How to Ensure a True Digital Transformation. Surprise!.. Start Acting Like a Software Startup Company

Introduction:

Nearly all Enterprise companies and their executives are struggling with their digital transformation initiatives.  

With 70 to 80% of these projects failing to gain traction and scale within their operations, 73% of executives report “They saw no business value at all from their digital transformation efforts.” (ref 1)

• They have no idea they need to think and act like a Software Startup Company to be successful.

As mentioned in our first two (2) articles, digital transformation requires successful navigation through these two critical milestones before worrying about organizational growth and corporate infrastructure complexities.  

• We called them Reason 1 and Reason 2 for failure:

Reason 1) The disruptive technology we are dependent upon must work as advertised and not include production stopping technology gaps which are out of our control (ref 2).

Reason 2) Our Digital Transformation Team must successfully deploy this disruptive technology into the hands of one or two satisfied production users who are willing to tell others of their success (aka achieving Successful Production MVP see definitions below). An outcome that is completely in our control (ref 3).

• See the Definitions at the end of this article.

In this article, we will discuss the third (3) major reason why digital transformation initiatives fail and what to do about it. 

Reason 3) for Failure: The digital technology “does work” but:

We misjudge the proper organizational structure required to ensure a true digital transformation. 

Then we poorly time our Digital Transformation Team’s growth and add corporate bureaucracy to the team which wastes investment funds and burdens the team's ability to accomplish and support their first Successful Production MVPs. 

• Dooming the Digital Transformation Team and its initiative to a slow but ultimate failure.

Bruce Cleveland founder of Wildcat Venture Partners and author of the great book “Traversing The Traction Gap” (ref 4) put it well when he said:

• ”…Digital transformation in an enterprise company requires reimagining and challenging every notion of the business model and operations…” (ref 5)

Organizational Failure is hard to avoid for the following reasons:

1.     Many executives believe that most digital transformation initiatives will succeed given enough time, money, and Program Management.

• The truth is most digital transformation initiatives will fail no matter how smart you are, or how much time and money you have.

 2.     Many executives are afraid of missing the “digital transformation wave” and feel their industry and competition are already successfully riding this wave.

• When in fact, the early self-proclaimed leaders in these disruptive technology fields have over-hyped and oversold their digital transformation success stories.

For example:

• IBM’s CEO Ginni Rometty oversold the success of their Watson AI technology for diagnosing medical conditions while the doctors using this technology said that Watson was not working as advertised. Ginni Rometty resigned as CEO of IBM in January, 2020 (ref 6).
• GE’s CEO Jeff Immelt oversold the success of their “Industrial Internet” operating solutions while their internal production organizations were not using GE’s technology successfully (ref 7). Jeff Immelt was forced to resign in October, 2017.
• Tesla’s CEO Elon Musk predicted by 2017-2018 he would have a 100% Autonomous Tesla vehicle (ref 8). Google’s Sergey Brin claimed by 2017 we would be driving in 100% autonomous vehicles. It is now 2020 and there are NO 100% autonomous driving vehicles on the market. Because they do not work (ref 9).

In the examples above (and in hundreds more), the digital transformation industry and its executive leaders' willingness to “claim success” before achieving success… is stunning and misleading.

Having the equivalent of a Successful Production MVP (i.e. a few successful users who have embraced the new technology, are using it successfully every day and are willing to tell others about it) is the only true sign that digital transformation success is on the horizon.

• Each of the companies above has retracted their claims, restructured their leadership, changed their organizational structure, and eliminated digital transformation jobs.

3.     Many executives believe it’s best to run Digital Transformation Initiatives under a “Corporate Digital Transformation Umbrella” where resources are shared and moved around within a matrixed organization. For example, sharing IT and software development resources.

• The truth is that each Digital Transformation Team should be run like a small independent and dedicated software startup company led by an intrapreneurial General Manager (ref 10). 

 4.     Even before achieving a Successful Production MVP, many executives require weekly tracking and reporting of their digital transformation team’s progress, rolled up through many layers of organizational staff who spend their days creating templatized status reports, “rigid-agile” processes (yes, this is an oxymoron), rolled up deployment scorecards, earned value calculations, and adherence to long-term corporate roadmaps.

• Instead, they should do everything possible to remove unnecessary corporate bureaucracy and infrastructure overhead from the Digital Transformation Team so the team can focus on achieving and supporting their Successful Production MVPs.
• Remember, if the Production MVP fails…your digital transformation fails.

What is a Digital Transformation Executive to Do?

The three (3) important messages for enterprise companies and their executives are:

1.     There are NO shortcuts to your digital transformation success. You must complete a Successful Production MVP for each Digital Transformation Initiative before you expand your Digital Transformation Organization and bureaucratic infrastructures.

2.     Model each of your Digital Transformation Teams after a small independent and dedicated Software Startup Company led by an intrapreneurial General Manager. Resist the pressure to grow your Digital Transformation Team until you have accomplished a Production MVP. 

3.     Be conservative and humble with the messaging of your digital transformation progress. To your internal company people, external partners, customers, and industry peers. 

• Premature and over-hyped success stories will come back to haunt you starting with your internal production users and extending all the way to the Board Room.  

The Way Forward:

Once you have achieved a Successful Production MVP, your deployment and investment risks will have been significantly reduced.

You have finally found a successful deployment pattern that your Digital Transformation Team can duplicate across other production users.

You now have a set of trusted production pragmatists who are willing to tell others of their digital transformation success which will promote traction and scale across your enterprise. 

• Now is the time to start spending money on growing the Digital Transformation Organization. Remember your goal is to model an internal, independent “Software Startup Company” dedicated to this Digital Transformation Initiative.
• Now is the time to start communicating your digital transformation success to other potential users within your company.

Grow your Software Startup Organization (Post - Successful PMVP):

You can greatly improve your chances of accomplishing traction and scale across your enterprise by reimagining your digital transformation business model and operations in the following ways: 

1.     Your Digital Transformation Team should include dedicated people who can perform every required digital transformation function necessary for this disruptive technology such as Software Product Development, Deployment, Customer Experience strategy, and internal Marketing activities.

2.     As you grow your digital transformation resources do not be afraid to leverage capable 3rd-party Systems Integrators and 3rd-party Development and Deployment Experts.

• Your Digital Transformation Team can learn from these 3rd- party experts allowing you to more quickly create a world-class digital transformation team.

 3.     Hire additional team members carefully and slowly. You want to find passionate, startup-minded personnel that your intrapreneurial General Manager can easily motivate, minimize team conflicts, and create a powerful team esprit de corps. 

• Just like startup company founders realize, the type of employees you hire will make or break your future digital transformation success.

4.     Begin to add development operations (DevOps) and infrastructure experts so you can repeatedly deliver high-quality enhancements and bug fix releases. 

• It is important to show your early Successful Production MVP users and potential new users that they have selected the right digital technology and Digital Transformation Team.
• Plan to support as many as 4-Bug fix releases and at least 1-Functional release every year.
• Your loyal end users need to be assured that their new digital transformation technology will stay competitive, continue to add important functionality, and will achieve higher quality with each new release. 
• Just like they expect from every Software Company they do business with.

5.     Add a dedicated Hotline Support team of IT and OT-Experts (see definitions below) who fully understand your digital transformation deployment infrastructure, disruptive technology applications and can expedite and resolve production stopping issues quickly (shooting for a 24-48 hour turn around).

6.   Establish an Internal Technical Marketing Team:

• Many enterprise executives miss the importance of building a strong internally focused Technical Marketing Team. They incorrectly think that their digital transformation initiative will “sell itself” and is immune to external and internal competition.
• In reality, even though you have achieved a Successful Production MVP, and your digital transformation initiative will benefit from “word of mouth” traction, this groundswell of good-will must be carefully promoted, defended and coordinated.
• Similar to any Software Startup Company, without a strong Technical Marketing Team, your digital transformation traction (you worked so hard to achieve) will stall and then die out.

7.     Technical Marketing should be a formal Digital Transformation Team function, that sits between the current and potential end users and the development team with explicit skills to accomplish the following:

• Build and perform regular demonstrations to reinforce your digital transformation messages, value and successes to other decision makers and new potential end users within your company.
• Understand through Customer Experience interviews how your current users are achieving value with their digital transformation deployments, what will accelerate greater value, and what is required to capture new production users. 
• Use this “Technical Marketing Team” to convert these customer experience interviews into new high-value experiences and functionality. Do not rely on your Product Development, Deployment, or Hotline Support teams’ intuition for new functionality. Their intuition is often wrong and many times leads to software bloat (focused on a few user’s needs) which will render your technology hard to use and uncompetitive.
• Contrary to popular belief, at this stage (post Successful Production MVP stage), you Do Not need to rely on 4-week Agile sprints to maintain and expand your customer’s satisfaction. Instead, focus on well-orchestrated (and promoted) annual functional releases.
• Since you now have a successful set of users running your digital transformation technology. You need to be broader "market minded" to ensure you add new capabilities that will keep you competitive and able to attract new potential users. 
• This Technical Marketing team will help evangelize (with your intrapreneurial General Manager) your digital transformation product positioning, roadmap and will demonstrate the importance of new capabilities to existing and new potential users.

8.     Establish an Internal Digital Transformation Venture Board:

• Software Startup Companies have a Venture Capital Board which regularly reviews and evaluates (quarterly) the current phase of traction and scale and the necessary level of new investment to accomplish the next phase. 
• Taking a page from Geoffrey Moore’s great book “Zone to Win”; establish an internal Digital Transformation Venture Board to shepherd your growing Digital Transformation Teams (i.e. your internal Software Startup Teams) through what Moore calls “The Incubation Zone” (ref 11, ref 12).
• This Venture Board will also serve as the primary reporting venue for your Digital Transformation Teams, eliminating a significant amount of unnecessary corporate bureaucracy.

You are On the Home Stretch to Success:

You are literally on the home stretch to achieving traction, scale, and accomplishing your digital transformation dreams. 

You now understand the important reasons why 70-80% of digital transformation initiatives fail and can improve your company’s probability of success by following the patterns laid out in this article and our other two articles (ref 2 & ref 3).

Best Wishes on your exciting journey!

Chris G.

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Definitions:

In this article, we will use the following digital transformation definitions:

Enterprise Digital Transformation:

• The use of new, digital technology that often depend on new disruptive technologies like Cloud Computing, Smart Phones, Augmented Reality, Data Sciences, and the Industrial Internet of Things (IIoT) to solve business and operational problems within and across the enterprise. Accomplished through a multidisciplinary team of OT, IT, Production, and Business Process experts (aka your Digital Transformation Team).

IT-Experts (Information Technology):

• Your internal & 3rd party team of Information Technology experts who deploy and support our computing infrastructure, networks and security, business and engineering software applications.

OT- Experts (Operational Technology):

• Our internal & 3rd party team of Operational Technology experts who possess domain and process knowledge plus knowledge of the disruptive technology applications required to solve the business or operational problem. 

Successful Production MVP (PMVP):

• A special form of Production Pilot that delivers the minimum viable (but usable) product to the first production user(s). This Production MVP delivers the value promised by previous demos, Proof of Concept (PoCs), and Pilots to such a degree that the production end-user(s) embrace this new technology, are using it regularly instead of their old process(es) and are willing to tell others about their success.

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Article References:

(ref 1) Everest Group “Why Digital Transformations Fail…”

https://www.everestgrp.com/2019-08-why-digital-transformations-fail-3-exhausting-reasons-blog-51164.html

(ref 2) LinkedIn article by Chris Garcia (July 30th, 2020) “Why Your Digital Transformation is Actually Not Working…and cannot be made to work no matter how smart you are”

https://www.dhirubhai.net/pulse/why-your-digital-transformation-actually-working-garcia

(ref 3) LinkedIn article by Chris Garcia (Aug 13th, 2020) “Why Your Digital Transformation is Not Working…You Leave the Scene of the Crime!”

https://www.dhirubhai.net/pulse/why-your-digital-transformation-working-you-leave-scene-garcia

(ref 4) Bruce Cleveland “Traversing the Traction Gap”

https://tractiongapbook.com/

(ref 5) Bruce Cleveland - Wildcat Venture Partners “The Elephant in the Room…the Current State of Enterprise Digital Transformation”

https://wildcat.vc/the-elephant-in-the-room-startups-enterprises-and-the-current-state-of-digital-transformation/

(ref 6) IEEE Spectrum “How IBM Watson Overpromised and Underdelivered on AI…”

https://spectrum.ieee.org/biomedical/diagnostics/how-ibm-watson-overpromised-and-underdelivered-on-ai-health-care

(ref 7) Inc. “Why GE Digital Failed”:

https://www.inc.com/alex-moazed/why-ge-digital-didnt-make-it-big.html

(ref 8) WIRED. “Old Promises Broken, Musk Offers New Pledges on Self-Driving”

https://www.wired.com/story/promises-broken-musk-offers-new-pledges-self-driving/

(ref 9) Vox. “It’s 2020. Where are our self-driving cars?”

https://www.vox.com/future-perfect/2020/2/14/21063487/self-driving-cars-autonomous-vehicles-waymo-cruise-uber

(ref 10) Gifford Pinchot The Intrapreneurs 10-Commandments

https://www.pinchot.com/2011/11/the-intrapreneurs-ten-commandments.html

(ref 11) Geoffrey Moore “Zone to Win”:

https://www.zonetowin.com/

(ref 12) Geoffrey Moore “Zone to Win Introduction Video”: The Incubation Zone starting at 20:20-20:28:

https://www.youtube.com/watch?reload=9&v=PDiCkAzMq54

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About Chris Garcia:

I have been in the digital transformation business for most of my adult career. Having founded two (2) digital technology start-up companies focused on engineering and manufacturing automation in discrete part industries like Aero, Defense, Automotive, and Heavy Industry. These companies were funded and mentored by smart venture capitalists from which many of the observations and lessons learned in this article have come.

I have also helped lead Enterprise Digital Transformations initiatives at GE, HCL, Siemens, Dassault Systems, and Lockheed Martin.

Finally, I led Software Research, Development and DevOps for the world’s most popular 3D Computer Aided Design (3D CAD) Product called SolidWorks a division of Dassault Systems.

Your thoughts, comments, likes (dislikes) are welcome through my LinkedIn account or by email

www.dhirubhai.net/in/chrisgarciaMBAIIoT

[email protected]

Thank you for your interest…

Chris Garcia

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