Transformations are all the rage these days. It seems like everyone’s doing one, and while the circumstances are varied, the goal is usually the same- catalyze the organization into a competitive force in the data driven digital marketplace. I’ve written on various types of transformation projects, how to ensure that you can setup your transformation for success, and the need to understand your current ground truth to inform the changes that need to be made, so now let’s turn our attention to a pressing topic, knowing where to start.
Where do we start?
I am frequently asked this question by CxOs, board directors, investors, and ultimately, by clients and potential clients looking to understand how to unravel and transform the complexity that is a modern operating company. While different industries actualize their value chains in unique ways, the one thing that remains the same is that there is a value chain. So let’s start there, with the value chain.
The value chain
If you take the time to follow the advice I outlined in How To Suck Less Every Day, you’ll have a good understanding of how your value chain operates. This is a critical first step. I can’t stress this enough- before you start on your transformation, you need to do a ground truth assessment and understand what you currently have. I don’t want to sound mean, but I’m pretty sure that while you may think you know what you have and how it works, you really don’t. I say this based on years of experience working with companies across a variety of vertical industries. If I had a dollar for every discrepancy between how the management in a company thinks something gets done, and how it actually gets done, I wouldn’t need to write blogs and work transformation exercises anymore. Hey, maybe that’s how I should price the next engagement!
In technology and data companies, and you might be one, the value chain starts with product and feature ideation, continues through demand management and product roadmap, work backlog, development, delivery, and operations.
Now that we understand both the value chain that we are operating and how it gets executed, we can start looking at building a transformation plan.
Do not pass Go
Back to our original question, where do we start? I like to start at the beginning- the very beginning of the value chain. We can call this Go, because it drives the entire value chain. One of the reasons so many agile transformations fail is because they start in the middle of the value chain and only accomplish a local optimization around the development and sometimes the delivery portions of the overall process, but don’t extend to other aspects of the value chain. The theory of constraints clearly shows us that local optimizations don’t solve inefficiencies, they just create other process mismatches and make the problems worse. The classic example I see often is what has become known as WaterScrumFall. Product management is pursuing a classic waterfall based based product roadmap, development is working according to Scrum, and then operations is back in the Waterfall model. This is a fail, plain and simple, it creates more problems than it solves. Clearly then, this is not the right place to start.
The way to overcome this is to start at the beginning of the entire process, which is where the value to be produced is defined and initiated. You need to start here because if you’re not defining the right thing, or the thing you’re defining can’t be reliably produced by the rest of the chain, you need to know up front and make some critical decisions around these facts. Regardless of anything that might be going sidewise further down the chain, if the foundation for the creation of value is corrupted, anything else you change won’t really matter.
By approaching the transformation plan in this way, you will also discover where the constraints and bottlenecks in your system are. Depending on the scope of changes the transformation will bring, you may also want to simultaneously look at the single most impactful constraint in the process, which is where the value to be produced languishes, loses value, costs more than it should to produce, or potentially even gets lost. The theory of constraints tells us that the entire rest of the process needs to be organized around this one constraint. For example, if the team can deliver working software to operations every week, but it takes operations a month to process each update, that’s a bottleneck that erodes value, drives up opportunity cost and impedes the ability to truly be customer centric. Either the cadence of delivery needs to be synchronized to the operations team’s ability to deploy, or the constraint need to mitigated.
One change and we’re not the same
Another mistake I see in transformation plans is the idea that the company is going to be able to absorb a “boil the ocean” approach of many changes at once. This is problematic for a number of reasons, a few of which include the following.
- There is no way to tell which changes are effective are which are not, or might even be harmful.
- People and organizations have difficulty absorbing many changes at once. Change fatigue is real and it wreaks havoc on productivity.
- It quickly becomes very complicated to manage a large set of non-trivial changes across functions, disciplines, and processes.
- The transformation will likely include some level of restructuring or reorganization; employees need time to adjust.
This does not mean that you can’t make simultaneous changes in different areas of the organization to concurrently align functions and disciplines to the goals of the transformation and to synchronize optimizations across cross-functional interactions. In fact, you will very likely need to do so. Nor does it mean that you shouldn’t communicate the entirety of the transformation strategy to everyone- you absolutely need to do this, frequently and repeatedly, along with updates on overall progress. What it does mean is that you should not attempt to define the specifics and tactics of all the changes that will happen and try to implement them all at once. Not only will the specifics change as you execute, both with successes and setbacks, but as the transformation itself begins to happen, new opportunities will present themselves that you may want to make adjustments to capitalize on.
Embrace the opportunity to learn
In order to take advantages of these opportunities, the people in the organization need the ability to learn and adjust along the way. Any change event, especially at the scale of a transformation initiative, creates an opportunity to introduce the tools of a learning culture. It’s a great time to introduce and encourage the start of a learning culture.
Ready, Steady, Go…
Now that you have a transformation strategy, you know what you need to be, a solid assessment of how things actually are now, and whether the very start of value chain is does what it needs to do, you can plan the next step- actually transforming how things get done or even what gets produced. Don’t over analyze this, the time has come to act.