Home > Articles

Digital Transformation - The Big Picture

  • Print
  • + Share This

Find out why digital transformation is important for all organizations and how to do it effectively.

Save 35% off the list price* of the related book or multi-format eBook (EPUB + MOBI + PDF) with discount code ARTICLE.
* See informit.com/terms

This chapter is from the book
  • Happy the [person] who still can hope

  • To swim safely in this sea of error

  • What we need we don’t really know

  • And what we know fulfills no need at all

                   (Johann Wolfgang von Goethe, Faust Part 1)

Digital enterprise, the Fourth Industrial Revolution, lean enterprise—today’s literature teems with exhortations to transform from the old to something new. How are you responding? Do you have your digital strategy in place? How do you plan to “realize” that strategy? Is your enterprise getting incremental outcomes in a world of exponential opportunities? Whether your goals are for your organization to become a digital enterprise, foster widespread innovation, or implement a digital strategy, is your transformation vision thwarted by poor execution?

Klaus Schwab, executive chairman of the World Economic Forum, spared little hyperbole when he said, “We stand on the brink of a technological revolution that will fundamentally alter the way we live, work, and relate to one another. In its scale, scope, and complexity, the transformation will be unlike anything humankind has experienced before.”1 You could think of a digital enterprise (or business) as having made the transformation from the Industrial Age to the Digital Age. An Internet search for “digital enterprise” yields phrases such as “leveraging technology for competitive gain” and “creating new business models.” But these definitions are lacking. Leveraging technology and creating new business models are important, but the most critical component is transforming your culture so that it can evolve and adapt quickly. This culture change spans the entire organization, not just your technology divisions. And, this book concentrates on transforming (a verb) rather than transformation (a noun). Most organizations aren’t “there”; instead, they are becoming.

Enterprises face an ever-growing gap between opportunities and the capability to exploit them. Technological advances generates opportunities, yet enterprises’ capabilities—from developing a digital strategy, to portfolio management, to software delivery—often struggle to keep pace. Change, brought about by technology—or indeed other major forces such as globalization or climate change—challenge our ability to adapt rapidly enough. Many organizations suffer from outdated management models, which block their desired strategy from becoming reality. For example, when enterprises have agile teams that deliver features every two weeks but operate within an annual funding cycle, something doesn’t jive.

In complexity theory, there is a concept called the edge of chaos.3 This “edge,” lodged between randomness and structure, is where innovation and maximum learning happen. Balancing on this edge requires everyone to work in a messy, exciting realm, where uncertainty is embraced and solutions may be ephemeral. It’s not a safe or comfortable place, but it’s the place where organizations will invent the future. The big question isn’t how to adapt to the rapidly changing environment, but rather how to adapt fast enough. Furthermore, the missing link between digital strategy and execution entails much more than traditional portfolio management. We call this missing link EDGE, because transforming (or becoming) requires continuous innovation and innovation requires an edgy culture that challenges the status quo.

Building the capability to evolve and continuously adapt is critical to transforming your organization. Today, the accelerating rate of change is overwhelming most organizations’ ability to absorb and respond to changes. You may be fast, but are you fast enough? Can you sustain your ability to adapt over time? Effective digital transformations are not for the timid, but rather for the bold and gritty, hanging out on the edge of chaos. Organizations that think a mobile app or a data lake is enough don’t understand that transforming is more about culture, mindset, and embodied principles. This is the hard part. Agile software development has been around for nearly 20 years, yet some organizations still think that implementing a practice or two—iterations, pair programming, daily stand-up meetings—is enough. By clinging to this narrow definition, they fail to embrace the cultural values that are the core of real agility.

In our work with enterprises in retail, financial, transportation, and other industries, the authors have seen organizations striving to become more responsive, especially to their customers. Organizations are finding that having agile software delivery capabilities is not enough. We worked with a large multinational financial firm recently that was interested in DevOps as a way to increase speed and agility. Our assessment pointed out that the firm was spending an inordinate amount of time planning (not surprising in a big enterprise) and DevOps was not its solution. Rather than focusing on DevOps as a means to an end, the organization needed to rethink its entire value stream to become more agile.

Similarly, organizations transforming themselves into more innovative digital enterprises may find they suffer from strategic misalignment between their business and technology functions. In either case—business agility or strategic alignment—the existing operating model for moving from strategy to execution is flawed. These approaches may be purported to be agile or adaptive, when they are actually merely dressed-up traditional processes that are both heavyweight and bureaucratic. They delude traditional managers into thinking they are making progress—but they don’t encourage innovation or risk taking. Figure 1-1 depicts the context of EDGE, an operating model that sits between vision and delivery—the critical link that is often missing.

FIGURE 1-1

FIGURE 1-1 EDGE: an operating model.

According to a McKinsey study, “IT organizations are asked to innovate at breakneck speed in support of their companies’ ambitious digital aspirations (85 percent of respondents want their operating models to be mostly or fully digital, which only 18 percent currently have).”4 So the vast percentage of organizations have digital aspirations, yet only 18 percent consider themselves successful. Why the disparity? Because there is a big difference between the ambition and knowing how to achieve it. EDGE focuses on building an enterprise that can respond quickly to customers’ needs and emerging technology by defining an operating model that bridges this strategy–delivery gap.

Exploring EDGE

EDGE’s operating model consists of a set of principles and practices that enables your organization to achieve organizational responsiveness.5 EDGE answers three fundamental questions about your transformation: (1) How should we work together?; (2) How should we invest?; and (3) How can we adapt fast enough? EDGE is designed to sparkle when faced with an enterprise strategy of innovation and transformation. From an operating model perspective, the enterprise needs to embrace EDGE concepts, principles, and practices. From a portfolio management perspective, as discussed in Chapters 5, Measuring and Prioritizing Value, and 7, Integrating Strategic and Business as Usual Portfolios, you can manage an entire IT portfolio while focusing on 10 to 20 percent of the portfolio that is strategic and transformative and, at the same time, integrate Business as Usual (BAU) investments. EDGE is fast, iterative, adaptive, lightweight, and value-driven.

When you ask the question “How should we work together?”, you learn how teams evolve to respond to an environment characterized by an accelerated pace of change. When you ask the question “How should we invest?”, you learn to allocate investments and monitor decisions to move faster into our future. When you ask “How can we adapt fast enough?”, you learn how to build organizational grit to outpace the competition through continuous learning and adapting fast enough to thrive.

Transforming isn’t just about where you invest money and time; equally, or even more, important is how you work together. Agile software delivery teams have learned to plan and deliver in short cycles, measure successful outcomes, experiment with spikes, gather feedback every cycle, and collaborate in autonomous teams. Agile teams “work” differently than traditional software teams do.

EDGE is designed to work in the face of market uncertainty by stressing the importance of adaptability. It helps create the links from your vision to the detailed initiatives you need to undertake. And it’s based on making incremental investments, rather than big, upfront funding. EDGE provides support for managing change and transforming your organization to a digital enterprise by changing the mix of investment funds to reflect your new strategy—and by reducing your risk when doing so.

In large enterprises, an annual planning cycle has become customary. Typically, some form of strategic planning process will identify a list of key programs and projects. An estimate of each program and project is then fed into a lengthy budgeting process. In a value-centered world, you replace upfront program funding with incremental funding of the business outcomes to be achieved. You can articulate your business outcomes using Measures of Success (MoS), which describe the value you’re willing to pay for. As you demonstrate value to your enterprise and outline the cost to achieve it, you can budget accordingly.

EDGE focuses on the decisions made in an organization. Information—data, spreadsheets, analysis, documentation, surveys and the like—is vital in helping you plot a path to success. But ultimately, information is not enough. To succeed, your decision making has to be informed by experience, judgment, courage, and instinct.

Note that this formula isn’t “either/or” but “both/and.” It’s not analytics or instinct, but a blend of both. Thousands of new opportunities are available to companies every day, and hundreds of possible responses can be made to those opportunities. The great entrepreneurial leaders have the instinct to look at the available, incomplete data and make the correct judgment calls more often than not.

  • + Share This
  • 🔖 Save To Your Account

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020