Post written by Leslie Willcocks, Emeritus Professor of Work, Technology and Globalization at LSE’s Department of Management, together with Dr John Hindle, Managing Partner of the advisory firm Knowledge Capital Partners
NEW YORK, NY - JULY 30: People are reflected in the window of the Nasdaq MarketSite in Times Square ... [+]
We all have blind spots. Part of the optic disc, the round spot on our retinas, lacks the cells it would need to detect light and this means that everyone’s vision is to some extent imperfect. Fortunately, our brain compensates by filling in for the missing data, so we do not notice. Research shows that corporations in the process of digital transformation often have blind spots. Here’s how they too can compensate for them.
Often a blind spot arises – especially in very large organizations – when those driving the digital transformation agenda - the "strategists" in Figure 1 below - have different objectives, resources and stakeholders to the technologists – also in Figure 1 below - who focus on building an automation capability for the whole enterprise.
The Digital Transformation Journey
Typically, strategists are doing a lot of things right. Of course, aside from developing an overarching vision, they take a lot of care and attention when it comes to planning processes and building their digital platform. But their execution of strategy is weakened through a variable mix of governance, navigation, culture and change management factors. Most typically, "strategists" are driving their transformation agenda from a higher position in the organization than the automation "technologists" who focus on building an automation capability for the whole enterprise.
All parties may feel they are being successful, but in practice the organization has replaced old silos with new ones. The result: a disconnection between the technological and the organizational. There can be at least ten major technologies in play for true digital transformation to take place: social media, mobile, analytics, cloud, blockchain, robotics, automation, the internet of things, digital fabrication and augmented reality. Intelligent automation makes inroads into converging only a few of these – typically analytics, cloud, automation, and, to some extent, the internet of things.
Organizationally, the processes and staffing for digital transformation and automation agendas are separate and do not converge. They create a "ships passing in the night" outcome. In short, "strategists" view automation as a tactical tool; "technologists" see digital transformation as having little to do with them.
The Secret of Success: Integration
The research we have done on more than 1,000 companies, shows that a few organizations break through this impasse. The senior executives adopt a strategic mindset when deploying robotic process and intelligent automation. In these organizations, the transformation agenda and enterprise vision comes from the top. The result is that the strategic integration of automation with other digital technologies delivers huge advances in both customer experience and operational efficiencies. One North American bank, for example, realized 400% gains in enterprise effectiveness measured by increased customer retention and revenues from broader services integration – and efficiency savings of 200%.
Organizations that make a success of digital transformation start with an external focus on customers and competition and use this perspective to design – from outward in – an end-to-end business process architecture that accelerates digital innovation.
Most organizations, however, still have a long way to go to match the Singapore-based DBS bank, which has been voted the world’s best bank several times and is an example of digital leadership at its best. DBS has multiple digital transformation capabilities, which have been built over time, and is able to deploy intelligent automation that is well integrated into its digital platforms.
Digital Progress: A Sting In The Tail?
Between 2020 and 2022, our research found many more organizations were moving faster on digital transformation. In some cases, they were driven by the need to survive in pandemic conditions. But this sense of rapid digital progress may create a further myopia which blinds the management teams of these organizations to what others around them are doing. Digital leaders are, in fact, investing larger and faster – and more strategically - than the industry average. They are also improving their own execution capabilities, and making further gains in revenue, profitability, market valuation, and other leading indicators.
But the widening gap between some of our most successful digital leaders and the rest should not be seen as inevitable. In the digital narrative, there does not have to be a sting in the tail. Time and again we find that it is the productive combination of 25% technology and 75% management that results in superior business performance. Our most recent research, which was a partnership between the LSE and Knowledge Capital Partners, shows that whatever your competitive positioning, there is significant business value in building and integrating the seven distinctive elements of strategy, planning, culture, governance, a digital platform, change management and navigation. As hard as this is, all the evidence suggests that it’s no longer a competitive option not to at least try. And removing managerial blind spots is a great way to start.
