When Shannon Gath took the technology helm at AMAG Pharmaceuticals just over a year ago, the company was in the midst of an enterprise-wide digital transformation. One of her first actions, along with her commercial business partners, was to pump the brakes on a multimillion-dollar data management and analytics technology investment that was expected to streamline customer data, help the company better understand the customer environment, and lead to new customer offerings.
Despite the project’s solid intentions, “It wasn’t the right investment for us for the size of organization that we are,” says Gath, vice president and head of technology at the Waltham, Mass.-based company. A majority of the core capabilities they were really looking for already existed in a current platform and could be implemented with an upgrade.
That pause allowed Gath to introduce more governance around the project and gather consensus by asking key leaders, “Do we really want to make that level of investment at this point in time? Or can we solve 80 percent of the problem with an incremental investment to be re-evaluated at a later point in time? Are there other problems to solve in the organization with those budget dollars?” They ultimately agreed with her assessment.
“I believe in meaningful innovation, something very deliberate and purposeful,” Gath says. She’s not alone.
These days, the term “digital transformation” is often met with groans or eye-rolling from those suffering from digital transformation fatigue in the middle of this massive organizational change.
The term means different things to different people. For marketers, it’s all about shifting from salespeople to web sales and mobile sales. For the oil and gas industry or logistics companies, it means digitizing their supply chain and production facilities, or bringing analytics into their operational technology — and the pressure is on to innovate quickly. In any organization, trying to pinpoint goals and define success often leads to miscommunication and failure. Some big companies, like General Electric, have already stumbled in their enterprise-wide digital transformation efforts.
Organizations are taking heed, and many CIOs are pushing back at the notion of the Big Bang approach to digital transformation.
“Big Bang feels more like a leadership charge, an aspirational force to bend the arc of an organization as swiftly as possible, than it is the translated reality on the ground,” says Randy Gaboriault, CIO and senior vice president of innovation and strategic development at Christiana Care Health System, a not-for-profit teaching health system based in Wilmington, Delaware. “The whole concept of innovation is really an exercise in change.”
About two-thirds of companies involved in digital transformations tell Forrester Research that these efforts are enterprise-wide — not just targeted at marketing, sales or engineering — but directed from the board level, says Brian Hopkins, VP and principal analyst at Forrester. What’s more, 21 percent of organizations describe their transformation as being “done.”
“As they move forward, these organizations are realizing that it’s not a Big Bang, one-and-done project. They’re recognizing that you’re really never done with digital. It’s a road that you step on and walk on forever,” Hopkins says. Many CIOs have shifted to a more measured and thoughtful approach to the parts of digital innovation that they can control.
According to Forrester, while 56 percent of firms are transforming, their level of investment and scope of transformation are still mostly small. For example, only 34 percent of banks and insurers are even bothering to transform marketing and only 45 percent are transforming customer care — surprising given consumers’ mass adoption of mobile devices.
Here, several enterprise leaders describe their transformation journeys and their lessons learned in slowing down transformation to get it right.
Innovate without overwhelming
Blue Shield of California began its digital transformation in 2017 with a hybrid approach that was neither Big Bang nor incremental. “We’re doing something in between, says Michael Mathias, executive vice president of customer experience and CIO. “We want to move as quickly as we can, but not overwhelm the organization.”
The insurance company’s transformation includes digitizing all policy enrollment, claims and payments by late 2019. What started as a two- to three- month planning process turned into six to eight months when Mathias and his team realized how pervasive and potentially overwhelming the process would be. “We needed to bring not only the C-suite along, but the whole organization along for the journey,” Mathias says. “We realized we needed to do a better job of mapping this out for people, of really articulating what success looks like and what the commitment is, and doing the planning.” The goal was not to create another project, “but make it a part of our DNA going forward.”
Mathias spent months going through “iteration after iteration and sitting with subsets of senior teams and the CEO to really be clear about what success is and what the roles and responsibilities are,” he says.
Once the enterprise was onboard, Mathias’ team could pick up the pace with concurrent implementations, including digitization of its claims process by August 2019 and the enrollment process by October 2019. In all, the insurance provider’s the top six value streams have laid out milestones or work plans that are scheduled for completion by late 2019.
“No company can boil the ocean when it comes to [digital transformation],” he says. “Planning is so important, and with that, bringing people along to the understanding of why and how — that’s going to help you become successful,” no matter how long it takes.
Separating innovation from the organization
Some industry-watchers believe that GE’s digital transformation failure was partly due to its inability to separate its innovation arm from the demands of its many divisions.
“Making GE Digital its own business unit was a step in the right direction, but it also inherited the roles and responsibilities of GE Software. Digital transformation initiatives don’t need thousands of people. They need a small team with very little time and very little money,” writes Alex Moazed, founder and CEO of product development company Applico.
Christiana Care Health System moved its transformation strategy forward by separating its innovation trials from its traditional business. The organization developed a virtual care practice by organizing a small group of doctors, nurse practitioners and pharmacy experts outside of any of its traditional practices, where they could adapt, learn and scale faster and with less fear of failure.
When a patient wants to see a doctor, they can arrange a virtual visit via video chat, first with a nurse practitioner who can prescribe medications. A physician can be brought onto the call if needed, or the patient could be referred to a nearby urgent care center and be pre-registered to shorten the visit.
The journey from committing to a virtual care practice to its rollout took 10 months. “Our goal is not that this initiative is successful or it fails, but how quickly we can learn,” Gaboriault says. “We overly communicate that we don’t know if this is going to be successful; this is experimental. Your success [as a participant] is in how quickly you can help the organization learn. If it doesn’t work, let’s get that out quickly. If it does work, what’s working? We want to learn how many patients can this new model support. The average primary care doctor might have 1,500 to 2,500 [patients]. You could really bend the arc on the access [to health care] problem if you could scale that immediately to 30 percent more or five times more.”
Before any investment is made in a new innovation, Gaboriault asks a series of questions about how it can be sourced: Can it be done with one of our incumbent strategic solutions? Is it a capability of one of our strategic partners, such as our electronic health records platform, ERP platform, productivity platform, cloud platform? If not, is it on their roadmap? If not, is there a collaboration opportunity to bring this onto the market together? If not, then who in the marketplace has solved for this problem? If the market hasn’t created this solution, do we need to internally develop the solution?
Though innovation may take place quickly, strategic planning in the healthcare industry takes years. Christiana Care’s applied innovation group looks at disruptive technologies and their future effect on healthcare.
“We try to look seven to eight years out so they can think about a future state” that is comfortably far off, Gaboriault says. “Then we look backwards from there. In order to be ready for that in five years we have to start building that competency two to three years before we have to be good at it, and a year or two before that, how you’re going to approach it and plan a budgeting cycle around it. So we have to think about things that might not emerge for five years before we have to be good at it.”
Meaningful innovation through governance
For any meaningful innovation to take place, getting governance right is half the battle, says Shannon Gath at AMAG Pharmaceuticals.
“You need to have solid thought leaders that can look through an enterprise lens,” she says. “You need to have all the functional areas of the organization really represented so you can understand for every dollar you have what’s the best place to spend that money across the organization?”
Instead of having the technology organization prioritizing on its own behalf or the business just giving demands, the organization needs a cross-functional governing body that has “healthy debate and unity of command,” Gath says. When decisions are made, “you’re all rowing in the same direction, and there’s no going back. Otherwise you’re not getting the change out fast enough and realizing the benefits soon enough.”
Strong governance also ensures that the squeaky wheel is not getting all the attention, she says. Gath requires those submitting requests for funding to answer four key questions: Describe the problem they’re trying to solve, define the actual direct value we can expect from the investment, outline the risks, and lay out the estimated cost.
“Do that for each opportunity, then you can at least weigh apples to apples against each other. It helps to drive accountability.”