Digital transformation: now is the time for leadership and vision

By Tom Burton

June 30, 2015

The digital era opens up radical new possibilities for the design and delivery of government services to citizens, communities and businesses and responding to this digital challenge requires a distinctively different approach to leadership and management.

There is no textbook for this new style of leadership. Much about digital is about giving it a go and releasing the energy and ambitions of your staff and stakeholders.

We are unabashedly excited about the potential for digital to deeply and powerfully rebuild the relationship between government and its citizens and on the day the new Digital Transformation Office formally begins, the Mandarin — together with IBM — begins a series around what is needed to develop the key building blocks of this new digital DNA — citizen and customer centricitydata and analytic literacyinnovation and agility, experimentation and collaboration; and expertise in technology.

These are the capabilities that provide the foundation for digital transformation. Well developed, they provide deep and powerful ways to rethink departments and agencies strategic mission and remit. Some agencies are well down the path of building these foundations, many are not, and the challenge is how to fast track the development of these internal skills and cultures.

A time to rethink

As agency leaders respond to the digital phenomena, they have a unique opportunity to reconsider deeply the remit and operation of their agencies and departments.

The digital era is still work in progress, but what we are seeing play out is the combination of ubiquitous connectivity, powerful intelligent devices and an extraordinary web of software, driving applications and services.

There has already been rapid and major disruption across the economy and history suggests that as connectivity improves and devices and software become even more powerful and intelligent, our world will continue to fundamentally change, in ways it is hard to predict.

And if the pattern of previous disruptive technologies is repeated this change will almost certainly be far more fundamental and profound than simply a new way of working.

Take for example the motor engine. Karl Benz’s patent of the internal combustion engine fundamentally transformed the late 19th century world and the public and private organisations that operated at the time. Cars, motorbikes, powerful trucks, planes and fast modern ships brought a mobility never considered possible.

This created practical needs – such as roads and energy networks to support this mobility — but it was the second and third round effects, that arguably were more profound. In Australia, today’s modern suburb — with its associated retail, educational, health and recreational facilities and supporting infrastructure — is arguably a direct product of Benz’s ingenuity.

We are already seeing just how quickly and deeply digital change is affecting the very core of our public agencies and the public system they manage. In a period of less than a generation one of our most successful public enterprises, Australia Post, is seeing it basic reason for being — householders physical letter delivery — rapidly disappear. Post is now delivering one billion less letters than five years ago. From a big contributor to the public purse, Post is about to become a loss maker. Its impressive, but now arguably already redundant, home letter delivery network is beginning to look like the small lanes built to take away the waste from back yard loo’s.

Post has thought deeply about its future and framed a digital mission around parcel delivery and commercial mail and has invested over $600 million in the last three years to remake its network as the fulfillment agent for the e-commerce world. You may have seen new parcel lockers in convenient locations to enable 24/7 pick up.

But these parcel revenues are not predicted to replace letter revenues, so Post is also looking to change its service model, increasing standard letter delivery and the price of stamps. In this process it has been a poster child for being open and transparent about the need for change and its vision.

In Victoria the Taxi Services Commissioner, James Holyman, is dealing with the popularity and disruption of Uber, the new ride sharing service, but also has an eye on autonomous driverless cars.

Why? Volvo has an audacious corporate goal that no one will die in a Volvo car by 2020. Human error causes 90% of accidents, so Volvo is working on having its first commercially available driverless car on the market in 2017. As Holyman observes, that is two years away. And with all its consequent disruption, Holyman rightly says government needs to be thinking about its impact now.

Create a vision

There is no shortage of advice that change is a constant, but the important point is that successful digital leaders need to articulate and communicate a strong digital vision for their agencies – and the reasons driving it – that will shape and drive on going transformation.

This vision is a critical factor for success. Research by the Apigee Instititute confirmed that eight out of ten people surveyed from leading digital enterprises said there was a clear well communicated digital vision. In contrast this number fell to around three out of ten for firms considered to be called digital laggards.

An example of this sort of deeper strategic thinking is the new corporate plan developed by the federal Department of Communications. Previously focused on traditional communications and media, the new strategy focuses on the digital era and the transitions needed to get there. The plan has not been without pain with job losses and restructuring but the agency now has a clear purpose.

Typically any rethink will need to be rooted in a global perspective and framed in a highly competitive world. Already the major advisory departments have found they no longer have a monopoly around research and counsel. Treasury and Finance agencies are now but one source of economic advice in a world littered with financial sector economists and think tanks seeking relevance in the public sphere.

For regulators their challenge is how to be relevant in markets that are being rapidly remade. Many of the rules look antiquated in a global world, so digital offers a real opportunity to rethink and in some cases withdraw from previously regulated arenas.

The sharing or collaborative economy – homes, cars, clothes, electronics, even food is predicted to grow from around 1 per cent of the economy to 15 per cent over the next five years.

Already organisations like Airbnb and Uber are testing regulators. But an essential part of these services is the personal recommendation and rating service that enables users and providers to score each other. The provocative question Dr Claire Noone, former executive director of Victoria’s Consumer Affairs agency and now principal at the Nouse group, asks, is why then does government need to be involved at all?

Similarly in a world of social media and recommendation do we really need a media regulator to regulate the often-ambiguous world of accuracy, fairness and balance.

At a regional level we are seeing how digital transformation is reinvigorating the economic vitality of our towns and regions. In Ballarat the Museum of Democracy at Eureka is using innovative digital immersion to engage visitors with the questions about democracy and why do we care. The Museum is using its web presence to reach out to students and teachers to engage in curriculum programs

Data drives decisions

Even more fundamentally digital and its twin bother, data are starting to challenge the very mandates of agencies.

The Bureau of Meteorology day job is to provide a weather forecast and the whole operational heart beat of the organisation is built around that task. But in in a world of open data and API’s (connectors which enable different systems to easily talk to each other) maybe the Mets role should be to simply capture the data sets and let providers tap that set in what ever way there is a demand for?

The data is in essence provided as a platform and as the interim head of the new digital transformation office David Hazlehurst says, the rest is left to the private sector to do what it does best – meet consumer needs.

This takes organisations like the Met and the Bureau of Statistics into a new space and role — knowledge agencies — with a very different worldview, operational culture and outputs than where they are now.

In NSW Service NSW has brought together over 400 different government transactional services into one digital portal. The portal is quite capable of managing many local government transactions, effectively unifying the two tiers of government from a citizen perspective. A very different take on the current federalism debate.

Experienced leaders like the former head of the Productivity Commission and now head of the Australian and New Zealand School of School of Government, Professor Gary Banks, argue we are at a major inflection point in public sector delivery.

Contestability, commissioning and the focus on outcomes is creating a broader public sector economy which means government does not have to always be the primary actor.

This suggests agency leaders are being called upon to make real choices and to work with their policy departments and Ministers to redefine the ultimate purpose of their organisation.

Anticipating these trends takes real effort and study and ideally needs to be anchored in the data we are creating in volumes never seen before. Data, and more precisely analytics, informs the truth of outcomes, what services citizens are using or not, and through social media what they think about issues. This presumes a literacy around data and analytics.

This feedback loop is not one traditionally available to government and creates a powerful new way to think about users and their needs. Till relatively recently the needs of government — to collect monies, to enforce laws etc have dominated public agencies and their organisational structures.

But loaded with data around how citizens and stakeholders interact, leaders are able to get a real time view of what they want. This citizen centricity creates a new paradigm for many government agencies and is a powerful way to think about agency design and work flows. “Delighting” your users is the expression often used — and requires a very strong external customer focus within the agency.

Putting the citizen first is the tent pole which holds up the new digital world and is a powerful driver of transformation that goes well beyond the technology.

Experiment and learn

Another critical capability is agility and the related ability to use experimentation and prototyping, releasing what is called the minimum viable product to get feedback on and to scale the core solution from their. This is often done collaboratively with smaller more nimble players and the ability to work outside traditional public sector boundaries is a hallmark of effective digital behavior and drives real innovation.

Start small, learn and scale is the mantra of this world and implies a very different approach to program and project development. For government, decades of highly structured procurement practices will need to be rethought. For many agencies it is still problematic to even buy software services online, even though cloud delivered applications are fast becoming the norm.

Expertise in technology

What is obvious is that being digital is not just about having a new website design or putting some forms on line. With nearly 85% of all new software solutions now being developed as a cloud app, and the rapid take up of API’s, agencies can now bring to market innovative digital services for a fraction of the cost — and in weeks rather than months. Dealing confidently and having an expertise with the capacity of technology to drive rapid transformation, is a critical capability that needs to be embedded in the organisation.

Every agency has to choose its road map how it deal with digital change but in our experience organisations that purposefully and energetically try to build these key capabilities, will create a transformative DNA that enables organisations to embrace the many opportunities of the digital era.

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