Three Hurdles to Digital Transformation

To transform our organizations and economies to higher levels of productivity, prosperity and sustainability, we need to design new systems from the assets of the old. That requires collaboration, a set of skills with which most leaders are unfamiliar. 

It stands to reason. Today’s leaders came of age within organizations designed for an industrial age. Despite waves of reengineering, matrix re-organizations, and lean implementations, most organizations still operate vertically. 


Here’s an example. Two years ago, we were asked to run a workshop for a Fortune 100 industrial organization. They faced the challenge of developing a new generation product roadmap.

We convened in the corporation’s training center with representatives from finance, marketing, engineering, operations, and human relations. Remarkably, this workshop was the first time that representatives from these different vertical functions were in the same room to work together.

Information and knowledge now flow horizontally at the click of a mouse. 

This world is fast disappearing. Due largely to advances in communications technology, information and knowledge now flow horizontally at the click of a mouse. Too few of our organizations are adjusting fast enough to the shift.

There’s lots of talk about the digital enterprise. Vendors and consultants relentlessly pump their newest “solutions”. But the authentic solution to the digital enterprise cannot be found outside the organization. The real solutions are embedded inside…within the pattern of information and knowledge flows across the organization. Before any digital transformation will work, these patterns must shift from a predominantly vertical orientation to one that is more horizontal.

To realize the promise of the digital enterprise — to create new value from knowledge quickly and relentlessly — we must learn to collaborate across organizational boundaries. To do that, we must meet three challenges.

New Ways of Thinking: Choosing a Prosperity Mindset.– First, we need to change our mindset, our mental maps. A digital transformation is a complex undertaking. There are no quick technical fixes. Root cause analysis won’t work. Instead, we need experiments and a relentless search for new opportunities to use digital technologies to link, leverage and align our knowledge assets (both inside and outside the organization) to create new value. A problem-centric mindset — focusing on what we can’t do, what hasn’t worked, what resources we don’t have — simply drives experiments into a ditch before they can even launch. Sadly, in too many organizations, the default narratives are negative, driven by risk aversion, jealousies, and fear.

There’s good news here. With the development of cognitive behavioral therapy, we’ve learned that we can become aware of our automatic thoughts and change them. Aaron Beck, a psychiatrist at the University of Pennsylvania and the father of cognitive behavioral therapy, taught us that our automatic thoughts — how we immediately frame a situation — determines in how we feel and the behaviors we follow. Martin Seligman, one of the founders of positive psychology, showed us how individuals become paralyzed by “learned helplessness”. But if we can grasp the power of reframing, we can overcome the negative emotions that hold us back.

At the Lab, we’ve seen that the best way to reinforce new, more productive thinking comes in asking appreciative questions. Positive psychology works to change our frame of reference, and, in doing so, it shifts our emotions in a positive direction. This mind shift opens the door to new possibilities.

New Ways of Behaving: Building Trust.– Second, we need to create new patterns of behavior within our organizations. Connections that increase the volume and velocity of information and knowledge flows do not operate on command and control protocols. They are fueled by trust. 

Trustworthy behavior emerges over time when we align our words with our actions.

Trustworthy behavior emerges over time when we align our words with our actions. As this pattern develops, we learn to trust. Most of us can manage the development of a trusting relationship one-on-one. We learn which dentist to trust, which auto repair shop will give us a fair deal, which bank doesn’t cheat us with hidden fees. But how do we build trusting relationships at scale…across an entire organization?

Unfortunately, our organizations are not set up to meet this daunting challenge. There are few corporate incentives to build trust. Quite the opposite. We are rewarded for completing relatively narrow personal goals. At best, we are directed to keep our eye on a limited number of Key Performance Indicators (KPI’s).

Here’s the rub. Innovation — creating new value out of our information and knowledge —does not operate on KPI’s. Innovation requires collaboration (powered by trust) and a willingness to experiment. Relentlessly.

Innovation requires collaboration (powered by trust) and a willingness to experiment. Relentlessly.

Now here’s some more good news. We are finding at our Lab that we really don’t need external incentives to create trusting relationships within an organization. Instead, we need to design experiences in which trusting relationships can form.

Don’t get me wrong. Horizontal incentives would help. But they are not essential. The behavior that creates new patterns of trust depends on the individual decisions that each of us to make everyday, as we interact with those around us. When you think about it, it’s all about the nature of our conversations.

New Ways of Working Together: Practicing the Multiple Skills of Collaboration.– Finally, we need to find new ways of working together. This challenge turns out to be more complex than it sounds. For most of us, collaboration is just a word. Yet, we have learned that collaboration is really a portfolio of ten skills. These skills help us design and guide complex, emergent conversations that turn ideas into actions. We’ve also learned that no one is good at all these skills. As a result, the most effective teams are cognitively diverse. Each member of the team thinks differently. 

The skills of collaboration are simple, but not easy. They take practice to master. We must become aware of our conversations and how we can design and guide them. So, here’s a final piece of good news. Since 2005 at Purdue, we have been developing and stress testing a new discipline to accelerate complex collaborations. The skills of collaboration — how to design and guide strategic conversations — can now be taught, learned and practiced. We call this discipline Strategic Doing

We explain these skills in our new book, Strategic Doing: Ten Skills for Agile Leadership. Strategic Doing is an open source operating system for complex collaboration, Open Innovation and ecosystems. Developed by our Agile Strategy Lab at the School of Engineering Technology in the Purdue Polytechnic Institute, Strategic Doing is an open source operating system that provides a reliable path for the digital enterprise. Why wait to learn more? You can begin your journey here.

Companies need to define their own path toward the digital enterprise. It’s not a job that can be outsourced to consultants. And looking for a technology fix won’t help either. The transformation begins and ends with the people inside your organization: how they share information and their invisible knowledge assets.

We can help define your path. With our colleague at Fraunhofer IAO, we are now developing an Industry 4.0 assist companies along their journey. Review the slides below. Contact us to learn more or if your company would like to become a beta site for our new assessment:

Industry 4.0 Assessment Overview from Ed Morrison