Mapping Your Digital Transformation
Digital Transformations are less about technology and more about meeting users' needs better to create more value — PowerMaps start with these needs. They also enable you to set up a Spend Control mechanism — critical to successful transformations as they ensure you don't invest in technologies that deliver no returns-on-investment (ROI).
To all those about to embark on a transformation journey, we salute you (and sympathise!)
Transformation journeys are popular amongst a growing number of companies in Russia (and beyond). But what should an Executive who has been handed the challenge of transforming the organisation do?

Once the anxiety at the sheer scale of the task subsides your natural reaction may be to create a plan that will propel your organisation forward to a brighter future. As this is filled with uncertainty you'll probably be tempted to outsource the thinking for this to the best management consultancy your organisation can afford.

But this really isn't the first thing you should be doing.

If your organisation needs a transformation it may be due to a 'Titanic-type problem': your ship is sinking because it's got a massive hole in it and the water is coming in (e.g. falling revenues/rising costs). So, before you start messing around with re-arranging the deckchairs (i.e. re-structuring), or plotting a new course (i.e. a new target operating model) there are a few things you should do first. And these are things you can do yourself. All you need to start is Sun Tzu's 'Strategy Cycle' from the Art of War:

  1. Define your Purpose — your reason for doing something
  2. Observe the Landscape you're operating in
  3. Be aware of Climatic (economic) patterns that will change it
  4. Check how well current Doctrine prepares your organisation for change
  5. Execute Leadership decisions based on reality (i.e. your context, not others').

NB:— this is a cycle: every time you, or anyone else, acts it can change the purpose, the landscape, where you need to act etc.


For simplicity sake let's assume that your organisation has a purpose, but like most organisations you probably have only a fragmented view of your landscape — as you have no Map of it (NB:— you might have lots of things that you call maps — systems maps, mind maps, road maps — but these aren't actually Maps). In fact, the odds are you've never seen a real Map of your business environment and you're therefore blind to it.

That's ok, almost everyone else is in the same boat as you.

So, for now we'll skip Maps for seeing the landscape and instead learn how climatic patterns will change it. Therefore, we'll loop around the 'Strategy Cycle' to doctrine and learn how to first, stop your organisation from harming itself further.

We're going to plug the hole in the Titanic!

In Mapping we use over 40 universally-useful principles that make up doctrine. Any organisation can (and should) adopt these to increase their Adaptivity Intelligence (AQ) — their ability to adapt earlier and better to internal or external changes.

Some of these principles are more important than others, (in that without some of these you can't proceed to others) and the table below provides the order you should adopt these in. For now, we'll focus on several critical ones (in blue):

  1. Challenge assumptions (speak up and question)
  2. Know your users (e.g. customers, shareholders, regulators, staff)
  3. Know your users' needs.
1. Challenge Assumptions

Why does your organisation need to challenge assumptions?

If your organisation is of any size it'll have lots of waste in the form of duplication (of technologies) and bias (people building things they should be buying and buying things you've already got). Unfortunately, no-one will be able to tell you how bad the problem is as no-one has a good view of the entire landscape (again, because no Maps).

Instead, your organisation will probably have lots of teams focused on addressing symptoms (e.g. architecture, business processes) rather than underlying causes. There's also probably very little in the way of challenge taking place in these groups as communication is often sub-optimal (endless meetings = lots of plans but little action).

As the new Transformation Executive your instinct is probably to try and get to grips with this. However, with something as big as IT architecture, or the organisation's processes this will be a daunting task. So the temptation will be to focus on 'taking stock' — understanding "what we have" — but this just wastes time. It's far better instead to focus on "stopping self-harm" — accept that there is waste, but instead of analysing how much just focus on having less of it going forward. This requires a lot of small (and therefore more feasible) steps to get you moving in the right direction faster.


Step One — Create a Spend Control Team (SCT)

Spend Control will become the future cornerstone of your organisation's strategy but for now it's your 'beach-head' for change — your commando team; rapidly assembled and quick to act. Spend Control is the reason the UK Government Digital Services were able to save £339 million in one financial year — by challenging assumptions.

Challenge is the purpose of Spend Control.

The Spend Control Team (SCT) controls no budgets (those continue to belong to business units and/or departments). SCT (or the senior person they report to, i.e. you!) simply says that, 'if you're going to spend more than $X thousands on something then it has to be presented to SCT for a bit of a challenge'.

The challenge starts with three simple questions:

  1. Who are the users (for this project)?
  2. What are their needs?
  3. How will you measure/monitor how well you satisfy those needs?

The former CTO of the UK Govt. Liam Maxwell (now at Amazon) used to reinforce this by posting stickers on things asking "What is the User Need?"

You may be surprised at how few organisations know who their users are, their needs, or have any systematic way of monitoring how well those are being met. Maybe your new organisation is the exception and knows all this — but chances are it isn't. Therefore start here, because a Digital Transformation is far less about digital (as your organisation has been buying this for decades) and far more about how well you satisfy user needs.

How does SCT work?

Let's assume that a project owner has a project which exceeds his discretionary spending limit (e.g. $100,000). He needs to answer the SCTs initial three questions:

  1. Who are the users?
  2. What are their needs?
  3. How will you measure / monitor their satisfaction?


To which the project owner may respond something like:

  1. I don't know
  2. Why do I need to know that?
  3. Why do you keep asking me stupid questions!!


Of course, as the project owner holds the budget, he can simply ignore SCT questions if he thinks they're "a waste of time" or he is too important to be challenged. So what happens next?

Let's assume the project owner ignores SCT and does the work anyway. If it goes well then great! However, if it goes badly there is now a paper-trail that shows they refused to answer even the most basic questions about their project. This is the other side of challenge — you ask the questions and then you audit what happened. By doing this SCT builds up a picture of what the organisation is doing:

  1. Projects in process
  2. Users we serve
  3. User needs we're aiming to meet
  4. How we measure/monitor success.

This also builds up a picture of which project owners listen, accept challenge, and succeed in projects (because they're user focused) and who isn't. At some point there will come a showdown with one of the failing project owners where you can prove how their lack of challenge leads to failure, while those accepting challenge increase their chances of success.

At this point you can drive home that people can't just keep on doing stuff without understanding users, their needs and some basic measures of success or ways of monitoring them. This showdown won't be comfortable but now you can push for no exceptions to the idea of being challenged and once you're there, the beach-head of change has been made and you can start to set things up a gear.


Step Two — Increase Situational Awareness

Now we can extend SCT to ask more questions — not just about users and needs but about what is needed to build a successful project. These principles are shown in blue:


SCT can now start asking people for Maps in order to understand their landscape better. Maps start with user needs, so it should be quite simple to make this happen now (as everyone has learned to start focusing on these).

What you're looking to do is work out the components needed to satisfy user needs. This is done through identifying the chain of needs you must perform to create value (i.e. your value chain). The only tricky bit is deciding how evolved each of these components is, but this is critical as it has all sorts of implications for where you're going to invest, how you're going to manage things, and even the kind of people you hire.

As an example, here is a Map of a tea shop, where our users (customers) have a need (a cup of tea):

Now, this isn't a perfect Map of a tea shop, there are all sorts of components missing that we could add. But we're not aiming to create the perfect Map (which would be a 1-1 scale and therefore useless) just a good enough Map with which we can challenge assumptions: identify what's missing (e.g. staff, furniture, payment system) and why we're doing certain things (e.g. why are we custom-building kettles rather than buying them?).

It's important to note that these are in fact Maps of capital flows and stocks. Each line is a bi-directional exchange of capital: users get a physical flow (a cup of tea) in return for a financial flow (money to pay for it). These capital stocks and flows can be physical, financial, social, risk, or information and we can build P&Ls and cashflows from this:

Now we can challenge assumptions across a range of key performance indicators:

  1. Who users are
  2. What their needs are
  3. How we measure/monitor this
  4. What components do we need
  5. Where the money is going (e.g. on custom-built kettles!!)

As we get more Maps we can even discover duplication in the organisation (i.e. where we are building the same thing more than once) or building what we should be buying, or buying what we already have. This is of critical importance as duplication and bias is a major source of waste, especially in IT. On a major infrastructure project in the UK, for example the Mapping team were able to reduce planned IT costs by over 95%.

Remember, these problems occur not because people are incompetent or malicious but because of suboptimal communication. People just don't realise they are this inefficient because previously no-one had Maps that revealed this wider picture so they never knew that they should talk about and challenge this.


Recap:

Step 1 — Focus on user needs, which means you also need to identify the users.


Step 2 — Know the details (i.e. what is involved in building the thing that creates value?). This allows others to challenge (e.g. needs), find missing components and create a common image (a Map) which can be used to communicate with others.
Step 3 — Reduce duplication. When you have more Maps from across the organisation you can now start to address duplication rather rapidly — and this matters as very few organisations have any sort of handle on what is a major drain on competitiveness.

SCT will be able to really help others by showing them that what they're building has already been built by others. This will enable people to focus efforts on stuff that matters, as well as identifying opportunities across multiple Maps for building common services.

Step 4 Reduce bias. You can also use multiple Maps to stop custom-building that which is a commodity as this wastes time and money, restricts your ability to attract talent (who don't want to work on yesterday's technology) and harms your reputation with customers, (who don't care about your custom-built kettle but only whether the tea is good quality and the water hot enough).

You can also start asking the opposite types of question — such as what should you be outsourcing or what should be building yourself instead?


What is now happening behind the scenes is that you're building a view of the landscape that you're competing in. All those Maps are connected — they're part of a wider landscape and you're now starting to get a view of this, which starts to reveal your options for action — in other words, you're now able to start thinking strategically.


Doctrine: Finishing Phase I

Although you now have Maps people may still be trying to build huge "Death Star" projects themselves that will blow up before they become operative. Therefore, you should now adopt the final few universally-useful principles of phase one in doctrine.

Step 5 — Break your Value Chain into Small Contracts

You will get resistance here because it makes the landscape look more complex. Project owners will complain that they've now got multiple contracts to manage along with multiple interfaces between them (in other words, no "one neck to throttle" if it goes wrong). However, it's important to note that these interfaces already exist and no amount of pretending, by bundling them all up in a big contract, is going to make them go away.

Breaking your value chains down into small contracts is vitally important because it means you can now start applying appropriate methods.


Step 6 Use Appropriate Methods.


This might come as a shock to discover, but there is no magic one size fits all method for project management anymore than there is for purchasing. You'll need to apply multiple methods at the same time for any large system.

You should outsource the more industrialised components (on the right) whilst building in-house with agile techniques those uncharted and uncertain components (on the left). The overwhelming majority of large scale failures come from misapplication of techniques and almost all of them can be anticipated before a project has even started.

The most typical type of failure is that someone takes a project (like the one above) and outsources it all in one big contract. In the Map below the components on the left hand side are in the uncharted space (i.e. novel, new and changing), which means they can't be specified accurately as they're constantly changing. So, putting them together in a contract with components on the right hand side (that can be specified, as they're more industrialised and therefore changing less) always ends up with excessive change control cost overruns. Invariably people argue that next time you need to specify it better but this is plain "wrong". The solution is to use appropriate methods.


Step 7 — Learn about Context (i.e. what works where).


Many people argue for using Agile, Lean or Six Sigma everywhere, but no method is universally applicable — they each have their own context. You may be learning this the hard way today — jumping from one method to the next, arguing about what works best.

With a Map you can not only see where these methods work best (e.g. Agile on the left, Six sigma or outsourcing on the right and Lean or off-the-shelf products in between) but also understand why (as components on the left will change a lot you need Agile to reduce the cost of change; in the middle you want to reduce the cost of waste, so Lean or off-the-shelf products are ideal; on the right you want to reduce deviation, so outsourcing or Six sigma works best). Now you can see this you can start to communicate these insights across projects to help and advise project owners on how to manage their environment better. This is where SCT can truly shine — becoming the deep intelligence function that every organisation needs.

By now you've completed all the doctrine in phase I and you should be noticing that you're now communicating more effectively, challenging assumptions to prevent self-harm, and learning about how you're spending money, how you're satisfying user needs, what methods work where, as well as removing duplication and bias. You should start noticing how much fitter and more responsive you're becoming, because your organisational AQ (your mean-time-to-respond to changes) is increasing.

This all takes time and you've still got several more phases of doctrine you can go through to become a modern, adaptive, cell-based organisation that uses multiple cultures to cope with evolution (see below). But importantly you're now better than you were when you started this journey (and even more importantly, better than your rivals).

Conclusion

Many organisations setting off on a Digital Transformation are quite keen to build something like an "AI based blockchain digital ecosystem platform" but this isn't really the point of a Digital Transformation. What matters is how effectively you meet user needs and how efficiently you can do this.

This requires understanding your landscape better (who are your users, what are their needs, and how are you satisfying them) and learning, in real-time, so you can adapt as you go. If you are able to do this then you'll be able to run circles around rivals who can't, despite their oodles of cash, engineers or other advantages. It took 18 months and less than £0.5M for Ubuntu to take over the cloud, out-competing the likes of Red Hat and Microsoft, by using this approach.

Maps can be powerful weapons in the right hands.

So, if you're embarking on a transformation hold off on organisational change and strategy development for now, because the honest truth is that most people don't really know how to do this (and that includes the expensive management consultancies) — it's pretty much all random, blind luck, memes picked out of the air and gut feel. If you don't know how to do it then don't panic as, the good news is, most other executives don't either. Just focus on making your first steps as quickly as you can, as you are setting out on a journey.

So what sort of targets should you be setting for Mapping for Transformation?

As a rule of thumb, by the time you complete the first phase of doctrine you might have demonstrably reduced waste by up to 50%. It's a rule of thumb because few have any real idea of the scale of duplication, bias, misapplied techniques, irrelevant user needs or badly designed contracts in their organisations. People will ask you how much can be saved? What evidence supports this? But no-one will be able to answer how much waste exists. You'll have to discover the baseline as you go along.

If your organisation has nothing that resembles Spend Control, that's normal. Set one up straight away as this can be to your personal advantage, as you're bound to run up a number of quick wins (i.e. you'll discover those multi-million dollar projects which can be built for hundreds of thousands instead). Once you've been able to provide some proof for what you're doing then you've made the first steps and the next ones become clearer and, most likely easier. And PowerMaps can help you along that further journey — get in touch today to learn a bit more and start your transformation journey into the unknown future with a Map in your hands.


Article adapted from https://medium.com/@swardley/rebooting-gds-96b1595096fa