I’m currently in the process of teaching my teenage son how to drive. Oh sure, he took a class of some kind before school transitioned to remote learning that provided some “book smarts” on driving. But as any parent who’s been through the process can attest to, the real learning comes in the form of the behind-the-wheel time, which in Virginia (where I live), falls mainly to the parents. I’m finding that for my son -- much like my daughter when she learned before him -- one of the hardest concepts for new drivers to get comfortable with is the idea of accelerating through a turn. It feels counter intuitive to the motion of turning. In reality, the best way to ensure the car holds the turn and stays on course is in fact to accelerate at the apex.
Over the next several months, business leaders will be faced with their own symbolic "turn" as they look to recalibrate the future direction of their business. As such, leaders will face the uncomfortable feeling of accelerating parts of the business to encourage the right go-forward progress. Weighing this process down is the lack of certainty in many areas, as well as knowing one of the few certainties they can factor in is an economic downturn of significant levels.
In all likelihood, some of the ambitions organizations held as part of their digital transformation plan will need to be suspended as a result of the global health crisis and corresponding decline in IT spending. Given all this context, I was encouraged to see a survey of Fortune 500 CEOs report that 75% of leaders believe technology transformation would accelerate as a result of the current disruption.
Part of the reason for the focus on acceleration is tied to the fact that most organizations are finding the areas that had undergone some level of transformation prior to the pandemic have been less impacted in terms of sustaining business operations. In other words, organizations more advanced in their Digital Transformation journey proved to be more resilient in the early phases of crisis response.
Consider the four critical pillars of business transformation driven by technology: workforce transformation, consumer transformation, ecosystem transformation and infrastructure transformation.
Organizations that had made strides in transforming the workforce towards a ‘work anywhere’ capability certainly didn’t do so with the idea they would be forced to shift the vast majority of workers to work-from-home in a matter of days. However, those capabilities came in handy in the early response to the pandemic.
Organizations with an advanced approach to coordination with their expanding vendor/supplier landscape were in an advantageous position. They were able to shift workloads, data, etc across their ecosystem provided they simultaneously advanced their understanding and view of risks across that transformed supply chain.
Since every company’s consumers immediately became inaccessible physically, those with remote work capabilities saw fewer disruptions. Others scrambled to transition to some level to digitize elements of physical product or service delivery, but those managing true digital businesses (i.e., those where the product/service itself is digital) saw not only fewer disruptions, but even a spike in demand.
And finally, through ongoing infrastructure transformation, organizations were able to minimize disruption of critical IT systems and applications that were already cloud or SaaS-based.
Despite the proven benefits these and other areas of digital transformation are yielding during the crisis response, most organizations will face tough decisions around the future of business transformation projects in light of increased economic pressure. The decisions that leadership make over the next 8 - 12 months related to core areas of focus, and associated investment, will be the most critical and sensitive to successfully get the adjusted strategy on-track. Business leaders will be faced with the sense of having “one chance to get this right," which in turn will force a focus on fully understanding and mitigating all risks associated with the go-forward strategy.
I hear from customers that many security and risk management teams are inconsistent in applying risk assessments to new projects. That discipline has to change, and has to encompass all three aspects of enterprise risk:
- Strategic Risk (should this be our go forward strategy?);
- Operational Risk (can we execute this strategy and operate in a resilient manner?)
- Technology Risk (what is the role of technology in enabling this operational future and what new risks does this use of technology introduce?)
Finding the right balance requires the assessment of risk to include the expected value of the initiatives (which for go-forward digital transformation efforts will have to be high) and the costs associated with mitigating those risks. CIOs who come to the table with business cases that lack this understanding of “value at risk” will be much less successful in gaining funding for their transformational efforts.
The economic downturn will also force organizations to scrutinize certain business operations (both existing and planned). They'll be analyzed in terms of addressing a true core competency versus an operation better outsourced to a partner suited to deliver results efficiently. Those areas that do remain core will need to be accelerated and optimized through digital transformation efforts, creating a "fewer but faster" mindset that will need to be balanced by the needs to understand risks.
Risk assessments will become an expected element of any strategic plan or investment ask; however, the approach to traditional risk assessments are too slow, too siloed and unscalable to accommodate digital business. Response to the current health crisis has shined a bright light on organizations’ ability to quickly assess the operational impact of the inaccessibility of people, process, technology and ecosystem partners. Going forward, organizations will need to enhance their view of true business risk to ensure resiliency and to help align the precious resources they do have for investment in areas that are truly critical, both strategically and operationally.