How digital transformation is discussed is inherently flawed



“Technology may have changed the hardware of your business, but culture is your true operating system.”

Mike Walsh


I believe we typically discuss digital transformation in an inherently flawed way. We speak of it as a business objective and a business infrastructure. I know. I know. That sounds inherently reasonable.

But. Yeah. This is a mistake.

Most often this business objective is all about maximizing what the business sees as ways to optimize specific business strategies, sometimes a mission. In doing so they then build a system and demand everyone to work the system and optimize the system. Once again, sounds reasonable especially if a mission has already been defined and the people have bought into it.

But. Yeah. This is a mistake.

It’s a mistake because nowhere in what I just stated is “optimizing people.”

I’ll get back to that point, but let me finish up on how basic digital transformation discussions are flawed.

Rarely does anyone point out if every business approaches digital transformation as it is typically discussed, it becomes a race to “optimization commoditization” where the value can only be found in one of two places:

  • Working the system better (kind of like training so you gain an extra .001 second in the 100 meter dash)
  • The edges (continue to overdeliver against customers – which is a losing race because the bar, and costs, continue to rise squeezing profitability more & more – or continue to squeeze production ‘inputs’ like suppliers, supply, etc)

Both of these minimize business potential to the narrowest in possibilities and possible results. In other words, approaching digital transformation in a flawed way makes the ‘differential potential’ minimal – progress & growth but restrained from full potential.

I do not mean to suggest there is no business value in digital transformation just that we approach it incorrectly. I believe the minimalist way, but an important way, to view digital transformation as offering structural value creation opportunity. It has the ability to lift the foundation of the business house so the people within it can “move on up” (to steal a Jefferson’s phrase).

Where I believe most digital transformation experts miss an opportunity (beyond overselling a mis-defined structural value creation potential) is in how one should view digital transformation from a transactional value creation aspect. If you think through the transactional value opportunities, well, maximizing potential value has little to do with technology and the value creation potential resides more in people.

The reality is people represent the highest potential for business and highest differential (both of which optimize & maximize value potential).

Which leads me to –

People (the key to the transactional digital transformation value creation)

Technology should mold to the people, and their skills and potential and quirks, and not the reverse.

The pushback I get is “how can we do that, people come and go and I want to build the business for the future?”

First, I point out technology, or a digital infrastructure, is simply a means to an end. People are the future of any business, not technology.

Second. This question permits me to ask: “have you read Antifragile?” (my second favorite Taleb book after ‘Fooled by Randomness’). Your objective of a business digital infrastructure creates a fragile system. I should note this is similar to Goldratt’s principles that you should develop an infrastructure system flexible enough to adapt to changing context and dynamics in the marketplace.

A digital infrastructure should be flexible enough to adapt to changing people and the dynamics of individuals skills & potential. It should not be a ‘best practice system’ of which most of your people will use in a ‘less than best’ way.

Which leads me to –

Sensemaking and choice making

I can almost guarantee you that no one brings up sense making and choice making when discussing digital transformation which begs the question who will make sense of what digital offers and how will choices & decisions be made?

Far too often digital transformation experts will toss out “culture” and “skilling people” as a head nod to the role people play in the organizational success (and digital transformation), all the while suggesting the system is a ‘plug ‘n play’ construct where people just plug into the system as if people are technology & technology is people. That sounds nuts to me.

What is really nuts is how no one seems to talk about how digital infrastructure can be used to increase better sense making and choice making. Basically, they talk about how people will learn to use the digital infrastructure instead of the infrastructure augmenting people. That seems ass backwards to me.

Maximizing business productivity, progress & profit resides in better sensemaking (ability to make sense of situation) and choice making (effective decisions within good sensemaking).

I mean, how do you use the benefits of a digital infrastructure if you cannot identify the right problem/opportunity (sensemaking)?

Oh. Digital infrastructure/transformation is going to do the sensemaking? (insert me laughing so hard my sides hurt).

If one cannot make sense of what is, or is not, happening then choice making is useless.

Oh. “Data” provided by the digital infrastructure will make the choices obvious? (insert me laughing so hard my sides hurt).

Data only informs, it doesn’t decide. Yeah. Some of those digital transformation people may say that, but it is most often said under their breath after showing a bunch of fancy dashboards showcasing how data can make the choice paths obvious.

It seems crazy to me to have to say this, but, digital infrastructure informs decision-making/choice making, data informs decision-making/choice making, AI informs decision-making/choice making and all simply inform context needed to make sense of what is happening (sensemaking). None make decisions. All offer possibilities with probabilities associated (assuming someone can assess the possibilities and apply some probabilistic thinking).

Most importantly, in the end all will inform people. People will make sense of what they are informed by and inevitably make the most consequential decisions and choices. It seems like digital transformation people should be thinking about how people think. Maybe help them become digital/data/sensemaking literate (not experts, just literate).

But. That’s me. I think how digital transformation is discussed is inherently flawed.

, , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , , ,
Written by Bruce