The Big Stumble – Why do so many Digital Transformations Fail?
For years, companies have been raving about their digital transformation initiatives. Every time without fail, it pricks the ears up of the media and investors but, more often than not, performance doesn’t even get close to expectations. But why?
I’ve already explored what a digital transformation is and why a company should digitally transform, and all indications suggest that it’s the only way to stay competitive. However, while this seems great in theory, the tangible evidence to support these claims seems to be lacking. In fact, according to research by McKinsey, more than 70% of digital transformation initiatives fail.
To me it seemed an investigation into the potential reasons was warranted.
The Catwalk Approach
Delving a little deeper, a common denominator amongst failed transformations is that CIOs seem to follow what I like to call the Catwalk Approach. Let’s make a lot of noise and fan our feathers to the investors and the media to raise our profile, before we turn around and walk back the way we came. All flash and no panache. In other words, one big investment to get everyone’s attention and then, the moment interest fades, everything is shelved for another time. Let’s be honest, we all know once the novelty has worn away the media won’t be interested anymore.
Maybe there’s a root cause of this problem. Are we perhaps thinking of it completely wrong? Something that is starting to become more and more evident to me is that maybe it’s not a digital transformation at all, but in fact a digital evolution. To me, transformation comes across as instant, a one-off event. An evolution is a different mind-set, it’s a process rather than an act, it’s ongoing and never finished. It almost comes down to the well-known saying: it’s a marathon not a sprint. It makes logical sense that the person who is leading the race after the first half of the marathon is the favourite to win. Taking form or any knowledge of fitness out of the equation, at that point, that is our best indicator of who is the fastest. But we know all too well that that’s not necessarily the case. Similarly, it makes as much sense for the media and investors to get excited about a company making a sizeable investment into a digital transformation initiative because at that point that’s their best predictor of the future, they have no idea that it might just be a one-off.
The way I see it, we need to dial the hype down, it’s hindering us rather than driving us forwards. As it stands, too many companies see a digital transformation as a pot of gold at the end of a rainbow. The reality is, there’s no such thing. We shouldn’t be trying to find the gold, we should be learning the processes behind producing it ourselves.
The People Approach
From what I have seen and read, the trick is to take the emphasis off technology directly and focus on the people who are going to use it every day. Ultimately, they are the ones that make the technology valuable because if they don’t use it, it doesn’t matter how beneficial it could be, it’s ineffective. The connection between an employee and the technology they use is like a relationship, and any relationship needs constant management. The digital transformation is the tool used to manage this relationship.
The love-hate relationship between a worker and their technological toolset is a very sensitive beast and gaining that all-important buy-in is often easier said than done. Due to the ingrained nature of technology in how we work and, therefore by extension, the satisfaction we gain from work, the question becomes will adoption be seamless or will there be a lot of friction? And the answer to this question goes a long way to determining whether the digital transformation initiative will be successful or not. This is so intricate, that in recent times this has opened up a whole new field – Organisational Change Management. At its core this involves transition planning and the culture change required to maximise adoption. Given the in-depth nature of this topic, I want to set time aside to go through it properly in a later article, so we’ll put a pin it for now.
Having noted the importance of putting the interest of people at the heart of any digital transformation initiative, I wanted to briefly use an example to show a sign of the times. A great example for explaining ‘the great stumble’ is health care. The health care sector is amongst the top investors in technology but very little has gone into improving the patient experience; into people. Instead, the majority has gone into administrative improvements, like into managing record systems. We all hate going to the doctor, and yes that has a lot to do with the fact that we go when we are unwell or hurt, so it’s never going to be Disney Land, but also because of that dreaded waiting time. But is it necessary?
Many of the digital transformation initiatives undertaken so far seem more cosmetic than practical. We now have screens to help us sign-in when we arrive at the GP, but we then go and sit in the same chair and wait just as long as we would have done had we signed in via a receptionist at the desk. Digital transformation? – I don’t think so. The same bottleneck still exists, but does it have to?
In a world where everyone is constantly contactable by smartphone, surely we can create a system where people show up on-demand? In fact, the technology already exists. When you get an Amazon parcel delivered it gives you an initial time window for your parcel, then the window narrows as we get closer to the time of arrival, and then finally it alerts you when it’s 8 stops away, counting down the stops on a map until the van is parked in front of your house. Surely, we can achieve the same for visiting the GP?
Rather than getting carried away with my example, I want to focus on the point. Putting a screen in the GP surgery is the perfect example of a failed digital transformation initiative. It hasn’t transformed anything because the same bottleneck that existed before is still there now. The patient spends the same amount of time in the waiting area as before. As discussed in my previous article “What actually is a digital transformation?”, to create transformative change we need to revolutionise how we operate and we need to have people at the centre of it.
Effective Digital Transformations starts with a Plan
If we want to talk about a digital transformation as an ongoing evolution, we need to try and plan our route forwards. We need a roadmap. No company is in the business of wasting money, so to extract the most value out of any investments made, we need to plot an effective route through the chaos. At the very least, where should we invest and when?
I liken our roadmap to a weekly food shop. To know what you need to buy from the supermarket, you need to know what you’re going to eat and when. Sure, you can go the supermarket every day and buy what you need for that evening, but it’s likely to lead to a lot of waste, be more expensive and cause enormous stress. Our digital roadmap is the same. The better prepared we are, the more cost effective our investments, the more timely they are and the more value we extract.
However, as anyone who’s tried planning the weekly food shop can tell you, it sounds very simple but it’s fair more complex in reality. It’s easy to get lazy and go every day. Going once a week forces you to be proactive, to invest a little time at the start of the week working out what you need so you save hours of time later in the week. Creating a digital transformation roadmap is the same. There’s always bigger fish to fry, something else to be doing rather than sitting down and creating a plan. It’s something you get round to ‘if you can’ rather than something with a high priority attached to it. And so, this is where a lot of companies get unstuck. They start making it up as they go along. If the GP surgery had been creating a digital transformation initiative that was focussed on improving the patient experience, they would have realised that the sign-in process wasn’t the bottleneck in the system. They wouldn’t have implemented the sign-in screens because they would have known it wouldn’t have made a difference. The money invested in screens could have been saved and invested elsewhere, say into an app that gave patients a specific time to be at the GP surgery.
From what I see, the current difference between success and failure of digital transformation initiatives is small, but it’s having a very big impact. More often than not, they are easy to fix and actually just require a bit of common sense and a little more dedication.
For me, this summarises the 3 key areas that are holding organisations back, and the shockingly simple solutions:
Catwalk Approach: Digital Change rather than Digital evolution - Wham bam one-off and be done with it. We just need more dedication to the cause.
People Approach: Not enough emphasis is being up on getting buy-in from the people using the technology – if they don’t use it, it won’t be beneficial. Surely, it’s just common sense to go to the people that are going to use the technology day in, day out?
Road mapping: Digital Transformation scatter gunning rather than digital transformation initiatives. A little proactivity goes a very long way.
Finally, for those that succeed, the result is a positive spiral of growth and innovation. With the foundations in place, it’s not a giant leap at all to a continuous improvement philosophy: You can always have more ideas in the pipeline, you can always do more to involve the people who will use the technology and who’s opinion matters the most, and you can always do more to plan the road ahead. I firmly believe, with this in mind, great success will be just around the corner.