There’s been a lot of talk in corporate circles around digital transformation of late. When I find myself in these conversations, it often feels like people are talking at cross-purposes. Recently I discovered the reasons why.
It turns out there are really two forms of digital transformation taking place at the moment, and it’s not always clear which version people are embarking on. Often they’re not clear themselves.
The type of digital transformation favoured by large IT consultancies and ops teams is known (rather unimaginatively) as mode one digital transformation. This form of digital transformation focuses on taking traditional analog processes and digitising them. This effectively means moving processes from people and paper, to data and screens. A lot of the conversations revolve around IT procurement; buying systems to digitise and store existing paper based information, or tie existing back-office functions together.
To digital natives like myself, this feels like a no-brainer. In fact it’s the type of thing I generally thought had happened 10 or 15 years ago, so I’m constantly surprised when I see whole departments spending their days moving paper around. It’s clear that this type of transformation is needed, and can provide huge savings, especially in stagnant or shrinking markets where operational efficiency is key.
The other form of digital transformation, is the one that is of more interest and relevance to me and companies like Clearleft. Mode two digital transformation takes the tools, techniques, behaviours, attitudes and culture of truly digital companies, and applies them to traditional businesses.
This involves building up digital skills in-house, rather than looking at buying in products or services. It involves applying digital service design and design thinking to human problems, rather than trying to purchase your way out of the problem with IT systems. And it involves changing the culture of the organisations, from the people they hire, through to the way projects are organised, run and delivered.
Mode two is much harder, as it requires long term culture change. It’s also the type of transformation that will pay much deeper dividends in the future, not simply just by reducing costs, but by building the internal capabilities businesses need to create the new ideas and revenue streams of the future.
Mode one and mode two transformation require fundamentally different approaches, so trying to tackle them in the same way is a recipe for disaster. This is one reason why a bimodal approach to digital transformation has been gaining traction of late.
In the bimodal model, you have one team of people, usually the IT and operations teams, focussing on delivering and improving core IT infrastructure—the type of services which require a high degree of services and are generally business critical.
You then have a second team using a combination of lean product management and design thinking to rapidly prototype and deliver new products, services, revenue streams and business improvements.
By separating your digital transformation programme into two separate streams, a new culture and way of thinking can incubate inside a dominant culture, where it would otherwise be snuffed out. This approach makes a lot of sense, but with transformation projects typically taking seven or more years, we’re still a long way off from knowing whether this model works.