Double-loop digital transformation

The digital transformation (DX) engine is revving up quite nicely these days. The fact that we now have an acronym is a testament to the wide-spread acceptance of the idea. Some of the clients we work with have even set up internal digital transformation offices (DTO) to see through the change.

But what is the change, really?

For many organisations, it is about using current tech to optimise existing operations (e.g., a telco moving to cloud-based CRM). For some others, it is about creating new products or services (e.g., carparks operator coming up with a mobile app, replacing paper slips). For a very few of them, it is about creating new businesses altogether (e.g., a fertiliser company moving into digital farming business).

In all the above cases, DX is about doing new things. About coming up with new products or services. And this may seem that the organisation is making progress.

But such progress is a trap.

The double-loop mindset asks: how might we use the learnings to redesign the organisation, where customer-centricity and digital agility are the default?

The fact the organisation is pursuing DX shows that there is a gap between how the organisation is set-up and its ambition. This single-loop transformation relies on closing the gap using the existing design of people, work, structure and culture. New tech is the primary driver. The single-loop mindset asks: how might we solve immediate problems and catch up with the rest of the industry?

For sustainable DX though, a second loop is required. The job of this inward-looking reflective loop is to reframe and reimagine the organisation itself. The double-loop mindset asks: how might we use the learnings to redesign the organisation, where customer-centricity and digital agility are the default?

The second-loop challenges existing norms, practices and objectives of the organisation. What kind of leadership is necessary? How will work happen? What skills and competencies would be prevalent? What would be the culture?

The concept of a double-loop is not new in organisation settings. In 1976, Chris Argyris proposed the double-loop theory of learning:

"First, most people define learning too narrowly as mere 'problem solving', so they focus on identifying and correcting errors in the external environment.

Solving problems is important. But if learning is to persist, managers and employees must also look inward. They need to reflect critically on their own behavior, identify the ways they often inadvertently contribute to the organization’s problems, and then change how they act...

To give a simple analogy: a thermostat that automatically turns on the heat whenever the temperature in a room drops below 68 degrees is a good example of single-loop learning. A thermostat that could ask, ‘‘Why am I set at 68 degrees?’’ and then explore whether or not some other temperature might more economically achieve the goal of heating the room would be engaging in double-loop learning."

Double-loop digital transformation takes the long view. It is about future-proofing the organisation at every step, like what Amazon does with its flywheel concept. Without the second loop, a digital transformation may end up resulting in what author Vaasu Gavarasana calls a "digital lipstick on a legacy pig".

This article was originally published on LinkedIn.