Across the world right now many thousands of professionals are working hard to improve their businesses. Project objectives are being defined, stakeholders carefully mapped, steering committees, huddles and scrums are happening somewhere as you read these words. Take a moment to picture them. You’ve met these people; you’ve been in these meetings.
Reflecting on all this hard work, it’s sobering to realise that most of those projects will fail. This is famously true of technology projects – around half of all technology projects fail to achieve their goals either in business outputs, timeframe or budget. But if anything, it’s truer of organisational change efforts with as many of seven in ten of such projects failing.
It’s remarkable that we continue to embark on major projects at all, never mind digital transformations. Digital transformations attempt to deliver on both technology and organisational change goals. They are not technology projects although they rely on technology. Successful efforts require a fundamental change in how businesses work, considering everything from organisational structures and business processes to customer engagement and measures of success. Failures can be costly in lost investment, reduced competitiveness and in harm to the credibility of the executives who championed the project.
Yet, despite the odds, companies around the world continue to make attempts. Spending on digital transformation professional services is growing strongly and is forecast to exceed $200 bn globally by 2025. For many industries, customer and employee expectations have driven digitisation, making development of a digital business model a base requirement rather than evidence of innovation. The potential value is proportionate to the challenge and has only been enhanced by the huge disruption the COVID pandemic has created. If your competition is already digital, if your industry is subject to new, responsive, agile and flexible disruptors then adapting to a digital world is a matter of survival.
So, knowing digital transformation is difficult but probably worthwhile, how do we maximise the chances of success? Below are three simple principles that – although far from a guarantee of success – will help reduce the odds of failure.
1. Be specific “Digital transformation” is a slippery term in the same way as “love” and “happiness” are. It’s a broad concept that serves only broad discussions. Business change, however, runs best on specifics linked to your overall business strategy. Specifics like:
• What goals does your transformation have? For example, improved sales conversion, better customer engagement or retention, reduced expenses, improved productivity.
• How will your change deliver these goals?
• What’s the realistic timeframe for the benefits from your changes to manifest?
• Critically – how will your business run in the meantime? Your transformation is a piece of work in service of the business so its goals should serve the goals of that business. Those projects that are thoughtful in setting these goals and are held diligently to account for them have a better chance of succeeding.
2. Remember that the individual remains the unit of change Organisations are collections of people, with all the disparate ways of thinking, biases and motivations that people have. Any successful transformation, digital or otherwise, must focus on the people involved. Delivering world class data architecture delivers no benefit if no one uses it; investing in robotic process automation makes no sense if people work around the new processes.
“Digital transformation is a broad concept that serves only broad discussions. Business change, however, runs best on specifics linked to your overall business strategy”
Each stakeholder be they individual contributor, manager, executive, customer, partner, will make their own decision on the transformation and their role within it. For this reason, digital transformations must not lose sight of the ‘bread and butter’ of all transformation efforts: communication.
Most successful transformations align around a clear vision of the future – a “North Star” toward which all efforts can navigate. Leveraging this vision to articulate the need for change, the logic of the specific changes being undertaken and to establish a sense of urgency around the endeavour helps build and sustain organisational momentum.
3. Commit to it, and to the people delivering it Digital transformations are major projects. Any company intending to deliver a project of this nature should not expect everything to be ‘business as usual’ while it is going on. Establishing the transformation project as a top priority for the business and resourcing it appropriately significantly enhances the chances of success.
• Dedicating top talent
• Devoting appropriate money
• Treating the transformation as a priority for today rather than a nest egg being invested in for the future.
McKinsey found in 2019 that digital transformations that were a top priority for leadership were 1.5 times more likely to beat target performance than those that were not, while companies that specifically allocated an operating expenditure budget to the work were 1.3 times more likely to succeed than those that did not.
In the end, lofty visions of faraway goals can make for impressive slide decks and engaging consultant pitches but the paths to real transformation tend to take us through clearly articulated business goals, an aligned and motivated workforce and a well-resourced and managed core project group. “Digital” may make life easier for customers and employees but the hard graft of large-scale organisational change remains the same.