertise, but place them inside the THIS group. Consequently, business executives, managers, and front-line workers don’t view the point of the newly available information, or how data could enhance their teams’ work. ” It is only by bringing the groups with each other that gains can be made.
Mistake #17. Practice Fake Change: “Change In Name Only”
Some instances of supposedly digital-age management have since much relation to the real thing while someone wearing flamenco costumes and talking about flamenco, without having mastered flamenco dance steps or displaying a feel or flair for flamenco music.
Mistake #18: Focus on Existing Business At The Expense Of Innovation
Often firms focus on the existing business at the expense of innovation. It really is all too easy to prioritize what is currently working at the expense of a much larger future.
Error #19: Neglect diversity plus inclusion
As Nadella wrote in Hit Refresh , “we are at our best when we actively seek diversity and inclusion. If we are going to serve the planet as our mission states, we need to reflect the planet. The particular diversity associated with our workforce must continue to improve, and we need to include a wide range of opinions and perspectives within our thinking and decision making. ”
Mistake #20: Failure To Become One Company
Many companies are warring fiefdoms, operating in silots, and pursuing their silo’s self interest, rather than that of the particular firm. But “innovation plus competition don’t respect silos, or organizational boundaries, firms must learn to transcend those barriers and become one company united by a single, shared mission.
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