Digital Transformation Failure Factor: The Primary Strategic Goal - - Part 1

From Process Transformations to Digital Transformations

I began managing Business Process Reengineering Transformations (Process Projects) in 1993 and continued in that role for the next eight or nine years. Over the past several years, I have transitioned into the role of Organizational Change Management (OCM) Lead on Digital Transformations (Digital Projects).

In the 1990s, the failure rate for Process Projects was estimated to be between 50% and 70%, a rate that mirrors the current failure rate for Digital Projects.

Initially, I assumed the factors that contributed to project failure for Process Projects would be the same as those that afflict Digital Projects, but it's clear now that some are and some aren't. Several factors that can impact Digital Projects rarely caused problems for Process Projects. This article focuses on one such factor: the primary strategic project goal.

The Challenge of Primary Strategic Goal Setting

Any transformation project can suffer from poor strategic goal setting. Sometimes no decision is ever made, leaving the project rudderless without a primary strategic goal. In other cases, leadership might believe they’ve set a goal, only to find out later that no one else knows about it. Alternatively, several goals might be chosen without prioritization, or the selected goal is vague and open to interpretation. While these issues can affect any transformation, Digital Projects face unique risks in this area.

Goal setting for a Process Project was relatively straightforward. A primary strategic goal, which we called the Big Hairy Audacious Goal (BHAG) was essential because those projects needed a specific target to avoid becoming too broad.

However, goal setting for Digital Projects can be less straight forward. During Process Projects, technology development and system implementation were always among the key components, but technology was not a game changer, nor was it expected to be. Consequently, the BHAG was never about the technology. However, now ERP systems are game changers, so the most important strategic goal for a Digital Project can revolve entirely around the technology.

BHAGs for Digital Projects

Here are the two basic Digital Project BHAGs:

1. Deliver an ERP system on-time and on-budget supported by a well trained, competent group of users.
2. Radically improve the performance of some aspect of business operations.

These two goals might seem like different ways of expressing the same idea, but they are not. Let’s call the first one BHAG #1 and the second BHAG #2. The IT-centric BHAG #1 and the operations-centric BHAG #2 are not even strategically aligned, and their change priorities often conflict.? That is what I believe, but others disagree.

A BHAG drives significant project decisions.? Consider a situation many Digital Project OCM Leads have likely encountered when business managers or product owners determine that a unplanned mission-critical system modification must be made before the system goes into production, and they submit a change request. If the goal is some variation of BHAG #1, especially if schedule disruption is an absolute last resort and no exceptions can be made because the plan is to use off-the-shelf functionality without significant enhancement, then the change request is denied almost every time. However, if the goal is BHAG #2, the request is usually taken seriously. A business case is made, and if the additional investment is acceptable and the schedule impact isn’t too severe, the modification is often approved because it will improve operational performance sooner rather than later.

Aligned or Misaligned?

Once after a discussion about strategic goals, I tried to capture what I heard in a slide.? It presents a continuum that I don't believe makes much sense, but others thought it made perfect sense. It prompted a conversation that ended with an agreement to disagree. The second part of this article begins with that argument.