The episode unpacks Process Transformation as the first form of Digital Transformation, stressing the importance of understanding business outcomes and deciding whether the transformation will be incremental, as part of an ever-evolving business strategy.
On this episode of the Definitely, Maybe Agile podcast Peter and Dave will talk about the first of the 4 forms of Digital Transformation, Process Transformation. They'll discuss what it is, how to do it, and why it's important.
This week's takeaways:
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[00:00:00] Peter Maddison: Welcome to Definitely Maybe Agile, podcast where Peter Madison and David Sharrock discuss the complexities of adopting new ways of working at scale.
[00:00:12] Hello, and welcome to another exciting episode of Definitely Maybe Agile with your host, Peter Madison, David Sharrock. How are you today, Dave?
[00:00:20] Dave Sharrock: I'm doing brilliantly well. It's been a great break from the airwaves as it were, but good to come back and we've got lots of interesting topics to pick up and, pull apart. In our intro, we talked about digital transformations, I think nearly any of the clients that we're talking to, everybody's looking at digital transformation. So let's just start, what is a digital transformation?
[00:00:41] Peter Maddison: I think it's a great question. When we look at the marketplace, there seems to have been this idea of there being four types of digital transformation that's come into the marketplace in the last four to five years. And those four types were: process transformation, business model transformation, domain transformation, and a cultural organizational transformation. And we thought we'd kick this off by talking about the first of these: process transformation. When we think of digital transformation, what is process transformation in the context of a digital transformation?
[00:01:12] Dave Sharrock: Great question. I would argue that if you use the word transformation, most leaders, most transformation managers or champions, the default assumption is it's a process transformation. Certainly over the last couple of decades, has been a priority of focus of most organizations and that process transformation effectively, it's an operational efficiency play.
[00:01:35] How can we reduce our operational costs by automation, by more collaborative delivery, and make sure we're working on the right thing. I think you start from the perspective that this is the lowest level transformation, in the sense that you're almost certainly going to identify an area that needs improvement. There's some processes not functioning the way we want it to. How can we go in there and transform that process to be more efficient, to be less costly, to be more impactful. Whatever that process change is required.
[00:02:10] Peter Maddison: And, one of the problems that I immediately see arise with that, is that if your target is cheaper, then you immediately bring in some very negative connotations into what you're trying to do. Something that's gonna almost certainly stand in your way of achieving some of the results you're trying to achieve as well. Driving for the least amount of money is not necessarily the best way to improve and optimize a process.
[00:02:36] Dave Sharrock: This is where we sit in that world of transformation, organizational change being synonymous with headcount reduction. Which is really what you're trying to call out there. It can be an absolutely correct use of that phrase, organizational transformation. Which can lead to fewer bodies being needed, fewer people being needed to get the outcome. But in many cases, it's used as this synonym for, we need to reduce headcount by this much. Therefore, we've got to go through this change. I think we want to separate the two out. Process efficiency is about, basically, reducing cycle time. Reducing the amount of time, effort it takes to go from A to Z. And I think when we are understanding it from that perspective, it leads to some of the first questions that define process transformation. Which is, where does it start and where does it finish? And, how does that fit into the whole? If I use a Lean concept of optimizing the whole, what is the whole? And where is this transformation within that whole?
[00:03:34] Peter Maddison: There are some very valuable constructs within this too. Value streams as a way of looking at what is my end-to-end system work? How can I model that in a way that I can understand, and then value streams can give that time diagnostic of the system of work. Which will then allow you to decide where to focus. Where is the bottleneck? Bringing Lean principles in to look at that end-to-end system, and how can I start to change that process?
[00:04:00] There's another aspect to this as well, which is the digital part of this. How does our process change, or how can we change our process by applying digital technology to it? Which is the digitization aspect of this too. If we look at filling out a form and faxing it to somebody, we can now fill out a DocuSign and sign it online, and it automatically gets stored. We use certificates to encrypt signature, rather than relying on a piece of paper.
[00:04:28] Dave Sharrock: I think there are two elements to that talk of process transformation. If I look at the Lean context, processes always need transforming. They need a continual improvement. That's because, as you're developing a process, you're going to bring in a lot of things which you'll learn over time aren't necessary. And we need that discipline of going in and trimming the steps, which were essential for us learning what we are delivering, but now we can start taking out. Taking these redundant, or low value steps out of the process. So process transformation is a continual need. You will always have a process that needs improvement. The opportunity around digital transformation is a slightly different perspective. It's less about operational best practice and more about " What can we do that gives us a leg up?" That gets us somewhere new.
[00:05:19] Peter Maddison: I think this brings us to the transformation with the capital T versus small T. Transformation means it is all changing. The two types you're describing: the first is about incremental change. It's about looking at where we are today, and what's the next smallest step change to get better. Versus, we're just gonna completely throw out how we're doing it and do it in a completely different way. We're gonna reinvent our current approach. We're gonna look at it from a totally different lens. That type of change, which is transformational in nature, is more of a step change. Also far more jarring to the organization.
[00:05:54] We'll get into that when we start to look at some of the other models that describe the four types of digital transformation. That's where we start to talk about the cultural organizational piece that is obviously very linked into this. If you make such large step changes, where you throw out the old, with-out considering the implications to your organization, then you'll certainly not see the results you're expecting.
[00:06:19] Dave Sharrock: I like what you're describing there, that sort of two perspectives, the continuous small T transformation, which we should be doing all the time. There should be one process transformation after the other. As we look at different parts of our organization, in terms of improving, optimizing that whole end-to-end process that we're delivering. Then I think there's another one which is much more steeped in innovation. It isn't just a simply a case of introducing some new digital tool, which allows us to smooth out the process, but there are real business opportunities that we can receive a benefit from. In a sense that comes into who's involved in that process transformation. If that process transformation is, CTO, CIO led, within our technical delivery, we're probably looking at small T transformation. We've got a process that needs optimizing, and getting better, or trimming in some way.
[00:07:08] If we now have business at the table, if there's a broader strategic eye, on the opportunities that we have there. And here I'm thinking of things like AI. You don't want your technical organization just coming up with ideas on the AI side. You want strategy, business at the table, to really understand your business problem, and figure out the next steps.
[00:07:29] Peter Maddison: If you're starting from a point where your transformation is, "I want to use AI", then you're probably starting from the wrong point anyway. You should be starting from what is the business outcome. What am I trying to actually do here? AI may not be the right solution. Just because you happen to have read an article about it on the weekend, this may not be the right way to go. It may not be what will help you solve the problem. That could be very detrimental if it takes you in the wrong direction.
[00:07:54] Dave Sharrock: I was just gonna say, I've had a very interesting experience this afternoon using AI web chat. I won't say anything more, other than I had to go through the process five times doing exactly the same thing, because you can't get around the little trip ups and automatic steps. There's times to use it, there's times to learn, and there's definitely times to be very careful about what the experience is, and what you're getting from.
[00:08:20] Peter Maddison: If we were to wrap up this episode here on process transformation. What would three point be that we should leave our listeners with?
[00:08:28] Dave Sharrock: There's three really nice separations. One is process transformation is probably what most people think of as transformation when we start. If you talk to any organization about agile transformation, or digital transformations, they very quickly get into the space of what process can we modify, improve, optimize as a result.
[00:08:47] So it's the default place to start. At least that's what people are bringing to the table. Often driven by efficiency, cost savings, operational cost reduction, something along those lines. What I really liked that you added in as a result of that, is this difference between small T transformation, which is the duty of anybody who has processes that they're working with. How do you make sure that they're fit for purpose? They're optimized, They're as as strong as they need to be. So that's the small T versus the bigger transformations, which are where the opportunities are. How do you bring technology, digital technology, to the table to identify opportunities in their unique business. I think that will lead us into some of the other conversations that we'll have later about this.
[00:09:31] Peter Maddison: The last piece that we touched on there, is critical too. When looking at digital transformation, in any of its forms, the focus needs to be on the business outcomes you're trying to achieve. Not on the adoption of the latest, greatest, shiniest object into your system. I add that one in there too.
[00:09:49] Well, thank you very much. I always enjoy these conversations and we'll wrap it up there today. If Anybody'd like to leave us any comments they can at feedback@definitelymaybeagile.com and I look forward to next time.
[00:10:01] Dave Sharrock: Peter, always a pleasure looking forward to the next one.
