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Why certain organizations seem to master digital transformation lightyears faster than others? Over the last few years I've seen the whole range of digital development from different industries ranging from enormous leaps into complete stagnation. Reasons behind differ for sure, but there are still similarities to be recognized. One of them is to be closely related to the industry where the organization is operating. It seems that the more regulated the industry, the slower the digital transformation.
In practice, if a company is operating in an industry with much regulations, directives and control requiring a lot of reporting, inspections and insurance, the so-called culture of caution evolves easily. And as it does, the majority of time is spent on creating reports or other evidence to prove, that one can be absolute sure no mistakes have been done. With the core business that isn't a major problem - since that's what required for operating in the industry, right? But as employees are often involved in projects related to both core business and other functions, the same culture quickly affects all parts of the organization - including IT and digital development. I've found real life Finnish examples from industries like insurances, transportation, medicals and pharmaceuticals. Obviously regulations as such are not to blame - we wouldn't want to have our pension funds invested recklessly. However, as the same practices reach the parts of the organization that wouldn't necessarily need it, the speed of development decreases at the same pace as the amount of pages in procedures, manuals and reports increases. Recently BCG listed industries that are at different stages in adopting digital technology. According to their study, heavily regulated industries like energy and health care seem to progress rather slowly globally as well. How to keep the culture of caution out of the operations where it's not needed? Obviously neither IT nor other digital development can't work without any rules or guidelines at all - especially in large organizations. A clear decision-making framework is an essential for defining which decisions can be done independently and by whom. That lowers the need for unnecessary double or triple checking. While planning an Operating Model for IT and digital development, one should take carefully into consideration, which operations need to be managed by the book, and which can allow more room for experiments, creativity, agility - and therefore innovation.
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