A New Language for Digital Transformation

Charlene O’Hanlon and Rich Nanda discuss a new Deloitte study, “A New Language for Digital Transformation,” which explores why so many transformations fail to deliver concrete impact. The video is below followed by a complete transcript of the conversation.

Announcer: This is Digital Anarchist.

Charlene O’Hanlon: Welcome back to Techstrong TV. I’m Charlene O’Hanlon and I’m here now with Rich Nanda who is the US monitor practice leader at Deloitte Consulting. Rich, thank you so much for being back on Techstrong TV. It’s great to see you.

Rich Nanda: Good to be here, Charlene.

O’Hanlon: Well, I know you spoke with Alan a couple months ago about another report that you guys had out, but I want to talk to you a little bit about the new study that you have called, I believe it’s A New Language for Digital Transformation. Is that the right title?

Nanda: That’s right, Charlene. Yep.

O’Hanlon: Excellent. All right, great. So tell me a little bit about this one and what its focus is.

Nanda: Yeah, so we remain very committed to this idea that digital transformation is in service of business transformation, and in fact, the earlier conversation I had with Alan talked about how it’s even impossible to separate the two in a digital economy that we’re in. So it really is all about how technology is applied to advance the strategies and interests of a company and how a company thinks more broadly about their winning strategies in light of technological innovation.

And we’re getting a lot of market resonance with that type of thinking and work as companies look to make themselves more sustainable in growing enterprises in an increasingly digital world.

One of the challenges to making that happen though is technology keeps moving very quickly. Right? And today’s very innovative new technology is tomorrow’s technology death. And how do we give leadership teams a way to have a coordinated and consistent conversation about digital transformation. So that was the impetus of this work and in a world where technology is so essential to how businesses grow and compete, digital transformation as a term in and of itself and all of the underlying technologies within digital transformation, they kind of mean anything to everybody and in that context, how do we help put everyone on the same page?

O’Hanlon: Well, it’s a very, very interesting question because we have been talking about digital transformation for many, many years, but it’s really only been over the past 18 to 20 months or so that we really have seen it spike and I know that you’re well familiar with the concept and what’s been happening in the market. But, now I feel as though we are not kind of seeing the hangover effects, if you will, of rapid digital transformation among organizations and it’s because maybe what they thought was critical for their business before, maybe turned out not to be so critical for them. Maybe they had to pivot quickly or maybe they just ended up making the wrong decisions about where they wanted to put their priorities in their digital transformation efforts.

So what are some of the things that you guys have seen then in speaking with clients and folks out in the field about their digital transformation efforts and what was kind of the Achilles heel, if you will, for digital transformation, you know, for those that maybe didn’t go as well.

Nanda: Yeah. Well, my view is it’s – all of these digital transformations are a work in process and what was a very common refrain throughout 2020 and even the early part of this year was, you know, “We’ve done a decade’s worth of digital transformation in months.” And we do our own survey with Fortune Magazine of CEOs, but there’s many similar surveys that were coming back with this data point that CEOs were saying, 90 percent of CEOs were saying, “We’re doing more digital transformation than ever before.”

And you know, through the lens of the pandemic and its disruption, virtualization of work for knowledge workers, adding automations for safety purposes into plants and distribution centers, creating more virtual customer interactions like telehealth or like click and collect in retail. I mean, all of those were very real changes that companies were making, some of which were in motion before the pandemic, but clearly, that 90 percent step was the acceleration that happened.

And now that those projects and investments are a year plus in the making, a new question is arising, which is, well outside of the immediate response, what did we get out of those? What did we learn from them and how do we scale to create the next level of business benefit. And so I think that’s where we are is just a new inflection point. And it’s a work in process. Right? We’re not done with these transformations by any means.

O’Hanlon: Yeah, I don’t think we’re ever going to be done. It’s kind of like doing DevOps. We talk about DevOps a lot as one of our sites and DevOps is not a one and done thing. You can’t just add a bunch of tools and technologies and say, “That’s it. We’re doing DevOps now.” And I think digital transformation, to your point, is very similar to that and you know, but it also becomes a moving target when it’s kind of always in process.

So how can an organization understand that it is on the right track and you know, is there a way that business leaders and IT leaders can both kind of, I don’t know, use the same nomenclature or speak the same language, so to speak, and understand what business outcomes they collectively are trying to achieve. I mean, I feel like there’s some sort of disconnect between IT and business a lot of times when we’re talking about digital transformation.

Nanda: Yeah, absolutely. So I would – I’m going to answer that question but I want to just go back for a second. I’d be remiss if I didn’t talk about the transformation is never done idea, Charlene, that you brought up.

We actually just published a book which launched last week called the transformation myth and it’s a collaboration between Deloitte, Boston College, and Northwestern and builds on five years of research. But the premise of the book is what we’ve learned through the highly disruptive times that we’re in is that transformation isn’t a one and done event. In fact, it’s in a constant state of adapting to an ever more complex and changing environment and so absolutely, right, transformation is a capability and a muscle, not a finite project or event.

But in a world where companies are constantly transforming themselves, you’re right, and technology is a key ingredient in that transformation more than ever before, how do business leaders, who are responsible for different units or different functions and they have their own set of priorities, communicate with technology leaders in a way that there’s a shared agenda. And what our research has shown is there’s just a fundamental disconnect in how management teams are able to coordinate and communicate with one another. And it’s very easy to get pulled into a specific disruptive technology and to say, “What’s my cloud strategy? What’s my AI strategy?” Well, actually you probably need to think through what’s our overall strategy and what’s the role of technology in stretching, improving or enhancing in that.

So what we’re coaching clients on is to think of five digital imperatives, and none of those five actually name a specific technology because the five imperatives allow for multiple technologies individually or collectively to make those imperatives come to life. And I’ll just rattle them off real quickly and then we can talk about them.

But first imperative is experiences, whether that’s workforce, colleagues, end users and customers. The second is an insights imperative. The third is a platforms imperative and aware and how does computing gets done. The fourth is a connectivity imperative, how do we connect to more players and entities and data in the ecosystem. And the fifth is an integrity imperative, how do we make sure that whatever we’re trying to achieve sustains under stress.

O’Hanlon: I like that lineup because it does provide a framework, but it does not kind of pigeonhole organizations into using a particular technology, as you said, or even thinking the same way because each organization, their digital transformation efforts are vastly different between different organizations and sometimes even to business units within the organization. It seems like – and we want to make sure that anything that’s happening within an organization as far as improving or enhancing digital transformation efforts isn’t at locker heads with other business units in the organization.

So you know, I feel like there’s a healthy amount of communication that still needs to happen, even within the organization, not just IT leaders and business leaders, but also kind of that one level down line of business managers or even practitioners to understand that everybody understands what the – I don’t want to say the end state or the end result, because we just said that’s never going to happen, but at least the desired state.

Nanda: The next interim state.

O’Hanlon: Exactly. Exactly.

Nanda: You elocuted on one of our very common fatal flaw or area of inefficiency, which is, look, enterprises are complicated units and what one business unit or function may be trying to optimize for is going to be different than what another business unit may be working on. But at the end of the day, technology is being procured and applied to the organization in a way that should be shared across.

So how do you build a shared foundation with a common understanding of what that shared foundation can do and then let distinct parts of the businesses get the benefit and the customization they need out of that shared foundation. It’s certainly much easier said than done, but that’s the task at hand and you know, missing on that task, that’s where we’re going to get , well 90 percent of the CEOs said they accelerated, but only half of that would say, “We got the ROI we wanted or some suboptimal outcome.” So that’s the opportunity at hand.

O’Hanlon: Yeah, well I think that it’s – I think the next 12 months are going to be very telling from an ROI perspective on many of these digital transformation initiatives that are organization that started previous to the pandemic and accelerated or just decided to launch during the pandemic. But I think that there have been a lot of lessons learned along the way and I think we’re nowhere near the point where an organization just kind of can just either take a digital transformation effort and come out unscathed. So with that, I think there’s going to be a lot of bumps and bruises along the way.

But Rich, thank you so much. We could talk about this forever I feel like, but I do want to thank you for the time that you have spent with me and we’ll definitely circle back another time and continue this discussion. I really do appreciate your time today though.

Nanda: Thank you for having me Charlene.

O’Hanlon: All right, great. All right everybody, please stick around. We’ve got lots more tech strong TV coming up, so stay tuned.

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