Digital Transformation Failure Factor: The Primary Strategic Goal - - Part 2

The Argument Over the BHAGs

The importance of choosing and maintaining a solid connection to the right Big Hairy Audacious Goal (BHAG) for a digital transformation (DT) cannot be overstated. As noted in Part 1, the argument centered on two primary BHAGs:

1.?????? BHAG #1:?Deliver an ERP system on-time and on-budget with a perfect go-live.

2.?????? BHAG #2:?Radically improve the performance of some aspect of business operations.

The choice between these two can significantly impact the success or failure of a digital transformation.

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The Summary of the BHAG Argument

When the argument referenced in Part 1 of this article was settled, three key points emerged:

• BHAG #1 as NBHAEG:?BHAG #1 should be renamed NBHAEG—the Not Big Hairy Audacious Enough Goal—because even if it succeeds technologically, it might fail to deliver the expected business benefits.
• BHAG #1 as the De Facto Goal:?Whether explicitly chosen or not, BHAG #1 often becomes the real goal for some digital transformations.
• Identifying a BHAG #1 Project:?It's relatively easy to spot a project where BHAG #1 is the focus.

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The Transformation Question

Using the word "transformation" means the project is intended to transform something. The crucial question is:?What is a digital transformation trying to transform?

• Technology Focus (BHAG #1):?If transforming the system architecture, or customer touchpoints, or data management is what the enterprise wants then BHAG #1 makes sense.
• Operational Performance Focus (BHAG #2):?If transforming operations is what the enterprise wants, then BHAG #1 makes less sense. A thing can be changed from the outside, but a thing can only be transformed from the inside.? Technology alone cannot transform operations; that can only be done by the people in operations.?
• A Decision of Omission (No BHAG): The other possibility is the enterprise makes the ERP investment but never really decides to transform anything, which is exactly what they do. Decisions of omission can be far more risky than decisions of commission.

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The Commitment Curve and the NBHAEG

The Commitment Curve is used as visual representation of the stepwise progression employees make to become competent users of the new systems and processes, and it is the go to change curve for BHAG #1.? It illustrates the four stages employees go through on their way to the future state.? The current state is still the status quo when the curve starts, usually near the time line employees need to be made aware of the project.? The future state is where the curve and the project end.

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BHAG #1 becomes the "NBHAEG" (Not Big Hairy Audacious Enough Goal) when the enterprise wants radically improved operations performance, but the project ends before operations is ready to perform at a level required to deliver the expected future state benefits.

Part of a BHAG #1 success is about how many employees are competent ERP users who are fully prepared to do their work in new ways at go-live. The picture below is BHAG #1 perfection, but it may be the exception and not the rule.

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The employees who don’t make it to the future state in time become ‘Stragglers on the Curve’. The ideal scenario is busted when employees are not ready at go-live (pictured below). BHAG #1 can’t be considered a complete success if there are stragglers on the curve. The biggest concern is that sometimes stragglers become stuck and never reach the future state without lots of help.

The Shadow Goal Phenomenon

BHAG #1 can often emerge as a "shadow goal" when it's not the explicitly chosen goal. A shadow goal is one that isn't officially acknowledged but still influences the project's direction.

• Shadow Goal Risks:?If the shadow goal (BHAG #1) is achieved, will the new system by itself be able to deliver the benefits expected from the officially acknowledged BHAG #2? ?If not, the project may not meet its broader business objectives. If that happens and additional resources required to achieve BHAG #2 are not available, project failure risk goes up.
• Influence of Vendors and Integrators: BHAG #1 might be their goal even if it isn’t the project team’s goal.? The internal project team should manage those relationships.? This is not to say vendors and integrators are doing anything they shouldn’t. ?When the internal team does not effectively navigate, the external consultants may have no choice but to step in and do it.

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Identifying the Real BHAG: BHAG #1 or BHAG #2?

To determine whether a digital transformation project is focused on BHAG #1 or BHAG #2, examine how the project team is organized, particularly the role of OCM:

• Separate Tech and People Sides:?In many cases where the goal is BHAG #2, the project is divided into a Tech Side (PM & IT) and a People Side (OCM), organizationally separate but working in tandem.??

• OCM Under IT:?In projects where OCM reports directly to IT and is limited to managing communications, employee engagement, and user training, BHAG #1 is likely to be the real goal.

?Conclusion

The trap here is that BHAG #1 seems reasonable and easy to understand. It is only if the intended return on the $XX million investment is a successful system implementation. But if the expected return is a lot more than that the enterprise is going to have to think again. BHAG #1 failure factor avoidance can be tough. Here are some other things to watch out for:

• Before the investment was made no one in the room was thinking about what exactly the investment wasn't paying for. The mistake occurs right there when the investment for BHAG #1 is made and funding for the operations side of the transformation is not.
• During the project planning effort, it doesn't seem much attention is focused on contingency planning, these projects are typically 'planned changes' where teams rely heavily on their work plans and schedules... no one is in the crow's nest looking for icebergs. Then the project is hit with a surprise and instead of a positive constructive response, team members behave badly.
• When the first signs of trouble appear executives continue to believe they will hit the motherlode in spite of what they see. They believe partly because when they signed off on the investment they believed success had to be inevitable because if you are spending that much money on a project success should be inevitable. ?