Turn Around Your Low-Performing Digital Transformation Projects

Organizational transformation is all around us. It’s the need of the hour and the future demands it. Without utilizing transformation programs, organizations stand to lose their relevance. Those who lost their opportunity to transform themselves are no longer talked about today. For example, the world is well aware of the failures of Yahoo, Blockbuster, Blackberry, Toysrus, and others, who lost their earlier positions of significance.

To ensure that they don’t fall behind, most organizations are undergoing various types of transformations. The most prominent of these transformations are enabled by digital technologies. A study by KPMG highlighted that almost 98% of the organizations that they surveyed have ongoing digital transformation programs. So, the urgency is quite obvious.

Digital transformation has become a competitive necessity. As a result, organizations are imagining new products and services, revisiting how they interact with their customers, focusing on digital-enabled operational excellence, etc. In extreme cases, organizations are even revamping their entire business models and changing the way business is done.

How Successful are Digital Transformation Projects?

Different organizations are in different phases of their long journey towards digital-enabled renewal and transformation. While some have achieved great successes, all is not well for others. According to McKinsey, just 26% of their surveyed executives are satisfied with the progress of their transformation programs. Two other studies from BCG and McKinsey state that almost 70% of digital transformation efforts fail to reach their stated goals. Another KPMG study highlights that 23% of the surveyed executives are concerned about not being able to sustain transformation related to long-term changes.

The Reasons Behind Digital Transformation Failures

There is also ample research and surveys highlighting the reasons behind these dismal statistics. Some of the major studies highlight numerous reasons, including CEOs lacking the aspiration to lead these programs, a lack of buy-in from all stakeholders, and a lack of skills. Empirical evidence also points to reasons, such as leadership being unable to establish clear goals and objectives for the transformation before launching these programs, lumping programs that may not be transformational under the label of “transformation” for the sake of pleasing shareholders, poor execution of programs, trying to rush transformations, etc.

Turnaround Strategies for Distressed Transformation Programs

While there are many strategies that one can pursue to make transformation programs successful, this article discusses three of them. These strategies include selecting the right leaders and managers from across the organization to lead these programs, building and maintaining the right momentum throughout the course of the program, and allowing for enough experimentation to reduce the chances of failure.

Let's discuss those next.

1. Make Leadership Pervasive Across the Organization

Given the complexity, breadth, and depth of digital transformation projects, strong leadership is needed not merely at the higher echelons of an organization, but across the organization and its structural layers. Therefore, organizations must select middle managers who also possess the proper leadership qualities to be able to steer these projects toward success. Over the years, we have come to observe and understand the important role that middle managers have played as digital champions in all types of complex projects. There is also plenty of empirical evidence proving that a lack of certain leadership qualities in middle managers can lead to substandard execution and significantly impact the performance of complex projects and programs.

Within their teams, managers with leadership qualities can help champion creativity and innovation, which are required for the execution of transformational projects. Such leaders are also needed to bring clarity, which can be a huge factor in inspiring continued confidence in their teams. Last but not least, managers with the right leadership qualities have a strong internal compass that can guide their decision making throughout the execution of transformation programs.

2. Maintaining the Momentum

Another strategy to ensure the successful completion of transformation programs is to build and maintain momentum throughout the duration of said projects. In the long and arduous road to transformation, extracting value from such programs usually involves a number of tasks and activities, which must be sustained over time. With that said, time can sap momentum from even the best of projects. One of the studies by the Everest Group points to “fatigue from continual change” as one of the factors behind the failure of transformational efforts. Other reasons for a loss of motivation and momentum include continual frustrations in dealing with stakeholders across the organization, trying to resolve complex dependencies across other departments, and navigating the many barriers that are typical in digital transformation projects and programs.

This is where strong managers and leaders must step in to guide their teams and help them sustain the momentum over the long haul to ensure success. To start, they must remain focused on the organization’s strategy and be mindful of the larger interests of the organization. This can prove to be the yardstick needed to help leaders and managers gauge their achievements, while keeping the sense of urgency alive. Leaders should periodically step away from the day-to-day minutiae of projects and remind their teams of the overall transformational journey by sharing stories of effective change. For example, during his time as the CEO of Amazon, Jeff Bezos was known to write long letters recapping his company’s key accomplishments while also reminding his employees that it was still “Day 1” of their journey. In addition, leaders should not shy away from openly discussing project challenges with their teams. Projects where challenges are overlooked and where progress is sugarcoated can lead to a loss of trust and confidence among team members. This can be a demotivating factor that slows momentum considerably. For example, according to one study, projects in which leaders are open and honest about progress are eight times more likely to succeed.

Also, while it’s important for organizations to institute the discipline and rigor needed to execute through a PMO or similar organization, it’s equally important to sustain momentum rather than relying on command-and-control tactics to try to get the work completed. This is also in line with another study from McKinsey, which mentions that the success of a digital change cannot be delegated to a PMO office. Leadership needs to be present and visible throughout the transformational journey until the job gets done.

To summarize, let’s not forget that one can sustain momentum in complex transformational projects only if the teams are committed to the journey. That commitment is only possible if the teams believe in the cause and can find some meaning in it for themselves and their organization. By staying engaged with the teams, leaders can thus help sustain that momentum.

3. Strike a Balance Between Rapid Delivery and Requisite Experimentation

One of the characteristics of most digital transformation programs is that they involve applying digital technologies at a large scale, which is meant to have a broad and deep impact on organizations. So, while creativity and innovation are essential during the early inception stages of transformation programs when the organization imagines new ways of conducting business, the insights that the team gains from iterative experimentation in subsequent execution stages are equally important to ensure a successful implementation of such programs. After all, it would be silly not to engage in some amount of experimentation when organizations are dealing with new technologies that could change the way one does business. So, in a world replete with competitive pressures, business requirements, deadlines, etc., where digital leaders are aware of the need to deliver business outcomes quickly, leaders must also recognize that the road to successful transformations are paved with experimentation, failures, insights, and valuable lessons. For a learning organization, these insights and lessons can be even more invaluable if they can become a source of learning for the rest of the organization.

?Conclusion

Due to the criticality of these transformation programs, it becomes incumbent for leaders to constantly gauge their transformation progress against their organization's overall strategy and be open to change if the delivered outcomes are not aligned to expectations. Because the fact is that for a number of organizations there may be simply too much riding on these programs.