Understand before you transform

by Elham Jalilzadeh 24 October 2019

Digital transformation often starts – and fails – with technology. Mature organisations recognise this and focus instead on transforming their processes and people first. Yet according to recent research from IBRS, some 85% of Australian and New Zealand businesses struggle to get their staff to adopt new processes linked with new digital solutions. And that raises a question which I suspect most transforming organisations have never asked themselves: how can you effectively change your processes if you don’t understand them in the first place?

For digital transformation to deliver meaningful benefits, new processes and solutions have to become embedded in the workings of the organisation – they must become ‘this is how we do things!’ To achieve this, business leaders need to start with a comprehensive understanding of processes and practices within the organisation. Most, however, forge ahead without taking this first step. More than ever, we need to recognise the immense dollar-value and intellectual capital that organisations gain from simply understanding how their people and things work together.

Leaping into the dark

Earlier this year, our Innovation Study found that 60% of Australian organisations fall short of the level of clarity that they feel they need around existing systems and processes for effective innovation. And when asked if their internal policies and processes are clear, senior executives are twice as likely to agree than their line-of-business managers. That suggests senior leaders often underestimate the complexity and nuances of how their organisations really operate – which, in turn, affects their ability to set attainable targets, or devise pragmatic strategies, for transforming the processes in question.

For example, we’ve often seen businesses start with extremely ambitious targets for customer experience improvements in their digital transformation, before falling short when their processes prove much harder to untangle than previously expected. Often, those businesses could do better by emphasising consistency of customer feedback, or coherent staff responses to customer requests, that set up a strong foundation for headline improvements further down the track. If you’re in the dark, you don’t simply leap out – you shine a light first, or at least take smaller steps to work out where you are.

The dollar-value of how things work

The first thing to do is ascribe a real dollar-value to the understanding of existing processes. Once something has real, quantifiable worth, it can no longer be ignored; in fact, it gains credibility as a consideration or an asset within the business. Where does this dollar-value come from? According to our Innovation Study, some 61% of Australian businesses lose productivity when they introduce any form of new process – but understanding how their processes work typically significantly reduces productivity losses.

Operations teams can use their existing knowledge as a starting point to work out how much a clear snapshot of organisational processes is worth, in terms of everything from increased productivity and collaboration to reduced risks of disruption across the business. Perhaps the most obvious value of this understanding comes from the amounts of money at stake during digital transformation. It’s not hard to see how such a snapshot could be worth hundreds of thousands of dollars if it could reduce the risks associated with reengineering a multi-million dollar business.

Mapping the unknown

Building that understanding takes place through a combination of data and more qualitative methods. Not all companies have substantial amounts of data about how their processes operate – in fact, I would say those which do make up a small minority. Most of us will have to make use of more old-fashioned ways of insight: observing employees, talking to customers, testing small changes on both back end and front-line interactions to see what happens. We tend to hold up data as the gold standard for organisational insight, but there’s no reason why organisations with zero data cannot build out process maps and models with high degrees of relevance and accuracy.

Operations teams are well-placed to carry out this mapping exercise, not least because they increasingly find themselves covering both customer experience and back-end business management, including handling of data where it does exist. Moreover, ops leaders tend to think in terms of processes – where they interact, how to break them down, what could make them better.

But whoever commits to this mapping process must remember that it is never just a one-off, nor is it restricted to just one or two business functions. Any map of organisational processes needs to be constantly updated and tested as the business transforms. Giving it a dollar-value at least ensures we treat it not as just another operating cost, but an asset that’s critical to transformation and growth alike.