The failure of many large digital transformations projects lies not in the system itself, but in how your people interact with it.
In these turbulent and often fearful times, many organizations have realized they have to invest in transforming themselves, and fast. The highest profile transformations are digital: “moving to the cloud”, “getting into e-Commerce”, or driving greater efficiency by implementing ERP (Enterprise Resource Planning) software.
A PricewaterhouseCoopers study of over 10,640 projects found that a tiny, tiny portion of companies — 2.5 per cent — completed 100 per cent of their [digital transformation] projects successfully.
According to McKinsey—Oxford, 17 per cent of IT projects go so badly that they threaten the existence of the company.
As someone who leads “lessons learned” studies (colloquially referred to as “post-mortems” for good reason) and post-IT-implementation “rescue” engagements, I have seen firsthand what it is like inside those organizations, and it isn’t pretty.
When you walk through the door of so many workplaces that are seriously struggling with a major IT project, the first wave that hits you, like a bad smell, is the cynicism. People no longer feel like they can believe the assurances that “it will get better.” There’s a lack of trust in leadership and a growing culture of blame. People pull into their silos and their shells, they disengage, and the material impacts start: productivity drops, and retention and profits fall.
ERP, FMS (Financial Management Systems), LMS (Learning Management), Payroll (Phoenix anyone?), eCommerce, and POS (Point of Sale) implementations: the list for 21st century business is long. For larger organizations these are ERP or FMS projects in the millions. For smaller businesses POS or eCommerce implementations in the tens of thousands. The relative impact though, can be the same, good or bad.
When they are good, they are truly transformational, representing an unprecedented increase in capacity to grow far beyond what was possible before the new system was in place. So why do large digital transformation projects, which have the potential to be so positive, fail?
The answers don’t lie with poorly managed organizations. They lie in human nature.
The plug-in fallacy. Humans have a very transactional sense of change: just buy the thing, or take the course, plug it in, and the new lights start flashing and everyone is happy. The truth is that you can’t just plug stuff in. You have to do the hard work of integrating it into the organization; processes have to be adapted, people have to change the way they do things. There’s a reason we call it digital transformation. These aren’t just new toasters sitting on the counter. Assuming tools as powerful as an ERP system for a larger organization, or as impactful as committing to an e-Commerce platform for any organization, is a little like buying a Ferrari but insisting there’s no need to change the way you drive. You’ll never see the return on that investment.
Embrace the Transformation
To get the highest return on these investments, there are changes in thinking and internal transformations that we can consider.
The most important change in thinking is to understand that the thing itself isn’t going to realize a positive return on the investment you made. It’ll just sit there. You have to be prepared to allow the new system to transform your organization, and recognize that the real driver of value isn’t the new system, it is your people and how they interact with the system.
▶ Transparent collaboration.
Long before the first vendor darkens your doorway, the best way to set yourself up for success is to engage your people. Work together to understand fully why the investment needs to be made, what limitations it will be removing, what new capacity it needs to create and what the true cost of the transition will be. The sooner and more fully you commit to transparent collaboration in this way, the greater the chance of the hoped-for return on your investment.
▶ Acknowledge the losses.
A classic tenant of change management is that all change, even to something better, involves loss. If we don’t anticipate and acknowledge this, the risk is that people will cling to what they are comfortable with, what makes them feel productive and less dispensable (because they are experts in the legacy system, but beginners just like everyone else in the new system). Resist the urge to simply trumpet the benefits of the new and shiny thing or tell people to “be more positive” when they share their anxieties about the transition. Listen, engage, empathize.
▶ Focus on adoption, not just implementation.
Project managers drive implementation. They put the Ferrari in the driveway. Change managers ensure adoption. They make certain that all that horsepower actually generates performance. We support adoption through early, frequent, transparent and inclusive communication. It is amazing how many organizations seem oblivious to the fact that training budgets should be a meaningful percentage of the total project costs, not a rounding error or an afterthought. Ensuring a low-pressure training environment often slows down initial productivity but pays huge dividends (literally) when the time to full adoption is cut in half.
▶ Get beyond adoption and look for transformation.
You can’t get the best the new reality has to offer if you don’t allow it to change you. Also, no complex tool or entity exists without built-in history, biases and idiosyncrasies. Many of these are what makes the new tool or entity so valuable. But they cannot be used to their potential if we insist on doing things the way we have always done them. If you think you can drive your new Ferrari the way you drove your pickup truck, and expect your investment to yield the results it’s capable of, you are going to be disappointed.
Clemens Rettich is a regular contributor to Douglas and a business consultant with Grant Thornton LLP. He has an MBA from Royal Roads University and has spent 25 years practising the art of management.