Corporate IT programs: Four cardinal landing scenarios

In present days, large Information Technology programs have acquired unprecedented prominence, and Digital Transformation looks like the quest for the “Holy Grail” to practically all Corporates.

In fact, through a quick search on LinkedIn, we noted that in certain companies hundreds of employees hold the title “transformation” next to – more or less – ordinary and understandable job titles.

It seems that many CEOs and their Boards have discovered only lately that nothing is stable, and everything must be relentlessly adjusted and re-orienteered to keep the route and accomplish own targets and expectations.

As a reasonable explanation, it must be said that we are all facing an acceleration of change, and the general feeling is that we are all living in a “fast forward” mode (going where is the big question), by occasionally experiencing the discomfort of a “future shock” (without knowing enough on what we are putting our hands) [1].

When we make a reality check about the outcome of transformational efforts, we discover that - according to McKinsey & Company [Perspective on transformation, August 5th, 2019] – about 70% of transformations fails.

We think that this figure is not surprising. What is also not surprising is that McKinsey & Company claims to have a “recipe” for (digital) transformation [Perspective on transformation, August 5th, 2019].

With all the due respect, our opinion is that nobody, but Corporates themselves, can realize what transformation means to them and if their available/accessible resources – competences, technologies, finance, time, etc. - can attempt/make/cook it.

This personal standpoint offers consultants the still crucial role of “mind openers” – which may deliver experiences and methodologies – but whose scope must be segregated to the back-seat, while drivers and navigators must be carefully selected from within the Corporates, if the subject of transformation – the Corporates - and their boundary conditions must adequately emerge - from shadow and fog - in order to be properly assessed, clarified and considered in the balance of costs, benefits and risks [2].

In fact, exchanging seat with consultants may be as easy as dangerous, because it may lead to pursue beautiful mirages [3], which are eventually off-the-shelf well-packaged daylight dreams, with little operational value and huge negative financial implications.

What is Digital Transformation

In addition to know who we are, and from where we are starting, the first question about our transformation initiatives - in order to address them in the right direction - should be the basic one: What is digital transformation?

In fact, without a concept that can be verbally communicated, it will be impossible – especially in large, structured, multinational organizations – to achieve any objective that is envisioned at the height of strategic planning.

We started by searching the web for an answer, and if you do the same exercise, you will see by yourself that a simple usable concept is not immediately prompted before your eyes.

When we googled it, we received back about 3.6 million results in 0.56s (out of which a bit too many were proposals to buy books about the meaning of Digital Transformation).

Strangely, even Wikipedia (on August 20th, 2019, at 11:12 CET) did not offer anything better than a very poor page – mostly about the benefit of “cloud” - out of which we report – for respect of the readers – only the following questionable excerpt: “the use of new, fast and frequently changing digital technology to solve problems”.

Something definitively better was offered by The Enterprisers Project, which unfortunately was too highly focused on digital technology and too low concerned about associated processes: “Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It's also a cultural change that requires organizations to continually challenge the status”.

A thorough examination of a good portion of mentioned Google’s long list, which shows webpages normally organized by relevance with searched terms, did not succeeded, in our view, in offering any workable concept, and this reminded us what Albert Einstein used to say:

This is why, in absence of external help, we decided to make our own concise definition, which we submit here below to you for evaluation:

One possible by-product of this article, with the help of possible readers, will be to improve above definition, while keeping it concise and comprehensive at the same time.

However, until a more accurate – and better - definition will be provided, we will keep such description of the ultimate successful purpose of any Digital Transformation undertaking.

As Digital Transformation is a strategic initiative, we will set up in the following an overview of what we think are the four fundamental outcomes of Corporate Information Technology programs, which are obtained by combining in a matrix the two key variables that we believe are to them associated: Strategy and Execution.

Before starting, we will remind as “caveat” what Winston Churchill said about strategy:

Given the constraint of this context, the dissertation will necessarily remain on the surface, but we hope that following concepts may trigger deeper elaboration in interested readers.

Corporate digital transformation initiatives: What may happen

If we assume Strategy and Execution as key variables, these elements can be, in their extreme cases, excellent or bad.

In order to align on the meanings, we state that an excellent strategy is such when appropriate to concerned Corporate, i.e. fit with Corporate’s capabilities (not extremely challenging) and expectations, within the correct frame of references set by markets.

Similarly, an excellent execution is such when this is performed on time, on cost and on quality, against those objectives that were set in line with the strategy, during the preparation of applicable strategic planning.

Bad strategy and execution are easily defined as the complete opposite of their respective excellences.

If only the combinations of “excellent” and “bad” are considered, the matrix in the following summarizes the possible outcomes:

Daniele Rizzo ? 2019

Let’s review each quadrant and see what can be prevented, avoided or pursued.

Digital Weakening

IT initiatives achieve the result of “weakening” the Corporate, that they should on the contrary power up, when the driving strategy is excellent, but its execution is bad (which may mean several different unwanted outcomes, all together visible in the worst cases).

It is not enough that an IT initiative is conceived to create the right conditions for the Corporate, unless the way these conditions are achieved stays within the assumed tolerances of costs, time schedules and quality (possibly exceeding most optimistic expectations).

For instance, it is a great idea to introduce a state-of-the-art CPQ solution by means of setting up processes and platforms in integrated seamless architecture.

Unfortunately, this cannot be accepted at any cost, and/or by disregarding the consequences of achieving integration of digital platforms at expense of performances.

It is worth noting that “Weakening” is not due to impossible expectations set by the strategy, but it results from wrong interpretation of strategy values and misconducts, or wrong choices, for which the Program Management organization is accountable.

Like for a symphonic orchestra, the director makes the difference and the result may range from a “fiasco” to a standing ovation, regardless the quality of the music sheet.

What “Weakening” means can be summarized by the quote attributed to Pyrrhus, king of Epirus:

Despite all money, efforts, time invested, a weakening initiative ends up with inadequate ROI and damaged leadership. It is not an unrecoverable failure, but it goes close to it.

Digital Collapse

An IT initiative evolves in “Collapse”, when both strategy and execution are bad.

While bad execution does not need to be further commented, bad strategy is worth a little deeper attention, because is more frequent than expected and probably responsible for a very large quota of initially mentioned 70% transformations failure rate.

In fact, a strategy is valid only if it is - really - applicable to a given Corporate, by considering its real capacities (present and/or acquirable along the execution), Corporate’s legacies (which may be also affected by M&A and divestitures) and the (always changing) boundary conditions set forth by the markets.

In fact, common sense would suggest CEOs and their Boards to not conceive plans by disregarding what their Corporate is and its history.

For instance, setting too “challenging” objectives, which do not consider at all existing processes and platforms, makes such initiatives doomed since their inception.

Hence “Collapse” is always painful and implies huge wastes of resources (and opportunities), and it normally leads to major management turn-around, sometimes across the whole leadership chain.

We have to be aware that – including both accounted and not accounted expenses – digital initiatives may easily hit the bottom line of unprepared Corporates with 9 digits negative figures.  

The sad thing is that – sometimes – this further pearl of wisdom by Albert Einstein is also disregarded:

Collapsed IT initiatives may have the only, if any, value to teach how not to do things. It is rather an expensive exercise, but it happens so it is necessary to take home at least key good lessons.

Unfortunately, among lessons often not learned, there is the missing removal of key people, responsible for wrong strategy and execution.

Digital Disruption

Disruptive IT initiatives are in our view extreme and potentially too risky choices. Tactically, they are often the equivalent of “burning bridges behind own troops”.

In this quadrant of the matrix, execution is flawless, but strategy does not fit to our Corporates (as these Corporates are at the beginning of their digital initiatives). It is like putting a bet on a future Corporate-self, assumed fitter than the present one.

The attribute “bad” given to strategy refers to initial large inability of Corporate to fit in it, associated to significant risk that this situation will partially remain with relevant consequences.

In a metaphor, it is like dropping a caterpillar from a cliff, by hoping that it will transform in a butterfly along the way and fly before reaching the point of impact.

For above reasons, in our view, “Disruption” should be always a second option, after “Transformation” (to be described next paragraph).

It must be clear, however, that disruptive IT initiatives do not necessarily lead to unwanted outcomes and, in certain circumstances, they are actually the only option left.

Being execution excellent, the focus for disruptive IT initiatives is on the strategy and why a “bad” strategy, consciously decided, may make sense.

In fact, there are possible situations in which only by brutally discontinuing the on-going organizational practices, it is possible to implement changes.

Corporates subject to disruptive IT initiatives are those seen quietly proceeding to decline, for which only a shock therapy can be beneficial.

It is the orthopedic equivalent of breaking a distorted bone in order to set a proper plaster and facilitate the natural and correct healing process.

Unfortunately, there is a strong precondition to be verified, if disruptive IT initiatives have to start with reasonable chances for success. This is awareness of CEOs and Boards about legacies and capabilities of their Corporates.

“Disruption” breaks in pieces the Corporates and implies that driving management is equipped with adequate skills – e.g. entrepreneurship, energy and vision - to re-build the new Corporate, which has to change and fit into what was initially an unsuitable strategy for the old Corporate.

It is similar to play the Tangram game (see picture below), where same set of tiles can start by forming a given shape, and eventually can be re-assembled at will to form completely different shapes:

Of course, applied to Corporates and differently than the rules of Tangram, it may happen that - in the period of disruptive executions - some tiles will change shape, and some others will be no longer part of the new mosaic.

However, the fundamental point of re-engineering the Corporate DNA remains, with all uncertainty associated to have a new unpredictable animal at the end of the IT program [4].

From above description, it is clear that an unlucky/mismanaged “Disruption” may unfortunately turn into “Collapse”.

Digital Transformation

Transformational Corporate IT initiatives, for which both strategy and execution are set and maintained right all the time until full accomplishment, remain an ideal case as it is very difficult, in large organizations, to achieve constantly the complete awareness and control of whatever happens in the structure, across the whole period of transformational undertaking.

In addition to internal partial indetermination, the long time required for Corporate transformation exposes also to external indetermination, due to variances in the markets of reference, which are by their nature unpredictable.

In short, we may say that final objective of any transformation may be itself subject to transformation, hence a rigid plan may lead to a result that became obsolete, since the time it was originally identified.

Regardless the practicability of such a condition, both excellent strategy and execution, the approximation to this ideal state can be as close as CEOs and Boards of the given Corporates prepare themselves and the organizations for the change in the right way [5].

It makes sense to state that the ultimate objective of Digital Transformation is the creation of a “digital transformation” culture that – cycle by cycle – creates conditions for smooth evolutions with minimal need to invoke the “disruption” mode earlier explained.

If we compare successful “Disruption” and “Transformation”, they both create a stronger Corporate.

Whereas Transformation mixes value-selling/coercion 80/20 blend, Disruption does 20/80, with a spritz of fear (by anticipating consequences in terms of “blood and tears” in case of bad outcome).

Three practical advices

Corporates in these days surf the markets in turbulent weather conditions, and often they have to decide which wave to leave or take in a matter of quarters.

Of course, what is easy for a surfboard is not easy for a super container ship.

We are all seeing that some Corporates are losing their load in the course of such hectic maneuvering, sometime accidentally, other times intentionally, by trying in this way to achieve more agility and speed.

Corporate IT initiatives are a necessity, and CEOs and Boards have to apply all possible precautions in planning, while enabling the identification and the maintenance of Transformation Teams inside and outside their organizations.

What qualifies a good management team, in comparison to a bad management team, is the capacity to anticipate to a reasonable extent the upcoming changes in market conditions, being able to activate in time all resources needed to face them.

This means – in our view – being Management 4.0 ready.

Some practical approaches may facilitate design and execution of digital initiatives.

The first advice is to have a clear value model, for measuring outcomes [6].

For instance, if there is insufficient adoption of deployed platforms and processes, we are facing a macroscopic failure.

The second advice is to measure the organizational “temperature” and understand which portion of the Corporate is ready, and in which order the rest has to follow the change [7].

Given the inertia of a large organization, it is naive to expect that everybody will jump on board from Day One. By choosing carefully the Corporate domain to start with, Transformation Team can create visibility and spirit of emulation as there is nothing like success to create followers.

The final third advice is to select carefully the members of Transformation Teams, being sure that transformation competence, creativity, energy and personal credibility are sufficiently available.

We believe that a general, deep knowledge of Program Management methodologies are of use, but the key lever to maneuver is often improvisation, because by definition Corporate is going to face unprecedented experiences, hence the capacity to develop ad-hoc conceptual tool boxes may make the difference in critical circumstances [8].

Conclusions

Corporate transformation by means of IT programs is a risky business and mitigation of implied risks must be a priority in the agendas of any such initiatives.

Certainly, adequate preparation - carried out by engaging the right employees and consultants - may help to collect hands-on information and valuable advices.

Even in the worst cases – “Collapse” or failed “Disruption” – recovery plans and resources must be prepared to prevent operational implosions and Corporate disintegrations.

Very simple precautions are to segregate portions of the Corporate, which are impacted by transformation, from the rest of the organization, and/or to apply modular, scalable approaches in order to avoid systemic failure across the Corporate, in case of unwanted outcomes.

Such unwanted/unsatisfactory results, according to McKinsey & Company initially cited, are indeed highly frequent.

In fact, given the Corporate contexts, there is never assurance of matching initial plans and assumptions, because the fact is that we always operate in one quadrant of VUCA matrix [9]:

Above consideration – calling in also VUCA - triggers now the most important question, that was purposefully left for the end: Why Digital Transformation?

The answer can be found in the initial definition that was given to Digital Transformation.

For change is not avoidable, Digital Transformation may be the right way to get in operation those better processes, which enable the given Corporate to be more competitive in own markets of reference.

This takes adequate leadership, wisdom, resources and TIME, as recommended by Jack-Yun Ma:

While all precautions of this world will not ensure prevention of painful outcomes and occurrence of critical errors [10], a good Transformation Team, with the right leadership, will always be able to create value by turning problems into opportunities and identifying the bright side in any occurrence, as Nelson Mandela taught:

References

[1] “Corporate transformation: Story of one elephant and eight blind monks”, Daniele Rizzo, LinkedIn, March 26th, 2019;

[2] “Why decommissioning IS legacy platforms in corporate environments is generally slow and hard”, Daniele Rizzo, LinkedIn, October 3rd, 2017;

[3] “Three dark facts that your IT consultant would never disclose”, Daniele Rizzo, LinkedIn, July 10th, 2015;

[4] “IT-engineered Corporates: How to implement with grace digital transformation”, Daniele Rizzo, LinkedIn, May 3rd, 2019;

[5] “Corporate transformation: Why adequate leadership is not an option”, Daniele Rizzo, LinkedIn, June 7th, 2019;

[6] “How to drive IT corporate programs with a simple three-dimensional value model”, Daniele Rizzo, LinkedIn, August 14th, 2015;

[7] “Change management: Key dimensions to consider for implementing a sensible base strategy”, Daniele Rizzo, LinkedIn, May 21st, 2019;

[8] “Why Product Management may help in driving development and deployment strategy for Corporate Information Systems”, Daniele Rizzo, LinkedIn, September 23rd, 2017;

[9] “What VUCA really means to you”, Nathan Bennett & G. James Lemoine, Harvard Business Review, January-February 2014:

[10] “Five key reasons why Corporate Information Technologies programs may fail”, Daniele Rizzo, LinkedIn, February 27th, 2019.