Strategy & Leadership

Creating digital transformation: strategies and steps

Haydn Shaughnessy,
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Haydn Shaughnessy, (2018) "Creating digital transformation: strategies and steps", Strategy & Leadership, Vol. 46 Issue: 2,
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 Creating digital transformation: strategies
and steps
Haydn Shaughnessy

lmost every major company is in some phase of “digital transformation,” an Haydn Shaughnessy is the

A on-going company-wide initiative requiring a multitude of technical and

cultural changes. As they make the technical changes needed to
coauthor of Flow: A
Handbook for
Change-Makers,
continuously compete in the digital era, the entire company must constantly be
Mavericks, Innovation
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mindful that the true goal of their work is providing value to their customers. Activists and Leaders.[1 ]
Implementing this goal at the pace needed to be competitive will require dramatic Shaughnessy advises
cultural changes. businesses on platform
and ecosystem strategy.
For leaders to guide their companies through the transition to digital culture, a sea
He was previously chief
change for established businesses, they must be able to understand and explain that editor at Innovation
culture in the context of the values and the flows of work that make digital-age Management and a
companies successful. columnist at Forbes.com

The FLOW-Agile framework

Looked at in terms of values and work flow it is possible to define a new set of practices
that focuses on creating a flow of multi-layered, daily innovation delivery rather than
individual instances of digital projects. To facilitate the cultural and technical changes
that are a hallmark of successful digital transformation, a few leading-edge firms have
adopted the principles of FLOW-Agile, an adaptation of the Agile framework
designed to enable small teams to accomplish rapid iterations of customer-focused
projects in a networked system. The FLOW framework formalizes a visual
representation of a company’s adaptive value-seeking process being implemented
by Agile teams.
Digital transformation powered by FLOW-Agile involves:
n The large-scale visualization of all work so that all teams perceive their role in producing
value.
n A concept of work done in units that are small enough to be modifiable, flexible and fluid
and therefore faster and more adaptive on a daily basis.
n Adoption of new social values that promote intensive, ongoing interaction in the firm.
n The prioritization of value-seeking activity in all work, whether in the executive suite or
the call center.

Significantly, FLOW-Agile does not focus on technology, but instead on the people
doing the work and the power of their innovative interaction. Technology, nonetheless,
looms large.

DOI 10.1108/SL-12-2017-0126 VOL. 46 NO. 2 2018, pp. 19-25, © Emerald Publishing Limited, ISSN 1087-8572 j STRATEGY & LEADERSHIP j PAGE 19
 “For leaders to guide their companies through the transition
to digital culture. . .they must be able to understand and
explain that culture in the context of the values and the
flows of work that make digital-age companies successful.”

Each of today’s breakthrough technologies pushes companies to scale up new

solutions for customers quickly, offering a wider variety of opportunities, services or
products, and doing all this at unprecedented speed. Some companies now update
their systems multiple times a day – the number of companies performing daily
releases to software systems has increased each year since 2014.[2] In such digital
environments, breakthrough customer value is derived from the ideas about
features, functions and concepts that need to be elicited and then shared, tested
and implemented many times a day. Firms suffer inefficiencies when those ideas
take too long to surface, when executive portfolios absorb too much time with
irrelevant work, and when different parts of an organization such as IT and various
operating units, see opportunity in different ways. To be successful, a culture
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change has to focus on bringing these groups together, not just in a common
purpose, but also in a real interaction that continuously seeks value.
The problem most companies face can be stated simply:
How can management make certain their corporate activities and investments are helping their
customers to succeed in a way that is sustainable – economically, for the firm, environmentally,
for the world, and morally, for society– and giving the company the capacity to seek new
opportunities and expand its markets?

To respond to this, executives need to think in terms of a flow of activities. But in the digital
arena the “flow” is not so apparent.

Making work visible

Making visible representations of digital projects that reflect the goal of customer
value allows people to track important work-in-progress and get a sense of how
well thought out a set of ideas underlying the initiative might be. And when work is
visible people interact around it. In the 2000s, software developers began to use
visible techniques borrowed from Lean and KanBan process methods. Agile teams
began using Post-It notes to walk through knotty problems. Nonetheless, the levels
of visibility development teams are now creating and encountering at work are still
not matching the needs of organizations for a fully social and interactive culture.
In FLOW-Agile, the aim is to make all processes visible on the walls of operating
units and to allow employees to collaborate in constant process redesign so they
are continuously defining the best way to get work done. In addition, companies
are having success when they create Walls that are specifically aimed at bolstering
interaction –”Thank You Walls,” “Cool Walls” and so on (see Exhibits 1 and 2).[3]

Creating new units of work and greater velocity and adaptability

Visible work on its own would not necessarily foster transformational velocity and
adaptability. The answer lies in the redesign of units of work.
Breaking out of the project mindset. Traditionally most work has either been part of a larger
process – the assembly line, the supply chain, the front office or back office – or it has been

PAGE 20 j STRATEGY & LEADERSHIP j VOL. 46 NO. 2 2018

 Exhibit 1 In FLOW-Agile, the aim is to make all steps in a digital process visible on the
walls of operating units and to allow employees to collaborate in constant
process redesign
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part of a discrete project with a beginning, middle and end, fixed budget, milestones and
deliverables.
From the late 1990s onwards, the software community began to function in smaller units of
work, disaggregating large software development projects into shorter Agile ones. The
boundaries imposed by project management were replaced with software ideas like story
telling – Epics and User Stories, Retrospectives – and adaptive techniques like sprints. This
drove units of work down to 1-3 weeks, instead of months. But IT developers have adopted
even shorter time units of work.
Software architecture is now characterized by microservices – the decomposition of
software itself into many parts that communicate, requiring the rapid integration of
development, testing, and operations (DevOps). The consequence is a continuous delivery
of change and innovation, often several times a day.
In that environment, units of work are shrinking to a day or so. Work is broken down so that
every day or so teams come back together with some customer-value-enhancing
achievement to show.
Micro-units, visible work and social interaction. By using visible representations of work:

1. Everyone can contribute to the design of the work thus increasing the use of collective
intelligence.
2. People continuously interact to perform these short units of work. In effect the team is all
on the same page.

3. The team is more able to respond to micro-trends or smaller, valuable customer

segments.[4]

VOL. 46 NO. 2 2018 j STRATEGY & LEADERSHIP j PAGE 21

 An example of managing using smaller units of work

A recent corporate digital project initially planned to use big data analytics to study
customer behavior, a l process estimated to take many weeks. Instead, team members
proposed conducting a survey via Twitter. The actual survey can be done in just two
days with several 1-2 day work units to support the main goal. Short units of work need
to be targeted at a specific goal: For example, “Enhance company understanding of
customer attitudes to auto-servicing.”
The work units around such a task would be:
n Select analytical tools (1 day)
n Draft brief questionnaire (1 day)
n Create incentive scheme for Twitter respondents (2 hours)
n Conduct risk analysis (1 day)
n Test internally and report (1 day)
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n Finalize questionnaire (4 hours)

n Refine risk analysis (4 hours)
n Create analytical matrix to automate data outputs (1 day)
n Design two-day social media campaign and launch (2 days)
As most of these tasks can run concurrently, the whole program could be completed
within a week.

Improving social interaction – especially around business goals and IT work – and
to promote collaboration
Given the sheer volume of work required to deliver digital services, teams can’t afford to
take the time to set up a sequence of processes to do the same thing repetitively as a test
and then hand it forward:

1. Most digital offerings are being rolled out for the first time, a series of one-off technology
introductions.

2. Most of these require teams to invent operational processes as well as the features,
products or services that customers want.
3. Knowing which features or services add significant value for customers is not obvious.
Creating and adding value are skills that need some new sensibilities.
To accomplish this, digital savvy start-ups have a noteworthy advantage – an intense level
of social interaction between all stakeholders. There are no barriers to talking, showing,
justifying and course-correcting. Work is visible to a committed community. How these
digital natives can adapt their systems at high speed is exemplary.

Case: How FLOW-Agile enabled 130 million transactions daily

Paddy Power Betfair is an online betting site that initiated a completely new system of open,
visual and collaborative project and process design from 2012 onwards as it prepared to
become a mobile-first company. Paddy Power serves more than 3.5 billion application

PAGE 22 j STRATEGY & LEADERSHIP j VOL. 46 NO. 2 2018

 Exhibit 2 This wall shows the type of visualization used in companies like Paddy Power
Betfair and Aviva, where each Post-it note, like the enlarged sample, contains
up-to-date information on value, benefits, beneficiaries, blockers and target
dates
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program interface (API) requests every day–a number similar to Netflix, eBay, Facebook, or
Twitter, according to infrastructure provider RedHat. It handles around 130 million
transactions daily–more than 10 times the number of daily transactions at the London Stock
Exchange. These levels of performance are supported by the FLOW-Agile concepts.
In 2012, the company needed to make rapid progress on a new online platform without any
loss in business continuity. To design a fast-track approach, software leaders were left to
define their own methods. This led them to abandon their existing work processes and
replace them with a work environment where part of the job to be done was inventing the
process, deciding the tools and prioritizing the possible!
Similar radical approaches have been adopted by companies like Spotify, the music
streaming site, Netflix with its very overt anti-process philosophy and of course Facebook.
Here’s how Paddy Power developers describe their experiment with finding their path,
iteratively, to a new way of work.
“Flow started for us,” explained Sean Twomey an early evangelist of FLOW-Agile at the
company, “when we had a requirement for a new platform and a very short deadline. We
had about three months over the summer to get something very significant done. But it was
clear we weren’t going to meet all of the business objectives set out for us,” he recalled:
“That put us in a position where we had to make critical decisions about what actually to do. And
we had to act fast,” he said. “We drew out on one of the walls everything that we felt had to be
built, at a high level, which led us to mapping up a series of goals, each of which represented a
significant independent deliverable to achieve a business outcome.”

VOL. 46 NO. 2 2018 j STRATEGY & LEADERSHIP j PAGE 23

 He explained: “That meant what we were doing was very visual from the start. Being visual
facilitated some decision making, which we needed because we couldn’t achieve
everything asked of us.”
‘When we had the goals we began translating those into projects, loosely defined in the
sense of being a series of work units rather than anything in a project management plan. We
also started to do some work breakdown, specifically what we could achieve within a week
so we didn’t go wandering down blind alleys. We didn’t try to break all the work down, but
just enough to get us going and get us to some demos:”
“What was very powerful was that this visual, the goals and the initial breakdown of work, was
something that every business analyst, developer and tester had to walk past several times
every day. Everybody could see it, and they had a chance to contribute to it too.”

In short, the work flow represented on the walls of the building fostered a sharing process
as people frequently gathered around the walls to offer opinions, help to design process,
suggest tools, support colleagues and report on work done. Another important step was to
empower software developers to question the value of the work allocated to them. That
created more dialogue across the interface between IT and the business functions teams.
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Seeking value and becoming value-seeking

Multidisciplinary teams must cooperate in defining how the enterprise is going to
define value-seeking. In FLOW-Agile settings, value is sought in a number of ways:

1. Informed customer segmentation. Up-to-date segmentation cognizant of emerging market

trends creates better targeted innovation. It needs to be dynamic and inquisitive.
2. By making a statement of proposed value. At the beginning of any initiative, teams can
hypothesize what they believe will create value for those segments, and how they might
test those assumptions.

3. Better work breakdown. In breaking work down, teams prioritize work that has value and
cancel initiatives that don’t. By progressing with small units of work it is possible to
make a statement of purpose for each unit.
4. Integrated feedback loops. Engineer projects so that feedback loops are constantly
creating information for strategists and other teams.
5. FLOW optimization. Periodically it is valuable to conduct FLOW Optimization Analyses
to check whether the systems, routines or services in use add value or not.

The how-to steps

Enterprises need to move towards continuous innovation, seeking value over spans of time
as short as 2 or 3 days. Work design has to change to meet those needs.

“To facilitate the cultural and technical changes that are a

hallmark of successful digital transformation, a few
leading-edge firms have adopted the principles of
FLOW-Agile.”

PAGE 24 j STRATEGY & LEADERSHIP j VOL. 46 NO. 2 2018

 “The FLOW framework formalizes a visual representation of a
company’s adaptive value-seeking process being
implemented by Agile teams.”

A digital company employing FLOW-Agile to seek and deliver customer value has these
distinctive features:

1. Creating visual work processes that reflect customer value goals.

2. Creating new units of work and increasing velocity and adaptability.

3. Improving social interaction to create value.

The benefits are better interaction around units of work, a more collaborative work
environment and faster and lower cost innovation. The first step in this process is to begin
the discussion internally. Companies can establish FLOW-Agile Circles to discuss critical
issues of existing culture and new culture: Key questions for discussion:
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1. What really blocks innovation in our organization?

2. Does our Agile practice truly break with the traditions of project management?
3. How can the business marketing and strategy functions and IT collaborate on creating
dynamic customer segmentation to drive appropriate, value-rich innovation?
4. On which new initiatives could we adopt visualization, new units of work, more
collaboration?
5. Create the first FLOW-Agile team.

Notes
1. Fin Goulding and Haydn Shaughnessy, FLOW: A Handbook for Change-Makers, Mavericks,
Innovation Activists and Leaders, FLOW Academy; First edition, October 23, 2017, 200 pages.
2. “Going to Market Faster: Most Companies Are Deploying Code Weekly, Daily, or Hourly,” Asimi
Novack, New Relic, February 4 2016 https://blog.newrelic.com/2016/02/04/data-culture-survey-
results-faster-deployment/
3. FLOW: A Handbook for Change-Makers, Chapter 6 “Rolling Out Visible Work.”
4. Haydn Shaughnessy “Continuous Innovation: the Basics”, www.flow-academy.net/blog/step-2-
continuous-innovation-the-basics?categoryId=30472

Corresponding author
Haydn Shaughnessy can be contacted at: haydnshaughnessy@gmail.com

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