This is the second instalment in our series on digital government. The first article explained how technology could support an uplift in performance in policy development, service design and delivery and corporate services.
Technology is having a transformative impact on government agencies. To effectively deal with the challenges and opportunities, departmental secretaries and their direct reports need to answer five key questions.
The answers, which will drive the long-term success of the department in a digital age, can be the basis for a common agenda across functions and departments.
1. What is the best model for managing enterprise-wide technology-enabled transformation?
Technology-enabled transformation needs a model that reflects the context: technology’s impact is broader than ever, there are multiple simultaneous projects, delivery times are shortening, and executives are seeking to ensure the multiple projects create the future they envision. There are three models to drive enterprise-level transformation:
- The Chief Information Officer-led model: The CIO is often the natural choice to lead for three reasons. Firstly, because most enterprise-technology transformations involve a root-and-branch review of IT capabilities followed by implementation of new platforms. Secondly, because the CIO often understands the business well through good relationships and long-standing personnel. And thirdly, because IT systems are usually crucial to achieving business continuity during a transformation.
- The Chief Transformation Officer-led model: Sometimes a new role is created to drive the transformation, reporting to the CEO or secretary. The private sector usually calls this person the Chief Transformation Officer, but government agencies may use a different name. In 2018, the Australian Security Intelligence Organisation recruited a CTO (not to be confused with a Chief Technology Officer), a position unlikely to exist a few years earlier. In general, the CTO role seeks to create a senior change agent to drive the transformation. Often the CTO (or equivalent) will come from outside the organisation or be a senior person with a long track record. To give this role influence, project teams across various functions are brought together and given responsibility for delivery. Sometimes the role aims to integrate methodologies, provide specialist expertise or improve governance. Success relies on a partnership between this role and executive leader peers, so the changes are accepted and implemented in business units. Global resources giant BHP recently appointed a CTO to execute its automation and data-led transformation as it refocuses its strategy to being the leading technology developer in its sector.
- The distributed leadership model: In this model, there is no central leader but each business unit head drives transformation in their unit. This model is used when there are capable leaders in business units, when business units need tight ownership of project resources, or the customer needs and processes of each business unit are so different that they can be decoupled. In this situation, corporate functions need to find a model for engaging with each business unit.
There is no guidebook for choosing a model. The decision should be based on the business context, the organisational culture (both current and potential future), the change sought by the CEO or secretary, and a judgement of what model will make change stick. These models can be a starting point for the decision. In all the models, supporting governance and decision-making structures need to be right. These are driven by context and depend both on the model and on what will be most effective for the organisation.
2. What are the key operating model choices to drive the transformation?
Choose the traditional or cross-functional structures that are right for the organisation. With a rich history in government, traditional structures have evolved to manage risk, to withstand the scrutiny typically applied to government actions, and to balance diverse objectives and stakeholders. These structures should only be changed carefully. But a cross-functional organisational structure undoubtedly brings benefits in efficiency, responsiveness and speed in driving an enterprise-wide transformation agenda that may span many years.
There are three choices:
- Use cross-functional structures for specific projects: Cross-functional teams are suited to projects with a dynamic business context, projects that need extensive consultations with citizens or stakeholders and projects that need to move rapidly from idea to implementation. In this situation, dedicated personnel from across a department or multiple departments could use an agile methodology, such as sprints or the scaled agile framework. Governance would operate differently to business as usual. The project then needs to be plugged into the rest of the organisation in a way that meets the needs of the cross-functional project and of the rest of the organisation. The presence of parallel worlds needs to be explained to the rest of the workforce as it may see one group as privileged. Lack of knowledge can cause angst and reinforce silos.
- Use cross-functional approaches for most projects: In this option the cross-functional approach is used for almost all projects after being adapted to the needs of the organisation. The impacted workforce needs extensive reskilling, capability development and support to manage the change. Governance and decision-making for project approvals and spending need to be substantially modified. The issue of two worlds is accentuated as there is a ‘projects world’ and an ‘operations world’ that look and operate very differently.
- Scrap the traditional organisation structure, with few exceptions: Some private organisations use permanent team-based ways of working, but this should only be considered for very mature organisations that have experienced the preceding two options.
The choice is not straightforward. To support decision-making, the UK government has developed a course to teach civil servant teams how to work in cross-functional ways. Similar group learning may be necessary for teams as they transition to a cross-functional work style.
3. How can we deliver a superior multichannel customer experience that balances citizen, cost and policy outcomes?
Integrate policy development, service design and service delivery. Integration can occur on new activities – such as developing a new policy, designing the business rules for a new service based on the policy objectives, and designing the service-delivery process – and also on existing policies and services. Collaboration from the beginning means trade-offs among customer satisfaction, efficiency and policy objectives can be made early and fast. It also makes it easier to achieve buy-in across stakeholders as they can influence and shape from the beginning. For example, Transport for NSW has established the Future Transport Accelerator, enabling innovators and start-ups to collaborate directly with the agency.
Understand the citizen’s life and experience with government, so customer needs and preferences can drive improvement. Historically, changes in services were driven by individual policy imperatives or incremental efforts to improve individual services. But now we need to develop a holistic understanding of citizens by segmenting them based on personal attributes – such as age, location (urban vs regional vs rural), life events (getting married, having children, change of employment status) – and based on government experience attributes – such as number and kind of government services accessed, interaction history, any known issues or decisions pending. With this segmentation, services can be developed or improved with citizen preferences and impact at the centre.
Across the ideation cycle – conceptualisation, design and development of customer experiences – harness human-centred design and agile ways of working. This will keep the customer at the centre, improve responsiveness to changes in context and maintain a focus on outcomes and outputs. Methodologies should be tailored to the context, culture and business imperatives of the organisation. Roll out these methodologies at the right pace because the capacity for change and the maturity of business and technology capabilities are factors in achieving lasting impact. There is much we can learn from the UK Government, which has developed a service manual for agile delivery, including principles, tools and governance.
Invest in driving citizen adoption of digital service. When a new digital service is built, governments generally cannot steer customers to exclusively use digital channels, unlike the private sector, which can turn off in-person or contact centre channels for simple transactions. Education and awareness campaigns are key levers for governments to encourage rapid take-up of digital services. These campaigns, which can often leverage the in-person and contact centre workforce to persuade customers to migrate to digital channels, need resources. The Augmented Intelligence Centre of Excellence in Canberra, an initiative of the Department of Human Services, aims to provide leadership in the use of virtual assistants with the aim of enhancing the experience for citizens interacting with government.
4. What should leaders do during great change caused by technology-enabled transformation?
Before exploring what leaders should do, we need to characterise the change caused by technology.
Firstly, for government departments familiar with a particular way of working, difficult-to-change IT systems and in-person delivery, the change is not quick. Secondly, change is pervasive, so there will be significant change to every activity of the organisation. Thirdly, employees are concerned that digitisation and automation will lead to job losses or a strenuous requirement to learn new skills.
In this situation leaders must clarify the destination, maintain momentum and provide support:
- Leaders must explain why a transformation is occurring. They need to communicate why the extensive change makes sense, how it helps the department achieve its goals and why individual employees should get on board. It is not enough for leaders to stick to a script. They need to say it in different ways, adapt the messages to each team, and communicate through digital tools, small meetings and townhall forums.
- Leaders must talk honestly about the new capabilities and challenges. Openness about the journey helps staff accept the change and greater visibility leads to less anxiety about personal futures.
- Leaders must talk about the destination, acknowledging this may be years away. In the middle and latter stages of a multi-year transformation journey, leaders should be transparent if the destination changed as the journey progressed. This is vital to show that lessons learnt improved the journey.
- Leaders must maintain a conversation with line managers. Typically line managers work with teams each day and deal with difficult issues such as transfers, reskilling and career transitions. By maintaining a dialogue, line managers can support their teams and provide timely feedback so HR processes, policies and support mechanisms can be adjusted.
The Federal Government has recently invested in supporting leaders and the broader workforce during times of great change. Building Digital Capability intends to better skill the Australian Public Service to support digital transformation, including through developing specialist digital skills, transforming agency culture through leadership, and attracting and retaining digital talent. It offers a program for senior executives that empowers them to transform their agencies by initiating and driving a digital culture. Such training can give leaders guidance on navigating through the challenges.
5. What is the role of corporate functions in supporting enterprise-wide transformation, and how should these functions be managed?
Corporate and enabling functions are vital to driving technology-led transformation. Therefore the model for transformation needs to manage them well.
- IT delivers cloud computing, analytics, artificial intelligence and ubiquitous connectivity, which often drive transformation. IT also manages information security and privacy.
- Finance monitors the benefits and costs of transformation. It also needs to develop a model to manage finances in an environment where costs are driven by ICT usage rather than by human effort.
- HR drives the development of new capabilities to meet future needs and supports change.
- Communications drives customer adoption of digital capabilities and manages change in the workforce.
- Legal builds the privacy and consent mechanisms that will be needed for a predominantly digital world.
There are two models to manage corporate functions. A blend may be most suitable:
- A central function model: In this model there is a single central function for each of IT, HR, finance, legal and communications. These functions, each with a substantial headcount and resources, are often overseen by a COO. The central function model seeks efficiencies, consistent methodologies and sharing of knowledge. During times of transformation these functions need to work closely with business units undergoing significant changes to process, people, culture and systems. Achieving this in the central model is challenging, especially when supporting smaller business units or those with distinct needs. But it can be done, using mature resource management and governance to ensure enterprise-level trade-offs have full visibility and transparency.
- The embedded function model: Corporate functions are rarely fully decentralised but the embedded function model preserves the strengths of the centralised model while adding customisation to internal customer groups. In this model, resources dedicated to each business unit work on specific initiatives in the transformation program of that business unit but use common approaches developed in their function. The challenge is sharing ideas and developing a community of practice across dispersed teams in different business units.
The model must align with whole-of-government initiatives, such as shared services programs, which add complexity, especially when they involve services with a large workforce, such as IT or finance.
Look out for the final instalment in our series on digital government, in which we explore the capabilities that are essential for successful digital transformation.
Get in touch to discuss how Nous can guide your thinking on the big questions for digital transformation.
 APS Jobs, First Assistant Director-General – Chief Transformation Officer, viewed April 2019
 IT News, BHP's big automation push creates new chief transformation officer, 1 March 2019
 GDS Academy, Agile for teams course description, accessed April 2019
 Transport for NSW, Future Transport Technology, accessed April 2019
 Gov.UK Service Manual, Agile delivery, accessed April 2019
 The Mandarin, APS centre of excellence to develop the next generation of robot public servants, 28 November 2018
 Australian Public Service Commission, Building Digital Capability, accessed April 2019
 Department of Finance, Shared Services Program, accessed April 2019