I had the honor of participating recently in an industry panel discussion intended to help wealth management firms think about the role digital transformation and technology should play in their organizational strategies.
I’ve pondered that question quite a bit since then, and as I have thought about our clients and other organizations who successfully align digital transformation and technology plans with organizational strategy, they seem to have at least three things in common.
- They can articulate their core strategy
- They know exactly who benefits from their technology investments
- They cultivate a leadership culture that supports innovation
Articulating your core strategy
At the risk of sounding like Captain Obvious, organizations with successful organizational strategies actually know their core strategy! There are several methods organizations use to develop strategic plans, but can they articulate what their core strategy really is? Michael Treacy and Fred Wiersema wrote a New York Times best-seller titled The Discipline of Market Leaders in which they identified three core strategies that market-leading organizations use to achieve sustained success: product leadership, customer intimacy, and operational excellence. We don’t have time to unpack each of those now, but one of the authors’ primary points is that organizations are tempted to be known for two or all three of these. True market leaders select and focus on one.
A firm with a clearly articulated core strategy has the opportunity to empower and accelerate its strategy by aligning its approach to digital transformation and technology investments to match. For example, if the strategy is to scale success through operational efficiency, then it will undoubtedly be looking for technologies that enable process automation or workflow automation across disparate systems. If the core strategy is customer intimacy, then it will be looking for technologies that foster and support deeper and stickier connections between its people and its clients.
What might articulating a core strategy sound like? “Our firm will grow and retain more clients by developing deep, mutually-beneficial relationships with those we serve, their beneficiaries, and others they influence.”
Who benefits from your technology investments
A second key to successfully maximizing technology investments is to clearly identify who stands to benefit from them. At Accutech, we’ve adopted the following definition of innovation:
“Innovation is the creation of new value that serves your organization’s mission or customer.”
(By the way, another read you might find helpful is The Innovation Mandate by Nicholas Webb.) Your digital transformation strategy can be targeted to help your organization be more efficient, more profitable, deliver products faster, extend its reach, and so forth. Or it can be focused on delivering a better experience, new products, or new tools to help your clients be more successful. Either way, you’ll have a better chance of delivering real value if you clearly identify the persona you are trying to help.
Many organizations serve more than one category or type of client. In other words, we serve multiple client personas. We have limited resources to spend on technological innovation intended to benefit our clients, and the tendency is to invest those resources to simply help the biggest number of them. That can lead to watered-down value, or worse yet, we focus on investing in technology to keep up with what we think our competition is doing. It may be worthwhile to at least ask ourselves if focusing our resources to drive real value for a specific internal or client persona would advance our organization’s position in our desired target market. Bottom line: a firm’s chances of delivering real value improve as it brings greater focus to the benefiting persona.
Using our core strategy example above, you might say something like “this year we will invest in tools that help our advisors gather and organize our clients’ business and personal data to enable them to have richer conversations and uncover new service opportunities.”
Cultivating a leadership culture that supports innovation
Finally, firms that are really successful at leveraging digital transformation and technology have cultivated a leadership culture that embraces innovation. Again, at the risk of overstating the obvious, implementing digital transformation strategies is hard work. Why is it hard? Because it involves two things organizations resist at almost all costs — risk and change. You’ve heard it said that people fear change. I prefer a different version of that saying. People don’t fear change—they fear loss. Introducing new technologies means facing the risk and fear that come from change head on. What if we lose a key person on our team who refuses to learn a new system? What if we lose a client because we changed something? What if I don’t get this perfect; will I be fired?
In 2019, Cornerstone Advisors offered this definition of digital transformation:
“Integration of digital technologies into all areas, fundamentally changing how to operate and deliver value, and a culture change that continually challenges the status quo and gets comfortable with failure.”
I’m not sure I ever want to be “comfortable with failure”, but I get the idea. Firms with a mindset to leverage digital transformation strategies place that responsibility with strong leaders who provide a safe place for their people to innovate, take risks, and effectively manage change. For a start on this, you might begin by identifying a senior leader in your firm who has demonstrated a growth mindset and ability to facilitate cross-team collaboration. Give that individual both the charge and freedom to help your team develop its innovation muscle.
Want to go bigger? Challenge your leadership team to candidly assess its readiness to foster a culture of innovation. There are many resources you might consider for facilitating this conversation, but I recommend Patrick Lencioni’s best-seller The Advantage, starting with a self-assessment using his description of a “cohesive leadership team.”
Are you ready?
Are you ready to align your technology initiatives and organizational strategy in 2021? Start by ensuring you can articulate your core strategy, focus on the persona(s) for whom you want to deliver value, and support your team with a culture that embraces the creativity and messiness that comes with innovation.
