Mission Possible: The Process Excellence Enterprise

1. From complexity to 'digital' transformation

A spaceship is complex because it comprises many interconnected components, systems, and processes. The complexity results from the multidimensional relationships and interactions between these elements. For example, a spaceship has advanced propulsion systems, life support systems, navigation systems, communication systems, and much more. Each of these systems requires a high level of expertise to operate. This complexity is then increased by the fact that all these highly specialised systems communicate with each other in networks and have interrelationships.

Furthermore, countless details complicate the spaceship if the underlying principles and interrelationships are not sufficiently understood. The complicated aspects of a spaceship can include the design of the individual components, specific and defined operation procedures, and the crew's organisational structure. These make the management of the spaceship more difficult if responsibilities are unclear and too fragmented in detail or remain in encrusted structures.

Complexity as a driver of change and transformation

The term complexity is generally used to describe the dimensionality, degree of difficulty, level of expertise or effort required to understand a system, problem, concept, process or situation. Complexity can also be quantified by factors such as the number of elements, the connections between them, the degree of uncertainty or unpredictability and the amount of information or data involved. Complexity occurs in various fields, e.g., mathematics, biology, sociology, and everyday life situations. Managing complexity consists of breaking down the whole into smaller, more manageable parts, understanding their relationships and interactions, and developing strategies to understand, control and/or solve problems within the complex system.

More than ever, complexity will drive change and transformation because as systems, technologies, regulations and organisations become more complex, they will encounter challenges that can no longer be overcome with traditional structures, methods, competencies and skills. Uncontrolled, complex environments lead to inefficiencies, communication barriers and difficulties if they are not addressed proactively. To navigate and evolve in the 'new' complexity, organisations often need to make fundamental changes, introduce structural innovations and redesign their structures and processes to remain effective and competitive.

The increasing complexity of organisations

Organisations are complex ecosystems comprising various interconnected components, such as locations, departments, teams, processes, technologies, data, regulations, expertise, languages, cultures and people. These components all interact with each other daily on multidimensional levels and influence an organisation's overall functioning and culture.

For various reasons, this will become even more acute in the future:

Globalisation: As organisations expand their operations geographically, they have to deal with different languages and cultures, flows of goods and market dynamics.

Technological progress: The rapid pace of technological progress introduces new tools, platforms and systems into organisations that must be integrated and managed.

Further specialisation with simultaneous diversification: Organisations specialise and diversify to make their product portfolio even broader and more customer-oriented, thus meeting the requirements of different markets.

Changing market and customer expectations: With increasing digitalisation, customers expect personalised and seamless experiences just in time. Organisations need to operate a new (digital) form of customer relationship management to fulfil these expectations.

Regulatory and compliance requirements: Organisations must comply with a growing number of laws, standards, and other regulations that vary from market to market and require sophisticated reporting, extensive control systems, and documentation.

Mergers and acquisitions: To speed up competition, mergers and acquisitions will continue to increase, which requires an equally rapid integration of different languages, cultures, systems, processes, and data.

All these factors and more turn organisations into highly complex ecosystems. But please let us differentiate between complex and complicated at this point. Different measures are required to transform organisations and processes depending on whether something is complex or complicated.

When complexity becomes complicated

The terms 'complex' and 'complicated' are often used interchangeably but have different meanings and effects.

'Complex' is something that, by nature, consists of various interconnected and interrelated parts or elements. It shows a high degree of complexity or sophistication when a more profound understanding or analysis is required to understand an issue thoroughly. However, complex systems can be well structured, organised and predictable once the underlying principles are understood.

On the other hand, 'complicated' refers to something difficult to understand or manage due to its intricacy or the multitude of factors that are not necessarily interdependent. It implies a higher degree of difficulty, making tasks or situations more difficult to manage. Complicated systems often require more clarity and are more difficult to understand. Examples of complicated scenarios are bureaucratic processes, evolved traffic infrastructures in large cities or intertwined legal systems.

Complexity is in the nature of things and complicated is what we humans often make of it.

In short, complexity is in the nature of things and complicated is what we humans often make of it. The challenge in today's organisational life is that many organisations are a mixture of both, and distinguishing between complex and complicated situations will become essential for any organisation's future success. Complexity needs to be understood and managed, and complicated situations, by contrast, must be recognised, eliminated or simplified. So, what do we find if we take a hard look inside our organisations? Complex structures and processes, or complicated structures and processes, or both? And what role does this distinction play in digitalisation? Shouldn't we first simplify complicated structures and processes and master complex structures and processes before we digitalise them?

The complexity of the 'digital' transformation

'Digital transformation' is the number one buzzword in almost all industries. But what does it mean? After all, digitalisation is not really new and has been practised for decades.

Reduced to the lowest common denominator, digitalisation refers to converting analogue information into digital formats that can be processed electronically and thus offer new possibilities for use. It is about using digital tools and platforms to stabilise, accelerate and optimise processes. This, in turn, aims to improve efficiency and effectiveness, open up new business models, enhance the customer experience and remain competitive in today's fast-paced and technology-driven world.

The digital transformation includes:

Technology integration: Adopting and integrating new technologies such as cloud computing, artificial intelligence, Internet of Things (IoT), big data analytics, automation and machine learning into existing systems and processes.

Process optimisation: Analysis and redesign of business processes to eliminate redundant steps, minimise manual intervention, reduce complexity, leverage digital technologies and improve overall efficiency and productivity.

Customer centricity: Focus on delivering exceptional customer experiences through the use of digital channels, personalisation and seamless customer experiences across multiple touchpoints.

Data-driven insights: Collecting, analysing and using data to gain valuable insights, drive decision-making, identify trends, predict customer behaviour and develop new business models.

Agile culture: Includes fast and innovative adaptability and continuous improvement. It promotes cross-functional collaboration, transparency, personal responsibility, quick decision-making, and adaptability to changing customer and market requirements.

Organisational change: Promoting a culture of change and continuous learning, training or retraining the workforce, forming cross-functional teams and defining new roles and responsibilities to facilitate the 'digital' transformation.

The ultimate goal of 'digital' transformation is to enable organisations to harness and improve the power of digital technologies to drive new business models and growth, increase competitiveness and create sustainable value in an increasingly digital and connected world.

'Digitisation' is not the same as 'digitalisation'1

'Digitisation' is the process of converting analogue data into digital data. 'Digitalisation' is the strategic use of digitised data and digital technologies.

'Digitisation' and 'digitalisation' are integral parts of the broader concept of digital transformation. Digital transformation is the application of digital technologies to fundamentally change an organisation's...