“Two roads diverged in a wood, and I —
Robert Frost – The road not taken
I took the one less traveled by,
And that has made all the difference.”
One would think that in business, like in the medical world, once the cure is available for everybody, all of the patients will be healed. But when it comes to change management and project management for digital transformations (or more generally put, IT projects), the “mortality” rate is still shockingly high.
Why is it, that with all the knowledge available, we are still looking at a 71% failure rate for IT change projects?[1] Why don’t companies just apply all the – by now freely – available tools and methods to deliver successful IT projects?
Digital transformation, by definition, implies a type of change more drastic in nature. It is not about moving to new headquarters or bringing in new printers, but rather about modifying important business processes and aspects that dramatically affect the life of the company and of most employees.
A swift look over various analyses of causes for project failure[2] shows that a majority of them belong to the change management and project management areas (soft skills), such as: not clearly defining what needs to be changed and how (problem & solution), poor planning, unrealistic assessment of risks and capabilities , communication, leadership, commitment and collaboration (or lack thereof), and so on.
Many books and articles analyze the root causes of such failures and propose various project management and change management methodologies – new, old, and reinvented tools and instruments. We will not analyze the efficiency of the tools and methodologies from the global change management library. What we argue instead is that some of the most important causes of failure are already part of the company’s DNA and are independent of any projects. It may seem that we get too philosophical or abstract, therefore this kind of approach will not help you figure out how to act. But we promise you: a great vision may be abstract, but it is never vague. It is actually a great guide for prioritizing and making decisions on the opportunity of your actions, including in digital transformation projects.
Mistake No. 1: “Saving” money on expertise
“ If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur”
Red Adair
Through time, scientists and scholars have broken down facets of the same reality – our universe – into sciences and disciplines, in attempts to understand the whole by isolating and studying its components, each with its own logic, rules and definitions. The knowledge of the world has been divided since forever into chemistry, physics, mathematics, biology etc., and recently into some other fields such as project management and change management, so that we became used to viewing them as separate things, rather than different perspectives of the same whole.
In a “ground-breaking” shift, we now re-learn that disciplines are just different but incomplete methods of obtaining knowledge over the same reality. We discover that we cannot get a full picture and effectively solve complex problems using tools from a single box; we can do that better by seeking to address the whole through multi-, inter- and trans-disciplinary approaches.
Take for instance the medical sciences: it took us years to learn that treating the patient’s mind is just as important as treating the body. Mind and body affect each other; therefore, proper healing must address both, by combining knowledge from different medical specialties. In physics, string theory taught us that there is an underlying energy fabric that unites everything into a giant ecosystem. This complex web makes everything related and interdependent; this discovery helps us understand that apparently unrelated components may actually affect each other through various forms of energy.
At a different scale, of course, similar logic applies to digital transformation projects. The word “transformation” implies a significant change, so there is complexity attached to it; all efforts are employed towards designing simple (user friendly) solutions to intricate problems. This kind of task requires a diverse set of skills and tools, not only for the technical bit of the project, but also for the overall management of change, starting with the definition of the actual change on all levels.
Apart from the administrative parts of planning and aligning change management activities with the technical tasks, there are other critical aspects of change that have to be managed: communication (on multiple channels and formats and with different purposes), adjustments of the existing IT systems, HR management (updating job descriptions, creating new positions, moving employees, promoting / demoting employees, changing or creating new payment & benefits schemes etc.) and many other. Each of them requires skills and expertise in different fields, from psychology to labor legislation, from communication to graphic design, or from database management to leadership and financial planning.
Since the chances of finding find a Leonardo da Vinci in the company for each project are slim to none, one must ensure the necessary set of skills by gathering a team of people specialized in various domains. Companies that achieved success through innovation were those that recognized the need for help and involved professionals from different fields, such as designers, psychologists, mathematicians, statisticians and even artists. Procter & Gamble, Steelcase and Cirque du Soleil are only a few examples of companies that managed to radically transform themselves by employing experts with design thinkers’ mindsets and by reaching out to build partnerships with experts and boards of advisors outside of the company[3].
Therefore: if you must save, avoid cutting the budget for “brain”; saving on expertise might cost you the whole project later, and then some.
What to do?
Redesigning innovative processes and business models is not easy. Designs of visionary digital business concepts able to build win-win partnerships, require multidisciplinary expertise accumulated through years of study and, most importantly, of practice. Therefore:
- Make sure you get the solid expert support when embarking on a digital transformation journey. A professional team can help you better define and manage the change, by using specialized, effective, and friendly tools.
- Get ideas and involve everybody who is a stakeholder – direct and indirect clients, suppliers, strategic partners, public authorities. The best solutions we have seen are designed as business ecosystems, which exponentially increase the benefits of all parties.
- Prioritize & focus: Keep fewer but more significant initiatives, instead of drowning in an endless flood of never-ending projects that drain your mental energy and financial resources. It is thus easier for the organization to absorb the changes and there is more time to work on quality instead of quantity.
Mistake No. 2: Measuring the new by the standards of the old
“The world is moving so fast, that we have few true experts on tomorrow. All we have are experts on yesterday.”
Gyan Nagpal
Applying old performance criteria to something entirely new is an intrinsic flaw of companies that prevents innovation – a topic extensively addressed in Clayton Christensen’s referential book Innovator’s Dilemma. Because of the pressure to obtain ever predictable and growing financial results (revenues, profit etc.), businesses are inclined towards fostering sustaining technologies, rather than disruptive ones[4], although it is the latter category that decides their very survival. Disruptive technologies follow a specific path; in their inception stage they bring a lot of uncertainty, are messy and inefficient, and generate higher costs and little or no returns. Basically, they represent everything that managers and shareholders hate. The problem is that if companies are unwilling to commit to these processes, they risk being thrown out of the market, given the rapid pace of technological progress.
Successful digital transformation projects are always innovative and generate disruptive changes. A new technology allows us to completely rethink the way we work, not just to do the same things a bit better; the benefits should be outstanding to justify the allocation of the company’s precious, limited resources to a specific project.
However, even when such is the case, the mindset is still tuned to the “managerial” way of thinking. One example is the demand to present a well-grounded business case with accurate ROI and EBITDA even before the approval of a digital transformation project. We do not say there shouldn’t be a business case. Instead, we argue that this document should be drafted later, after the digital concept has been well clarified and validated. After all, how accurate can you be if you don’t know what the root problem is and what the solution looks like? Moreover, self-imposed, unrealistic deadlines are counterproductive and push many companies to jump to the development phase even before clearly establishing what the problem is, and if the solution really does solve it.
What to do?
Innovative, transformational projects require a different approach and mindset than business as usual. Therefore, consider the following:
- Festina lente: do not burn stages to “save time”. This will only cause more delays and higher losses later in the project, so allow yourself enough time to think and analyze. Don’t start digging the foundation of the house, before having the architect’s plan ready.
- Get a taste of the future before spending on it: use prototyping and various methods to test hypotheses and validate the digital concept. High-fidelity prototypes are great change management tools:
- they are the most efficient way to communicate with all stakeholders, as they allow beneficiaries to fully experience the change upfront, in a visual and tactile manner.
- they allow early detection of flaws through iterative testing of the concept, before investing in the actual development.
However, building a high-quality prototype or digital concept is quite an art. After more than twenty years of experience in digital transformation, Axiobit has developed a proprietary approach called Methodology of Convergence that: a) establishes and b) manages the stages of an effective and efficient digital transformation project. The methodology combines tools and methods related to problem solving, innovation, BPM[5], design thinking, UX, black-box theories and a few original constructs, to deliver a most efficient and effective approach. Read more about it here.
Mistake No. 3: Not training the “change muscle”, despite living in a changing world.
“The future cannot be predicted, but futures can be invented”
Dennis Gabor, Nobel Prize in Physics
Imagine an average Joe working out once or twice a week at the gym who suddenly decides to take up the challenge of winning the 100 m race in the Olympics next week. What are his chances to win? As inept as such a decision may seem, it actually resembles what most companies try to do when jumping into a complex digital transformation project without having built appropriate culture, mentality, and practice. They bet, in fact, thousands or millions of dollars on a miracle in which the project manager dealing with the change plays the role of a super-coach who must turn a couch potato into a champion within a few days. In this scenario, the aforementioned 71% failure rate doesn’t even seem so high anymore.
Obviously, in reality, there are no 100% “untrained” businesses that have never experienced some kind of change. However, digital projects are a different ball game; being innovative in nature, they require a special set of skills, attitudes and mindsets that companies do not normally foster or “train” regularly:
- Challenging current practices and rules
- Creativity and thinking outside the box
- Reaching out and engaging in regular cross-functional communication
- Thinking cross-functionally (wholistic), rather than functionally (components)
- Design thinking, developing aesthetics and usability
- Allocating time, budgets and physical space for scenario planning, experimenting, trial and error activities.
- Etc.
For companies to reach a state where innovation is possible and normal, these types of behaviors would have to be the rule, not the exception. This is hard to achieve because innovation is risky; shareholders love stability and predictability and humans are prone to choose the path of least resistance. Innovation requires proactive efforts to learn, observe, think, reach out to other people, and be exposed to new experiences – everything we call “stepping out of the comfort zone”. Unless companies create proper frameworks for all these things to take place, innovation will only happen by accident, and change will always be a painful process because it will be something unnatural for the organization. Survival of a company on longer terms should not be left to chance.
Both mind and attitude can and should be trained. Company culture can be shaped, but only if the vision and the intentions of the leaders are authentic and their actions are consistent with communicated values. Otherwise, any communication or attempts to motivate employees to embrace change will not be credible and even risk eroding trust in leadership. This is always the effect of not “walking the talk” and not training the “change muscle” constantly.
What to do?
Companies can promote and encourage openness to innovation and change in many ways. These actions should not be spontaneous or erratic, but instead formalized and embedded in day-to-day activities. It may seem like common sense, but it rarely happens in practice because companies struggle to reconcile two objectives apparently divergent: on one hand, development of existing products & clients (which generate most of revenues, but are constantly eroding), and on the other, the development of the next products and markets, which will ensure the future of the company. In most cases, present preoccupations prevail and short term results become the priority because of various pressures.
In reality, however, markets are dominated by those companies that have found a way to balance the two horizons; they have embraced change and have deliberately and constantly innovated in the field of technology. Think of Apple, Google, Amazon, or exciting newcomers such as Lemonade (insurance), Revolut (banking) or Verishop (online retailer).
Contrary to what some may think, creativity and innovation are not exclusively spontaneous. There are established practices and well-structured processes to spark creativity and manage innovation. Historically, companies have applied different methods to achieve this, from Jack Welch’s quality circles, through the more generic focus groups, up to physical or digital “ideas boxes” where employees can drop suggestions and optimization proposals.[6]
In the arsenal of methodological tools for supporting innovation, our favorite is the so-called Corporate Innovation Accelerator. The term refers to formalized programs meant to “develop, test, and grow new business ideas in a few months outside of organizational processes and deliverables.”[7]. Depending on each company’s maturity and culture, such accelerators can be set-up as stand-alone structures or cross-functionally embedded; they can exist inside or outside of the company and can be managed using different decision-making and governance mechanisms. Depending on the scope, they may be very closed and private, or very open and connected to the outside world.
Defining such a structure in an effective way and in harmony with the rest of the organization is a real challenge. Because of that, at Axiobit we have developed not only a personalized method to manage the creation and the set-up journey, but also a unique Platform for Accelerating Innovation through Digital (“PAID©”) that manages the entire innovation acceleration process, from capturing of ideas to approval of the digital project implementation. PAID can boost the value of accelerators by tens of times, due to the following:
- Multiplied efficiency through:
- Automated processes to orchestrate communication and to initiate various actions, based on business rules
- Selection and approvals based on automated decision-making mechanisms and business rules engines
- High usability, limiting the manual input needed from users and the time to learn the platform
- Match-making algorithms based on multiple criteria.
- Effective Knowledge Management using:
- Automated interaction with the document management module to ensure efficient knowledge and information management
- Versions and users’ management
- Smart Search and words association features
- Story line & Customer Journey management.
- Testing & Continuous Improvement:
- Prototype testing & validation
- Machine Learning & AI modules using the data collected to improve and to speed up the decision-making processes.
Below is a short recap of our recommendations on managing change effectively and fighting some of the flaws rooted in the corporate DNA:
- Don’t save money on expertise; invest in the right mix of people and skills to avoid higher costs later.
- Use prototyping to experience the future, to familiarize people with the change and to reduce risks.
- Formalize the support for innovation and experimentation by building dedicated structures and frameworks in your company. Corporate Innovation Accelerators represent some of the most efficient instruments in this respect.
In conclusion, have a critical look at your company today and start proactively preparing for change before projects turn into a crisis, big dollar losses, or worse.
We would be more than happy to guide you during the challenging – but highly rewarding – digital transformation journey, so don’t hesitate to contact us!
[1] https://www.imaworldwide.com/blog/the-truth-behind-why-70-of-organizational-change-projects-are-still-failing
[2] https://blogs.gartner.com/mike-rollings/2013/03/28/why-projects-fail-hint-its-not-technical-skills/
[3] Roger Martin, The Design of Business: Why Design Thinking is the Next Competitive Advantage (Boston: Harvard Business Press, 2009, 435 (Kindle ed.))
[4] In Christensen’s terminology, sustaining technologies improve existing products and services, while disruptive technologies bring a completely new value proposition to the market (Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail (2016), Boston: Harvard Business Press, 232).
[5] Business Process Management
[6] Some were temporary structures or frameworks, other more permanent, such as the position of “Innovation Officer”.
[7] Definition by Board of Innovation: https://www.boardofinnovation.com/business-design/corporate-innovation-accelerator/