FeatureDefining a target is easy, but knowing which string to pull first on the legacy knot is a delicate affair, writes Gregor Hohpe at Amazon Web Services.
Think of an industry that is not affected by the digital revolution in any way. One that can keep operating as it has been without any fear of disruption or need for change. If you are part of a successful enterprise, chances are your business is being challenged, or perhaps even disrupted, by so-called digital companies. Those are the players who have no legacy, have nothing to lose, and release software one hundred times a day. Or so it seems, perhaps.
Fact or folklore, to remain successful your business needs to define a strategy that responds to this challenge. To do so, I recommend to first take a step back and have a close look at the definition of disruption.
The critical point here is that we, as the ones being disrupted, are working under a set of assumptions and constraints that no longer hold true, or at least not for our competition. When things got choppy in the past, the strategy that businesses fell back on was optimization.
We reduced our cost base, looked for further efficiencies, and leveraged our economies of scale. Now it is a different ballgame; we cannot expect to tackle disruption with optimisation. Instead, we must transform.
It is apparent that our business environment has dramatically changed shape, so it seems appropriate to change the shape of how we conduct business. What shape that should be, though, requires a bit more consideration.
Transforming means we have to shed old habits and question existing assumptions. It is easy to think then that we are best off starting over—after all, those digital disruptors do not have all the legacy that we lug around. However, that would be putting the enterprise baby out with the digital bathwater.
When embarking on a transformation, you must have some idea of what you are transforming into. The natural target would be to become like those digital companies that are disrupting your business. However, this could be your first major mistake, for two reasons.
First, these companies have a different starting point than you do, so you will not be able to simply copy their operating model. Second, and more importantly, trying to emulate a digital disruptor would negate the key assets that your business possesses, such as physical points of presence or great customer service.
There are surely some ways of working that you would want to adopt from modern companies, such as experimentation, frequent releases, or agile software delivery. Alas, each of these approaches, while often simple at the surface, depends on underlying capabilities and attitudes without which the technique will not work.
Simply emulating observed behaviors without implementing the underlying core mechanisms will not be more effective than installing a barista and colored furniture in your office.
Approaching a transformation like a traditional IT project is unlikely to succeed. It would be like taking your horseless carriage to a vet. Transformation is not a project with a defined start date, end date, and upfront business case.
In fact, projects are the incarnation of traditional IT thinking, where IT automates an existing and often well-understood business process to increase efficiency. The digital world works in exactly the opposite way: it is a journey of continuous learning and discovery, and so is your transformation journey.
The other items that you need to leave behind when embarking on your transformation journey are existing beliefs and assumptions that are, often unknowingly, baked into processes and mindsets. To tackle disruption, you must question existing norms and beliefs. Your main challenge will be that those beliefs are not documented anywhere. A third popular assumption is that speed and discipline oppose each other, portraying fast-moving companies as shooting from the hip.
The last observation is that there is no recipe for transformation. It is a great idea to look at what other organisations have done, but each organisation’s journey will be different. Defining the target picture is relatively easy, but knowing which string to pull first on the Gordian knot of legacy systems, processes, and organisational structures is an equally unique and delicate affair.
Transformations require both restlessness and patience—another perceived contradiction. Restlessness gives you the drive to run up against existing rules and processes; starting a transformation with an eighteen-month planning and requirements gathering phase is almost guaranteed to be a failure.
At the same time, once underway, you cannot expect overnight miracles. The start-ups that reached one hundred million users with an app written by three developers are usually on their fiftieth iteration and third pivot by the time they make the news.
To measure gradual progress, make sure you have simple and visible metrics, ideally those that are not only meaningful to your own IT but also to your customers—customer centricity is where many digital disruptors started. Customers will appreciate more frequent updates, fast response to their feedback, reliable operations, and good performance. Achieving internal efficiencies, while desirable, is not visible to your customers and should come after your customers are delighted by your products. Else you end up optimising that which is not needed, which was famously described as the most useless endeavor by Peter Drucker.
Here is one additional advice: transformations are hard. You are not putting new wallpaper into the living room; you are taking your two-story house apart and putting it back together as a bungalow. Can it be done? Yes! Will it be easy? Heck no!
