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You may have seen over the years numerous reviews, articles and case studies from the likes of McKinsey, Boston Consulting Group and countless others about business transformation and digital transformation failures, and depending on what report you read, between 70-80% fail.
These reports usually come with a top 10 or so reasons for failure i.e. unclear objectives, absence of leadership, poor communication, poor change management etc.
These ‘top 10’ reasons may be the primary causes of eventual programme failure, but I think they are really just the symptoms of two deeper, more fundamental reasons and, unless these two root causes are adequately addressed, transformation programmes will continue to have a high failure rate.
Of course, root cause analysis is nothing new but when it comes to ‘transformation programmes failing’, it’s just not been applied correctly as by focusing on the top 10 symptomatic causes of failure, I think we’ve been looking in the wrong place, at the wrong things.
The first fundamental reason is lack of understanding; an under-estimation of what transformational change actually involves, the challenges and complexities that it brings, and the impact it has on all aspects of an organisation.
By transformational change I’m talking about strategic change, larger scale change that can have a significant impact on a company’s business model and operating model, where all aspects of a company can be impacted including:
- market and customer segments
- products and distribution channels
- the organisational design
- people & culture
… they are all connected, and how all these components work and interact with each other, and the impact of change on them, has to be understood.
Regardless of the primary driver for change (be it cost reduction, technology, regulatory, restructure etc) a company may ‘think’ it has the appetite for transformational change but this has to align with the understanding of what that means and what it involves.
From this alignment, expectations will develop around benefits, cost, effort and timescales.
If the alignment (between appetite and understanding) isn’t there at the very beginning, then at some stage during the course of the programme, this mis-alignment will become apparent and will need to be bridged; perhaps scaling back in some way or even cancelling the programme. Either way the ROI and expected benefits won’t be realised.
An analogy – think cooking!
You may enjoy cooking for family and friends, and may be quite comfortable cooking dinner for 6 people. However, you’d probably think twice if you were asked to cook a 7-course banquet for 50 people as, although this is also ‘cooking’, you’d know that the banquet is far more complex, presents more challenges and requires particular skills and experience.
Transformational change is like the banquet.
If you don’t understand the extent of what’s actually involved you’ll approach it like ‘cooking dinner for friends’, and you will find yourself on the road to failure before you’ve even begun.
So to avoid falling at the first hurdle, you must ensure that your appetite for transformational change and your understanding of what that actually means and involves are aligned.
Assuming there is alignment, the second fundamental cause of failure relates to engaging the appropriate capability to deliver it.
Additional capability will be required given the scale of change involved and there are three possible scenarios, only one of which is likely to put you on the path to possible success. However, companies often just aren’t very good at recognising what capability is required.
Firstly, you could engage a tier-1 consultancy to help.
This approach carries risk of failure because of the different priorities that you and the consultancy may have. You will care about delivering your programme in a cost-effective way that delivers strategic goals, enables you to move to a new way of working / a new operating state, and realise all of the benefits you expect.
However, the tier-1 consultancy may be more interested in generating additional revenue, ‘Land & Expand’, sustaining ambiguity and getting as many consultants on the ground as they can.
Secondly, you could get people in yourself but, when you’re looking to fill key senior programme positions, are you going to ask the right questions?
For example, if you’re looking for a programme director or advisor, and implementing a core platform is one of the many programme objectives, he or she should have sufficient knowledge of those ‘types of platforms’ (generic functionality and how they can be used etc), however, it’s not necessary for them to have in-depth knowledge about the specific platform being implemented; that’s why you have Subject Matter Experts – it’s a different role, a different skill set.
If you were looking for a conductor for an orchestra you wouldn’t expect them to have played, or be able to play all the instruments. They are there to conduct, to orchestrate. They need to understand what each instrument can do and how to get the best from all the individual components, to get them all working harmoniously together.
If you ask the wrong questions, you will get the wrong people.
You will get people who don’t fully understand what transformational change involves; people who can ‘cook the dinner’ but not the banquet, and again on a potential road to failure.
The third scenario is to get the right people i.e. the appropriate capability. This will at least put you on the road to potential success.
Of course, this isn’t very scientific but I believe the path to success or failure is set right at the very beginning, when setting the foundations and approach you’re going to take for your transformation journey… and that is way before any programme formally gets going.
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