Digital Transformation

Whatever You Do Today, Don’t Start A Transformation Programme

New research indicates that corporate transformations have a 78% failure rate.

The default position is that most top down change programmes will fail.

Smaller, well focused, spreadable changes, which are introduced on an ongoing basis in an inconspicuous way trump big change almost every time.

The global transformation market will be worth $2,279.4bn by 2025 with the consulting component alone at $44bn.

Who is really winning from transformation? It’s not necessarily going to be you or your customers.

More than 25 years ago, John Kotter made his now-famous assertion that 70% of corporate transformation efforts are doomed to fail.

New research shows it’s worse than that.

Only 22% of organisations successfully transform.

Using a meta-analysis the authors examined 128 global companies that had undergone transformation between 2016 and 2020. There are a couple of interesting points about their methodology.

First of all they actually defined the word ‘transformation’ as a “fundamental shift in the way that an organization conducts business, resulting in economic or social impact.”

Secondly, they considered factors other than just savings or cost benefit , the position that transformation snake oil enthusiasts always start from. Instead the authors (Paul A. Argenti,Jenifer Berman,Ryan Calsbeek,Andrew Whitehouse) crunched data on corporate reputation including impacts on employee pay, satisfaction, gender pay disparity and engagement. i.e did the transformation actually make the organisation a better and happier place?

The implications of their findings are clear: companies have a better chance at success if they focus on their people during transformation. And this is very important: “the type of employee engagement made the difference between top-tier performance and not. Companies that prioritized attributes that are fundamentally related to employee engagement, such as diversity & inclusion, in addition to traditional benefits, such as compensation or health care, saw stronger reputations and greater financial returns than other organizations”.

There’s a lot to consider in this as – in my experience – this is what most change or transformation programmes completely miss. The hallmarks of these programmes are big, 2-5 year initiatives with a number of technology drops and a greater number of consultants. The first release is usually many months, sometimes years away. Too often organisations deliver a form of ‘change-washing’: introducing reforms that purport to bring about change but fail to result in any substantive shifts in systems, services or culture.

Interestingly, the authors of the report applied the mathematics of evolutionary biology to corporate data sets. Corporations, like biological organisms, also have to adapt to their environments. Just like our natural systems, our organisations are not machines. They are systems — often very large ones — that are run by humans. They are complex and they are adaptive and therefore the path for us to change them will be unpredictable and often counter-intuitive.

If we can recognise that organisations are people and people are complex then we can avoid simplistic transformations – and make real sustainable change.

However, it’s worth noting that not everything needs changing. Many change programmes are a form of corporate narcissism, like folk who continually strive for Instagram Face in the internet’s endless pursuit of physical perfection. Far from pursuing some unrealistic dream, perhaps we’d be much happier if we learned to live with our imperfections, neuroses and human frailties.

This title of this post is partly meant in jest but there is a serious point.

If transformation programmes have a 78% chance of failure why would you ever consider doing one? You certainly wouldn’t get on a flight that only had a 22% chance of a safe landing.

If you’re in the middle or nearing the end of a change programme it’s worth looking at your metrics and seeing how this programme is actually going to benefit your people – outside the day to day impact on their job roles.

It’s never too late to press on the brakes. Many digital transformations are the living embodiment of the Sunk Cost Fallacy: where organizations continue to justify spending additional resources to try to recoup already lost costs.

However if you’re still at the beginning it’s worth looking at why the 70% + who have gone before you have failed.

The default position is that most top down change programmes will fail. Smaller, well focused, spreadable changes, which are introduced on an ongoing basis in an inconspicuous way trump big change almost every time.

What if, instead of trying to change the business you already have, you worked with colleagues to explore, experiment, test and build the company you should have?

Image by Free-Photos from Pixabay

Moving From ‘Big Change That Rarely Happens’ To ‘Small Change That Always Does’

We’re obsessed with big change, but what if we’re underestimating the power of the small changes that lie more easily within our reach?

In 2002 the UK Government announced the beginning of a £12.7 billion NHS National Programme for IT . The aim was seemingly simple: to replace paper medical records with a centralised national electronic database, allowing a patient from Manchester to walk into a hospital in London and find all their details readily available online in one place.

At the time, this transformation was meant to constitute the most extensive, and expensive, IT healthcare development of its kind in the world. “The possibilities are enormous if we can get this right,” Tony Blair promised whilst clearly overlooking the possibility of getting it wrong. Nine years later, in September 2011 the government announced that the scheme would be scrapped.

That £12.7 billion investment into nothing is now dwarfed by the UK Test and Trace System that has so far cost £37 Billion, which is significantly more costly than getting a sustainable human presence on the Moon.

All over the world our organisations are experiencing profound change. The most common way to react to that is some kind of transformational change programme.

The hallmarks of these programmes are big, 2-5 year initiatives with a number of drops and a greater number of consultants. The first release is usually many months, sometimes years away.

According to Barry O’Reilly, the growth of investment in digital transformation is compounding at 18% year-on-year. By 2023, an estimated $7 trillion will be spent on these initiatives annually. To put that in perspective, total US expenditure on healthcare for 2020 was about $4 trillion—during a pandemic.

70% of these programmes will fail.

Why? Well, generally organisations don’t change. People don’t like it and don’t see why they should.

They adopt a culture – a unique blend of practices , beliefs and customs – that takes a long time to form and an age to break down.

Think how hard is to is to make a significant change to your personal life: quitting smoking , losing weight , ending a relationship. Multiply that difficulty by the number of employees you have and the hundreds and thousands of inter-relationships.

Just as your body is designed to fight a common cold, many of our cultures protect the organisational DNA from any irritant antibodies. Add something new and it’s likely to get rejected.

The challenge then is not to embark upon another change programme , but to hack your culture. To deliberately set out to mutate your organisational DNA and make it more receptive.

This isn’t easy and will be resisted. As David Burkus points out, research suggests that there is often a cognitive bias against new introductions – a “hierarchy of no”.

It’s going to be difficult for any of us to abandon our organisational structures – but there are ways you can create a “hierarchy of yes.”

As Tony Hsieh said – one of the biggest organisational barriers to change can be managers themselves. Hierarchies simply aren’t built to accommodate change. If change is going to happen, it often has to be project managed a year in advance.

We need a more democratic work environment. One where employees’ input is sought into areas once reserved for a select few.

It’s more than seeking inputs, though. If we are serious about hacking culture it means employees co-creating solutions with managers, not just feeding into meetings.

One of the mistakes ‘big change’ programmes often make is starting from the top. It’s almost impossible to innovate from the centre of the business. It’s easier to start at the outer edge and work your way in towards decision makers.

At Bromford Lab we’ve had to distinguish between wicked problems which might require widespread organisational change – and the smaller changes and innovations we can introduce from the edges of the organisation.

It’s why Jeff DeGraff argues for the creation of a “20/80 rule” to innovation: “It’s easier to change 20 percent of your organization 80 percent than it is to change 80 percent of your firm 20 percent,” he notes. Work your change from the outside in.

Keeping change locked up into a Lab or Hub type arrangement will only get you so far. You are going to need to infect emergent leaders if you want to bring about widespread change.

Leadership development programmes are a great way to make creativity part of everyone’s role. However they can often instill too much adherence to past organisational behaviour rather than a more disruptive future model.

Instead we need to develop more curiosity in our organisations. Socially curious employees are better than others at resolving conflicts with colleagues, more likely to receive social support, and more effective at building connections, trust, and commitment on their teams.

Giving people permission to be curious and to create new rules is the quickest way to eliminate fear , the biggest enemy of change.

There are big, bold ways to hack your culture – but there are lots of mini-hacks you can do that will make a huge difference. Most colleagues are annoyed with a limited number of things which breed mediocrity.

Our track record of introducing big change programmes is abysmal and yet your organisation is almost certainly about to embark on one right now.

The challenge is to think big about everything you want to change, but always to start small.

We’re obsessed with big change, but what if we’re underestimating the power of the small changes that lie more easily within our reach?

The No.1 Problem With The Digital Workplace

“Collaboration is an essential skill of the digital economy. And yet how to collaborate productively is hardly ever taught either in universities or in the workplace.” – Gerry McGovern

It’s only a couple of months since I posted Why We Don’t Collaborate, but a few things I’ve been reading and observing make it a subject worthy of returning to.

The people selling us the digital dream (agile working, always on connectivity, work from anywhere) too often skip important questions. Are we really more productive? And do we really collaborate better that we used to?

As Gerry points out in his post , collaboration isn’t taught. You’re just expected to know. “Productive collaboration is really hard. It requires a whole range of communication, organizational and social skills.”

I’m old enough to remember when my pre-digital inbox (a filing tray) was actually audited by my team leader. In my first real job my performance related pay actually depended on my ability to effectively organise my day, my work and how I communicated and collaborated with others.

Today, I could have thousands of emails in my inbox and nobody would know. I could be presenting an image of an organised and well functioning colleague when I’m actually drowning.

The abundance of technology and the myriad new ways to interrupt someone’s day isn’t necessarily evidence of progress.

A new report on the potential impacts of digital technologies on co-production and co-creation finds that there is a lack of hard evidence of actual impact. Indeed, “conceptual fuzziness and tech-optimism stand in the way of collecting such evidence”.

This tech optimism is worth dwelling on. The report notes we tend to stress the enormous benefits digital technologies could have, but tend to ignore the profound uncertainties and risks that come with technological innovation. Digital transformation in a nutshell!

The report ends with an important question – who controls the shape of digital technologies in public service delivery and, by implication, the opportunities for co-production and co-creation?

In a more optimistic piece for Harvard Business Review, Raj Choudhury , Barbara Z. Larson and Cirrus Foroughi write that an increasingly mobile workforce can present problems for traditional team leaders. Their research indicates that the real productivity boost doesn’t come from digital tools per se, but rather from the increased flexible working options that digital can facilitate.

Their study compared how productive, loyal, and cost-effective employees at the U.S. Patent and Trademark Office were when they were allowed to work flexibly. They chose that employer because it had recently implemented a wide-scale pilot program allowing people to work from where and when they wanted, while still requiring others to remain in the office.

The results were 4.4% higher productivity among those in the pilot program, from people doing the exact same work as those who were required to come into the office.

However, they note that work-from-anywhere policies could increase costs in work environments that require brainstorming and project-based interaction, adding that more research is needed to fully understand the implications of remote work in more collaborative settings.

So again, the jury is out on whether the digital workplace helps or hinders collaboration.

I’m an eternal optimist so my gut feeling is that mobile working done well, leads to a better connected, more productive workplace.

On Tuesday this week my team hosted a hackathon in the Cotswolds. We came together physically with a range of partners and then retreated to synthesise the outputs remotely. The draft report and basic prototypes were distributed less that 36 hours later. There’s no way we could do that without digital tools AND having work from anywhere flexibility.

However, we are an innovation and design team who have the luxury to experiment with digital collaboration tools and we can invest a lot of time in our personal learning. We frequently go ‘off grid’ and use non work sanctioned tools if we can find a better way of doing it.

That probably doesn’t apply to 99% of workers – and it’s these people we need to focus on if we really are to get the benefits of our investment in technology.

Leveraging technology to connect and collaborate with people at scale is the No.1 requirement of the 21st-century leader.

It won’t happen on its own. So if you have a digital workplace strategy, you need a collaboration strategy too. Because if we don’t teach, measure, encourage and reward collaboration it doesn’t tend to happen.

Without that support the magical collaborative workplace of the future may be further off than you think.

Photo by Georgie Cobbs on Unsplash

Who Really Wins From Digital Transformation?

The birth of the change management movement began in the 1960s and 70s – when big consultancy began to see a vast new market – convincing organisations of the benefits of ‘transformation’.

Alongside this came the development of a distinctive, pseudo-scientific language of change which the consultants needed to pitch themselves to new clients.

It aimed to take advantage of a sort of corporate narcissism – hoping that senior executives and boards would swoon at the chance to ‘made over’ by slick looking outsiders.

They certainly did swoon, in fact they fell head over heels. As Jacob Dutton writes in a challenging piece – helping companies ‘do transformation’ is now very big business.

“The total size of the global transformation market is expected to grow from $445.4bn in 2017 to $2,279.4bn by 2025. The consulting component of a transformation programme alone is worth $44bn. As a result, the likes of PwC, Deloitte, KPMG and EY have all reacted and developed their transformation capabilities.”

The size of this market , and the riches on offer, arguably drive three key behaviours:

A focus on agile solutions rather than contemplative problem definition.
A subsequent focus on low hanging fruit – the easier problem to solve is often through tech, rather than the more complex wicked problems
A focus on benefits realisation rather than value production – which often puts the emphasis squarely on efficiency. Humans are expensive right?

Which then leads to: The rush towards technological transformation – as if cheap tech is the only solution.

But what are we losing from our organisations, from our community, when we approach transformation as purely a means to be quicker, slicker and more convenient?

We could be seeing the digitsiation of the most important thing your organisation has – the relationship with your customer.

As Gerry McGovern has written, looking at technology as cost minimization results in the hollowing out of organizations into technological shells, in which staff spend far more time interacting with numbers, code, and content than they do with their customers.

These avoidance tactics presume the customer is a cost on your time rather than an opportunity. In our own work we have learned that our customers and communities have many skills, often untapped and completely underutilized by us and others like us.

This change evangelism and the hollowing out of relationships can make us embark on the worst kind of technological solutionism – that risks ignoring the skills, assets and sheer talent that exists in our communities.

Starting With a Clean Slate

At Bromford we’ve done a lot of work on the standardisation of our processes and service offerings. It’s not sexy, but some of the most innovative companies operate very standard operating models. It allows them move exponentially quicker.

Focusing purely on the relationship your customer wants, and the simpler processes that support it, helps resist the need to transform.

Jacob Dutton proposes that big companies abandon the idea of transformation programmes altogether and suggests some tips for kicking the habit. I agree and would also add:

Let’s have more reflection and contemplation rather than lots of management activity.
Let’s devolve resources and influence to those closest to the problem rather than outsource them.
Let’s change little and often through small-scale experimentation.
Let’s not roll anything out until we have evidence that it actually works.

As Neil Tamplin has said perhaps our organisations need to be more amenable to gentle iterative change rather than lurching forward intermittently to catch up?

Being a human organisation means resisting someone else’s idea of best practice.

Who is really winning from transformation?

Is it the customer who now has a digital portal and a chatbot with a pre-determined series of options between them and the person they really need to deal with?
Is it the organisation who were promised a bright new future but find they have the same fundamental problems they always had?
Is it the employee who was told they shouldn’t resist change and that their job would be made easier, but found that their job would eliminated altogether?

The global transformation market will be worth $2,279.4bn by 2025.

Someone is winning and it’s not necessarily going to be you or your customer.

View at Medium.com

What Digital Transformation Is Not About

#WAODigital18
I’m hearing a lot about testing multiple small things and spreading what works – rather than investing in single Big Bang solutions. The world is moving too fast…

— Chris Bolton (@whatsthepont) June 14, 2018

“How ambitious can organisations be in using digital technology?” was the theme of two recent events I contributed to for the Wales Audit Office Good Practice Team.

It served as both a reminder of the issues our organisations are grappling with – as well as unearthing some opportunities we are yet to exploit.

Here’s a round-up of my post-match thoughts:

Success in digital transformation depends on mindset, not technology

The problem is that digital change requires a completely different mindset, not just skill-set. The consumerisation of IT means we are forever playing catch-up. Employees are using popular tech and devices at home and then introducing them in the workplace, whilst customers are using better tech than most of our organisations can hope to provide.

Redesigning our services around this is cultural rather than technological. It means we need to adopt very different organisational behaviours.

Stop talking, start experimenting

Organisations are still over-thinking digital and being cautious – waiting for the landscape to settle before they decide what they do. Arguably this ‘wait and see’ option is more ‘wait and die’.

When you don’t really know the way forward the best strategy is to spread your bets with small experiments. It’s these low-cost practical tests that show whether the fundamental assumptions are correct and what they mean for your business.

A focus on cost-cutting is a danger in transformation plans

Focusing everything on cost savings is outdated and will ultimately have longer-term implications for business in the digital era. There’s a huge opportunity for companies to broaden the lens and widen their ambition:

Rebuilding organisation’s as a platform – enabling people to select the suppliers and services they themselves want
Rewiring your organisation for the network era – stripping out hierarchy and management and making a transition to decentralised decision making
Automating everything that can be automated. But not before stripping out legacy protocols and systems. Decommissioning old world services as you launch new ones, reserving your people for worthwhile jobs that add value to their lives and those of others.

In reality, many of us are delivering the same services as we did in 1970, just with shiny websites and ‘customer portals’. That’s not transformation, that’s stagnation.

Technology cannot solve your organisation’s deep problems

If someone gives you the digital sales pitch as a golden bullet for systems that are fundamentally broken my advice is, don’t believe them – Shirley Ayres

The problem I have with digital cheerleading is two-fold:

The implication that all our problems are easily ‘solvable’
The subsequent rush towards technology – as if digital is the only solution.

The evidence that technology makes us more productive is weak at best. There’s an ever-increasing gap between technological sophistication and work actually being performed.

This is because we are simply taking existing ways of working and digitising them – effectively just transferring today’s problems to another platform.

‘Digital transformation’ is rarely about digital, or transformation.

It’s actually about the processes by which you change your business model or approach. Some of which will have digital elements.

We need to talk about leadership in a digital age

Digital illiteracy will get you fired long before a robot does. Digital is now not just part of the economy — it is the economy. Rather than it being the responsibility of an elite few surely anyone in a publicly funded role must be digitally literate?

Perhaps leadership in the digital age is less a set of skills and more a set of behaviours.

The challenge for current leaders and public sector organisations is the legacy thinking and a business model disconnected from citizens living digital lifestyles.

What is digital transformation anyway?

If your transformation doesn’t significantly change the customer experience of interacting with you, then it is not a transformation.

Indeed, the first rule of digital transformation is not to talk about digital transformation.

As Tony Colon writes – most employees wouldn’t be confident and nearly a third would be “extremely uncomfortable” in explaining what this concept actually is:

Let’s think about that for a second. The concept that businesses are betting on is something that the general population just doesn’t understand – even though they need to play a part in that transformation at work – and the entire premise of digital transformation relies on people.

Making the opportunities of digital real for people is becoming one of the most pressing priorities for our organisations.

Our biggest challenges are dealing with people’s belief systems, addiction to legacy processes and cognitive biases.

Digital transformation is not a ‘thing’.

It’s a race you can’t win with no end destination.

Photo by rawpixel.com from Pexels

The Case Against Digital Transformation

Something that’s being sold to you as more convenient may well be a lost social interaction that you’ll never get back – Ben Holliday, Convenience Isn’t Digital

Last week a friend of ours told me a story about trying to get some support for his partner who was ill. He was stuck in an impasse between the NHS, the Department of Work and Pensions, and Social Services.

He kept being told that either he, or the GP, or his employer, or her employer, had not supplied some piece of information. Two of the agencies blamed the NHS. The NHS blamed him.

The repeated interactions he was having with people and departments who wouldn’t, or simply couldn’t, speak to each other reminded me of the closing lines from I, Daniel Blake:

‘I am not a client, a customer, nor a service user.

I am not a national insurance number, nor a blip on a screen.’

He described the slow progress he was making against systems seemingly designed to make it as difficult as possible for him to succeed.

What really made me think though was the resignation in his voice as he said – “They just don’t seem to listen to what I’m saying – they only believe what’s on their screens.”

Myth #1: Every part of an organisation should digitally transform.

Not every company, process, or business model requires or is benefited by digital transformation.

Perhaps it’s time to pause the relentless cheerleading for transformation and consider the cost of digitising everything.

What does society look like when each and every interaction with citizens has to be digitally verified?

Today in business it’s heretical to suggest that it’s sometimes easier just to pick up the phone and have a conversation with someone. Big consulting has been very quick to point out the inefficiencies of talking to people – the implication being that everything is cheaper and easier online.

Are we allowed to mention that cheaper is not always better?

The digital revolution has meant lots of things but there’s precious little evidence it has improved customer service. On the contrary, as Gerry McGovern writes in his latest post, customer experience is flatlining. Organisations have often used technology to boost short-term profits with none essential expenses (like people) being reduced, outsourced or replaced altogether by machines.

The rush towards technology implies everything can be made better when the meddling influence of people is minimised. Even if that were true the data systems we replace them with are designed by people – and inherit many of our human flaws. We rarely ask to get a second opinion on what our data is telling us.

A better starting point might be considering the case against digital. Which part of your customer experience are you unwilling to automate and make more efficient?

First Direct – one of the UK’s first and arguably best online financial service – have deliberately made their telephone service easier to use than any other bank. That’s conscious design, deliberately adding cost to the business with the trade-off being improved customer experience.

A couple of years ago we did an experiment where we sent two colleagues out to meet with customers – devoid of any technology. What we perceived would be a huge barrier to the test turned into a net gain – the colleagues told us it enabled them to have a better conversation by not having to repeatedly look at screens. We liked the results so much we built an entire service around it.

Ultimately we have to change the leadership model, not the technology. Customer experience isn’t all about efficiency, systems and protocol. It’s letting people do what they do best — knowing customers, personalising service, surprising people with the unexpected.

Being a leader in the digital era means resisting the insistence for efficiency at all costs – and deploying digital methods where it actually improves the outcome and experience.

Rather than the continual celebration of change and transformation, we should spend more time considering its social cost.

What we are really transforming into – and why?