Think at London Business School: fresh ideas and opinions from LBS faculty and other experts direct to your inbox
I have been significantly involved in transformation at Vodafone for five years. Even in that short period, the landscape has changed dramatically and we have begun a process of digital transformation that has involved a complete rethink of how we do things.
At the outset it’s natural to feel overwhelmed at the scale of change required throughout the organisation. But, by shifting the mindset from “How do we react to the threat?” to “How do we harness technology for the good of our customers?” transformation can be achieved in a way that brings interest, fulfilment and purpose for the company and its people.
Before you begin the journey, it’s crucial to break the process down into three aspects: the ‘why’, the ‘what’ and the ‘how’.
Don’t fall into the trap of making it about cost reduction. At Vodafone we had numerous conversations to the effect that we must not start with this as the ultimate aim, otherwise we knew the company would never break out of current ways of thinking. Your organisational DNA may be about reducing costs, but when thinking about digital transformation you have to start with the idea that it’s all about making a positive impact for customers. You need to cling to the belief that, through a pure focus on customer-centricity, good will come for the organisation. Hence the primary ‘why’ is about serving customers better; whether that is the experience they have or the solutions you deliver to them.
But of course ‘why’ is also about productivity and efficiency: how to do things better and save money to reinvest in the things we need to do for the future. And it’s about making work more fulfilling and more interesting for employees, giving them some new ‘hooks’ in the world of work, because there is great apprehension about what the future holds. So the message is: “This is interesting and exciting for us as individuals.” This is a big part of the ‘why’.
The ‘what’ can also be categorised into three areas. At Vodafone, and probably for many companies of our size, these are: the commercial work we’re doing; the technology work; and the work we’re doing internally, namely our operations in terms of processes. For us, it was important to ensure that all workstreams fitted into one of these categories.
Once these have been identified, you can start to narrow the focus to look at, for example, people practices. This could begin with looking at the brand and refreshing it.
For us, this consisted of sending out the message that we want to be a partner with people on their digital journey. Another decision we took was not merely to refresh the external brand, but to make sure that the internal brand aligned with the external, so they were exactly the same. The future is exciting. Ready?
You need to step back and consider: What is the actual purpose of your brand? We already had a very compelling purpose to ours – to help people live a better today and build a better tomorrow. But this begs the question: How do we wrap that up and make it more meaningful in everything we are doing? How do you increase the volume? If you look at Vodafone, you see a huge focus on purpose: why are we doing it? What is the real purpose of the company?
‘You have to focus on the very few things that will move the needle and really make a difference’
And, besides the fact that it’s the right thing to do, you have to bear in mind constantly that it must be done in the context of digital transformation because, if you want to attract and retain in-demand skills, the question any prospective employee is going to ask you is, “What is the purpose of your company?” You need to have a compelling purpose that attracts those people and allows them to thrive in your organisation.
This means not just identifying the purpose of the company, but a purpose that includes senior management and all employees. The talent will not join your company unless your purpose aligns with theirs. For companies, the question becomes not simply “How do we do things?”, but “How do we do things that have a positive impact on the world?” This is a huge change in how companies behave and is a key aspect to address in transformation, especially with regard to attracting specialists and those who have a real vocation. You can’t get these people to work simply by telling them what to do – they will decide for themselves. In effect, the question of purpose becomes not simply about intrinsic merit, but is an essential ingredient in competitive survival. If you are in a tight labour market where the specialists you need are in high demand, the differentiator for them is: Is this work meaningful and fulfilling? So, regardless of how compelling the intrinsic merit of what you are doing is, you have to do it anyway, otherwise you simply won’t attract the skills you need.
The ‘how’ of what we are doing is really quite different to anything we have done before. In the traditional way of doing things in a globalised organisation, you centralise it, you figure it out and then you push it out. But Vodafone is a pretty decentralised organisation and most of what we do is done in individual businesses, because that’s how we serve our customers – our business model works best with decentralised rules. And the old way would be too slow and would not support any of the principles of empowerment, risk-taking and experimentation that are necessary to true transformation.
For that reason, we decided about a year ago to put a wrapper around all the digital work we’ve been doing and call it ‘The Digital Vodafone Way’. This was in order to encompass everything we need to do and, crucially, to signal to the organisation at large that it is business-critical.
The ‘how’ may vary according to industry and business but one aspect of it will not, and that is time. Money, quality and everything else you can somehow get back; time you cannot.
This can lead to paranoia, but doing it now is worth much more than waiting and doing it perfectly. We approached digital transformation with the attitude that we have got to do it and we have got to do it now because if we don’t, someone else will. We have been on this journey a long time, but it feels like we’re only at the beginning. This raises an important point about humility: the odds for big companies are not great. When you look at the many companies who have created a business model and then destroyed it, the chances of survival for many of us are not good.
And because time is of the essence and you know that there is only so much you can do, you have to focus on the very few things that will move the needle and really make a difference.
A key question here is: What is the trigger that’s driving the need for transformation? Often it’s an external event, such as a competitor’s move in the market, something coming out of Silicon Valley or the appointment of a new CEO. This can provoke a big shift in the way that the conversation goes in senior management. This is often a difficult discussion, because it means confronting the fact that you need to do things very differently.
At the outset, you inevitably ask yourself, “Is this a threat or an opportunity?” But as we started on the journey, we focused on the fact that we are a successful global organisation that has already gone through multiple transformations, from being a mobile company to being a significant enterprise organisation, with one of the largest internet-of-things platforms in the world, so in many respects we were well set to embark on transformation.
We have to move on from the defensive mindset that says: “How do we adapt so someone else doesn’t destroy our business model?” It’s very easy to have the conversation about transformation in fear mode, but you have to break out of that and approach it with a positive, opportunity oriented mindset.
So, rather than think, “Right – how do we decline as slowly as possible?”, we need to shift the question to: “What are the new opportunities?” and address what we need to do, whether it’s in the core business or somewhere at the edges, to make sure we can take advantage of technology.
There is a lot to change in our organisations. It must be led by the top and the people doing the work must feel empowered and excited as they go about the task. Yes, we are talking about technology, but what has to come before that is creating a human platform to be ready for it.