Digital transformation, the discovery-driven way

Talking about digital transformation has a way of freaking people out. They then do the exact wrong thing, which is to throw money and effort at anyone who can promise that — Poof! — digital is right around the corner! Here’s a smarter way to approach it.

There is no doubt that the advent of digital technologies has presented executives in companies with an inflection point of enormous proportions. An inflection point, as I discuss in Seeing Around Corners, is something, typically outside the boundaries of your organization, that exerts a 10X change on the way you operate. Ten times cheaper, ten times faster, ten times more valuable — you get the idea. So kudos to executives for taking the future seriously and moving to prepare. But, before leaping into an immediate solution, think through the implications of a plunge into the uncertain.

The more things change….

When I co-authored the article “Discovery Driven Planning” in 1995, the lean startup was years in the future, we didn’t have concepts like “minimum viable products” or “agile” and people planned their big projects the way they planned everything. Big budgets, big targets, big teams, and a project management process that was based on a mistaken assumption: that in an uncertain venture, you actually know what you are doing.

What we proposed, instead, was inspired by the way we saw successful serial entrepreneurs go about building businesses. Rather than a big monolithic plan with a huge up-front investment of resources, what they did was ask the question, “what would success look like for me?” and then work backward to discover what would have to be true to achieve that success.

Then, they planned around milestones, which I’m now calling checkpoints (some countries don’t use miles!), using as little money and time as possible to test assumptions at each checkpoint. As a lot of people now recognize, this is a much smarter way to go about building a new business than assuming you know what customers will want, what prices to charge, how to go to market, or any number of other potentially disastrous wrong assumptions.

Last summer, my co-author, Ryan McManus, and I noticed something interesting. The exact same pattern that had created so many big, expensive flops (Quibi, anyone?) seemed to be happening to firms pursuing digital transformations. We checked it out and the results are in our HBR article “Discovery Driven Digital…