January 10, 2017Doug Hadden
This post ties up the series on the organizational change management “perfect storm” facing emerging economy governments. This comes from questions at Inter-American Development Bank workshop, The Cutting Edge on Information Technology on Public Financial Management last month. This organizational change management “perfect storm” combines the challenges of large IT projects, government projects, emerging economy context and digital transformation.
Governments are no longer satisfied with improving “systems of record”. The move to “systems of engagement” requires new ways of looking at technology. “Effective change management is imperative to making the transformation from ‘doing’ digital things to ‘becoming’ digital,” according to a Deloitte and MIT sudy. Meanwhile, McKinsey suggests that “the reported failure rate of large-scale change programs has hovered around 70 percent over many years.”
The Gartner Group observes that “digital government is government designed and operated to take advantage of digital data in optimizing, transforming, and creating government services.” This is the purpose of “systems of engagement” in government.
Beyond Citizen Services
Much of the government digital transformation literature focuses on citizen services improvement. That makes perfect sense because of the efficiency and effectiveness benefits of digital: lower costs, greater productivity, improved citizen satisfaction. There’s no question that 24/7 government digital services can reduce government costs while reducing the time burden on citizens and businesses.
Comprehensive “digital thinking” goes beyond improved services to engagement. Engaging civil society to overcome difficult problems. Engaging businesses to create better infrastructure for sustainable growth. Open innovation. McKinsey has described the benefits of “co-creation of solutions with private sector and citizens.” Governments who leveraged the combined wisdom of citizens are more likely to overcome “wicked problems.”
Digital Change Challenges
The Gartner Group has observed that “while digital transformation is having a major impact on private sector organizations worldwide, its presence in government remains at an embryonic lebel of development.” Organizational change management in government is a contibuting factor. Government organizations are faced with significant challenges with digital transformation initaitives.
- Operational core: Digital transformation means fundamentally changing processes, not digitizing existing processes for incremental improvement. According to the Institute for Government, “digital is not just for geeks anymore – everyone in government must work to make it a success.” This introduces anxiety about achieving mission and meeting legal obligations are processes are transformed.
- Planning cycle changes: The government “yearly cycle for planning, budgeting, and project initiation will not suffice anymore,” according to Raj Ramesh of the Cutter Consortium. This introduces the “how things have always been done” change resistance.
- Hierarchy changes: “Speed is the key factor that companies need to consider: digital organizations move fast. In large and complex companies, this means reducing reliance on hierarchies, and leveling hierarchies requires reliance on collaboration,” according to the Boston Consulting Group. This changes the entire structure of government career planning. According to Deloitte: “For public bodies across the globe, the hierarchies and governance structures are often more pronounced than in the private sector.”
- Cult of the ‘expert’: Public servant specialization and experience can perpetuate the view that outsiders do not have sufficient expertise to provide insight. Governments also seek external specialists as advisors. The creates environments where citizen engagement is considered lip service rather than empathetic exercises.
- Government-wide: Digital transformation respects no organizational boundaries. According to Amanda MacAuley of CapGemini: “Many current digital initiatives are specific to the remit of an individual department and its need for transactional improvements, instead of being based around real user needs and the citizen’s life events. These approaches are ineffective because they focus on individual transactions within a department rather than on citizen events.” Gartner Group suggests that “government agencies and departments continue to operate in silos, creating a barrier to delivering cross-cutting (or horizontal) services that are now made possible by digital technologies and data.” Digital transformation introduces change to the nature of planning, from silo to whole-of-government introducing the anxiety that power and influence will be reduced.
- Eliminate legacy: Government organizations are hampered by the reliance on legacy technologies and structures. Many public servant careers are predicated on legacy technologies and legacy thinking. Digital transformation introduces threat.
- Lack of implicit certainty: Many government investments are made based on the fictional certainty of positive future results. Public investments are made and contracts tendered based on a “waterfall” set of milestones. The notion of digital transformation with experimentation, learning and “failing fast” is not culturally compatible with risk-adverse government organizations.
The Process of Digital Transformation in Government
Effective government digital transformation is not for the feint of heart. This comes at a time where citizens are suspicious of government digital investments, according to Forrester. There are fundamental changes to government IT planning and execution necessary to succeed.
- Long-term vision: “More digitally mature organizations,” according to Deloitte, have long-term coherent digital strategies. This must cross organizational boundaries to overcome the traditional “multiple disconnected point technology solutions that provide a limited ability to obtain a consistent view” of citizens, according to Ovum. Digital objectives should be aligned with government priorities, according to McKinsey.
- No new rules: Public sector organizations “tend to rely on a familiar but ultimately unhelpful set of remedies. These remedies often revolve around creating more rules to prevent bad things from happening or revising the organizational structure through new roles or reporting lines,” according to the Boston Consulting Group. “The problem with adding more rules is that it creates a compliance-based culture in which staff do not feel empowered to make decisions, and the organization becomes stymied by a growing pool of “checkers” and a shrinking pool of ‘doers.’ “
- Citizen journey mapping: “The public sector needs a deep understanding of: Why citizens need to interact with government The life event triggers for interactions The value of each interaction in the context of a citizen’s life events and needs The broader implications of a life event for government services.” This means that the citizen journey across organizations needs to be seamless.
- Agile Methods: Methods such as “design thinking” and “DevOps” enables digital redesign. “Governments must be willing to remake products, processes, and policies around what citizens want,” according to McKinsey. This requires “agile” iteration and experimentation. It also requires focus on “customer experience” or CX that Brian Sollis of Altimeter has found to be “the top driver of digital transformation.”
- Data-driven: Data must be used in driving digital transformation initiatives and as an overall outcome. Governments use digital to better instrument and monitor processes to improve services. According to Gartner, “The key to progress for digital government maturity is a singular focus on the exclusive use of data in designing and delivering government policies and services.”
Government Digital Transformation cannot be Avoided
Governments do not have competition for services. It could be argued that government could avoid digital transformation. According to IDC, “global digital transformation investment will reach $2.2 trillion in 2019.” Gartner predicts that “by 2018, digital business will require 50% fewer business process workers and 500% more key digital business jobs, compared with traditional models.” Gartner also speculates that the share of IT budgets for systems of record will fall dramatically by 2020. Government is not immune to changes in the IT environment. Deloitte suggests that citizen demand for better services will drive government investment in digital transformation. Governments are expected to provide the same quality and usability as consumer digital services.
Government Transformation Organizational Change
According to McKinsey, “governments typically center their digitization efforts on four capabilities: services, processes, decisions, and data sharing.” Governments should “digitize high-volume services first, they should digitize labor-intensive, costly processes before others.” Change is hard and there are no magic bullets:
- Compelling change story: According to McKinsey, “Engagement with employees and managers needs to have a context, a vision, and a call to action that will resonate with each person individually. This kind of personalization is what motivates a workforce.”
- Governance design: Digital transformation mandate should have, according to McKinsey, “organizational design mapped directly to goals.” This means that method changes, but mandate remains the same. Digital transformation projects can be viewed as core.
- Multiple Year Planning: McKinsey points out that “relatively placid experience leads to a “steady state” of stable structures, regular budgeting, incremental targets, quarterly reviews, and modest reward systems. All that makes leaders poorly prepared for the much faster-paced, more bruising work of a transformation.” Therefore, PFM reform with multiple year expenditure frameworks are necessary.
- Leadership empowerment: Senior government bureaucrats and Ministers do not design and implement digital transformation. They empower, though what McKinsey calls “leadership commitment and awareness of trends and opportunities.” This empowers project leadership.
- Establish boundaries: Empowerment requires everyone understanding project and mission boundaries. According to the Boston Consulting Group, “this is a big organizational and cultural change, and implementation is difficult. Companies that get it right design guidelines at the top, which establish the boundaries within which empowered employees can collaborate and make great things happen.”
- Experimentation incentives: Empowerment needs to enable experimentation. According to Gartner, this means a: “focus on creating a culture that is less averse to change and more unified in its vision and direction — one that can manage change more effectively over longer time frames.”
- Leverage investments: Governments should build on efforts, even failed initiatives to leverage the investment. As Raj Ramesh of Cutter: observes “two principles of well-engineered digital systems that we’ll focus on are modularity and reconfigurability.“
- Talent Incentives: According to McKinsey, governments need to attract “Technical and implementation talent (and use) programs to attract and retain digital workers.” Digital transformation should become an accelerated career path for public servants.
- Transparency: Transparency about digital transformation goals and outcomes is necessary for public service buy-in. As McKinsey points out, “transparency can strengthen the public’s trust in government and its civic engagement,” increasing citizen adoption.
- Data-Driven governance: Advanced analytics should be used in digital transformation, according to Gartner, “to predict what is likely to happen in any given situation and prescribe the best course of action when the event occurs.”
- Build on commercial tools: According to Raj Ramesh at Cutter, organizations “cannot afford to build everything from scratch. Rather, the thinking should be about architecting, designing, and building small blocks of business value that can be reconfigured and recombined in many ways to adapt.” This approach of small wins reduces change resistance.