The Four Minds of Digital Transformation
The Four Minds of Digital Transformation
How to Make Adaptive Changes That Stick
Often, when companies make an organizational transformation, there is understandably a lot of uncertainty, challenges, and hurdles to successful implementation and adoption. It takes work to streamline processes and get everyone on board. These issues are only elevated during digital transformations (DT). And without successful adoption, the change will ultimately fail.
The Harvard Business Review reported that studies have found that an average of 87.5% of digital transformation initiatives fail. Yet, they remain a top priority for most companies. Organizations saw a massive push for digital transformations during the pandemic, and now this trend continues as companies strive to modernize and innovate into the future.
Therefore, relying solely on traditional change management practices is insufficient in today's rapidly changing landscape.
So, what is the key to a successful DT initiative? One revolutionary tip is to consider the initiative through the lens of the "Four Minds"—strategy, operations, technology, and data. This holistic approach helps organizations strategically navigate uncertainty and achieve remarkable growth.
I recently sat down with Paul Higgins to discuss the concept of the Four Minds.
Watch the full episode here, on YouTube, listen on Spotify, or keep reading to learn more about the keys to successful implementation and how to transform obstacles into achievable outcomes that stick.
What is the Theory of The Four Minds?
In today's tumultuous world, patterns and predictions are becoming less reliable and consistent. For example, data patterns that were true and reliable before the pandemic are no longer relevant. Despite best efforts to define “the new normal,” there is not enough data yet to determine a new baseline. Furthermore, solutions often do not exist and must be created.
Therefore, organizations must shift their focus from looking at things as they’ve been in the past to looking at things from multiple perspectives—almost a 360-degree view of the desired outcome.
The theory of the Four Minds defines four particular ways of thinking that surround every challenge or outcome and are necessary to produce a solution capable of creating systemic change. These four essentials are strategy, operations, technology, and data.
Why are The Four Minds Important?
Conventionally, here is how DT has come about:
The strategy person starts with their big idea > The strategy person asks the operations person to make their big idea true > Operations looks to the technology person to determine what technology would be needed for the big idea > The technology person asks the data person what data is available to support the idea.
In this scenario, each of the Four Minds acts as a distinct function. When answering questions, everyone involved naturally draws on their previous experience and success to try to emulate or recreate those achievements. Since everything is siloed like this, the strategy person thinks about the idea only from a strategy perspective, the operations person thinks only from an operations perspective, and so forth.
What is wrong with that?
The point of the Big Idea is to take the organization somewhere it’s never been and create a new, better reality that doesn’t exist yet.
To get to that new reality, the team has to work together. Instead of being completely siloed, team members must understand each other's disciplines enough to recognize that all four parts are necessary to solve a problem.
In other words, a technology problem can’t be solved with just technology. It requires the other three Minds’ perspectives to be successful.
How Does The Four Minds Go Beyond Just Collaboration?
This idea of collaboration is not unique. Many organizations are pushing toward building interdisciplinary, interconnected teams.
However, these teams are usually organized around shared outcomes rather than particular functional areas or metrics. This is a crucial distinction of the Four Minds.
During a transformation, utilizing teams based on the four functional areas elevates the organization past the idea that any individual has a unique insight that the rest of the team must wait for. No one is going to come down off the mountain with a stone tablet to tell the team how to best move forward. Instead, the team has to move forward together.
How Will AI Technology Impact the Future of Digital Transformation?
For a while now, technology and IT functions have transitioned from being isolated functional areas to being integrated into all facets of business.
For example, what used to be called ASP became the cloud, which facilitated the widespread adoption of cloud infrastructure, and now there are SAS-based business models in play.
Now it is the same situation with AI technology. Using the Four Minds perspective, AI is a function that needs to be embedded inside the organization rather than a functional area that sits separate from everything else.
For example, business analysts might consider AI functionally under operations or business intelligence, but in reality, these functions sit side-by-side with the business line leaders, the directors, and the vice presidents to ensure a holistic, organization-wide understanding of what's happening, what could happen, and what is likely to happen at any moment.
Therefore, the most significant success factor for AI-based digital transformations is whether business leaders find value in the technology's ability to drive or solve a specific business outcome rather than its capabilities.
Some of the most popular and successful implementations of AI technology so far are programs like Grammarly and ChatGPT. Their success comes from the fact that they efficiently help solve a business problem. No one needs to go from person to person to champion the programs to individuals.
In the next five years, every organization will likely have to reconcile its system architecture, data flow, and business processes to centralize, integrate, and simplify.
It is also likely that the complexity of AI technology will decrease to make it more accessible in the commercial market. However, as this technology is still in its beginning stages, it is yet to be seen how it will take shape.
How Can Organizations Use the Four Minds to Improve Digital Transformation Success Rates?
Remember, about 87.5% of DT initiatives fail. These failures often result from poor adoption rates, incorrect technology use, and poor change management. So, what is the key to success?
There are two technical elements of any transformation: there is a defined problem and solution, and there are adaptive elements.
The process goes:
Define the problem > Design the solution > Test the solution > Implement the solution
Many organizations make mistakes by spending too much time on the technical aspects of defining, designing, and testing and not enough time on the implementation.
Right now, the world is being thrust into a period of creation, innovation, and entrepreneurship, so we have to equip people with the knowledge, skills, and tools necessary to work through the challenges and love the process rather than just focusing on the end result. This skill is not taught in business school, so adaptive leaders have to model this perspective for others and be adaptive.
Many people fail when they view everything as a technical challenge rather than an adaptive challenge. When people lose sight of the process, they become disengaged and drift, and eventually, implementation gets pushed aside as everyone has other more important things to do.
Once a project is deemed dead on arrival, the DI initiative will fail before it has a chance to start.
Another way to put it is that DI will fail if people continue to view digital as a tool. Some people won’t want to learn to use a new tool, don’t think they need to use the tool, or prefer to use a different tool.
But digital is not a tool. It is a way of thinking about the customer experience and a way of operating that creates accountability, transparency, and visibility across an organization that helps identify what is being delivered to the customer and any frictions that might exist in the workflow so they can be resolved.
What Makes a Great Adaptive Leader?
Great adaptive leadership is characterized by humility, curiosity, experimentation, effective communication, and internal capabilities.
First, a good adaptive leader must have enough humility to realize that their past success does not guarantee future success. As noted earlier, data patterns are no longer accurate or reliable, and technology is advancing quickly, so leaders must be very adaptable during this dynamic time.
Second, they must be extremely curious about what they don’t know, figure out what they should know, and learn from others to see what others know. This builds off of humility because one must be humble to acknowledge that they do not know everything and always have more to learn.
Third, good adaptive leaders must also have a sense of experimentation. They exercise structured experimentation where there is some risk of failure, but any failure will be in service to future success or learning. Adaptive leaders create a culture of learning in their organization where they can learn, grow, and expand by experimenting and creating continuous feedback loops.
Furthermore, good communication, especially written communication, is an essential element of an adaptive leader. To have a successful transformation, it is critical that everyone in the organization is aligned on the problem, the cause of the problem, how success is defined, and so forth. Everyone needs to be on the same page.
Lastly, a good adaptive leader must understand the organization’s deficiencies that could inhibit implementation and be willing to build those capabilities up in a sustainable way that will lead to success, even if there is an associated cost. They must be ready and willing to do the work to prepare for, implement, and sustain effective change in the long term to have success.
Learn More About The Four Minds and Adaptive Leadership
For more insights on The Four Minds, listen to the full, in-depth conversation between Ben Stroup and Paul Higgins on YouTube or Spotify.
You can also read my latest books:
Great article, Ben. I always enjoy reading your weekly posts. Loved your emphasis on valuing technology based on its "ability to drive or solve a specific business outcome rather than its capabilities". Reminds me of how I present data analytics to churches and ministries - its purpose is always "to drive an organization to make a more effective and efficient ministry decision". I appreciate you sharing your wisdom and experience through these posts. Have a blessed week, friend!