Digital Transformation: Signs of Doom and How to Fix it

Change is the most crucial and hardest aspect of any transformation. Approximately 75% of change efforts flop -- either failing to deliver the anticipated benefits or being abandoned entirely. People don’t want to adopt new ways of working (tools, processes, etc.), so value erodes quickly and exponentially unless there’s an implied reward. Getting change management right requires extensive planning as well as agility -- plus a huge dependency on HR to manage talent impacts. A strong and senior team pushing, driving, defining, and preparing is critical to assure success.

Any long-term transformation program needs to indicate the oncoming shift by creating an internal transformation management office. This office monitors and escalates any issues, pushes the thinking, solves problems, and motivates teams. It also handles key strategic services areas -- reporting up to executive leadership and the Board; organizational change management and communications; enterprise strategy alignment and conflict resolution; and acting as the “venture capital” arm by shifting funding as needed.  

An internal team should own not only the transformation’s direction, but also the delivery of the strategy. If the company doesn’t have any internal talent with these capabilities, then it should hire or contract until a permanent solution is created. MillerCoors learned this the hard way in 2013 after spending about $100 million on a failed ERP implementation without the internal expertise or advisors to steer the transformation or guide their implementation partners.

 Any transformation should keep those outside the transformation office engaged and accountable for both successes and failures of the transformation. Each initiative should be assigned one C-suite sponsor (ideally not the CIO), accountable for the publication of KPIs, milestones, financials, and high-level status across their programs. This leader should regularly update the CEO, showing progress against defined, manageable, and measurable outcomes, sharing any forward-looking failures, such as “being $X million over budget,” with executive compensation tied to the success of the transformation.  

A goal is an ambition for what will be achieved --"reduce COGS by 7% this year” -- whereas a target is a commitment for what will be deliver – “supply chain organization to reduce production cost by $50 million in the current fiscal year.” Realistic targets should follow three principles: Aspire to stretch beyond targets, for example, by shifting focus to where the most value can be delivered instead of continuing to follow the business case; promote unbalanced scorecards -- external targets should be devolved to each business unit and provide context for the targets; and resolve issues swiftly as they arise, using existing governance mechanisms.

 A transformation isn't a project with an endpoint but a new way of doing business that delivers added value and requires permanent maintenance. As described above, accountability should be driven by the executive business sponsors and led by the named program leaders for the initiatives.

Almost 77% of organizations adjust their digital transformation plans with “major” or “noticeable” modifications -- the question is how to respond and adjust accordingly. An agile approach is a best practice in digital transformations because it’s iterative in nature and allows for taking small steps to ensure the business needs are being met at each turn. Beware of indecision! There are no right or wrong decisions, only learnings.