It is customary to say that failure is not an option, and the same goes for digital transformation. Much as I’d like it to be true, one has to admit that this is not what we observe in the field. Strangely enough, touting that you have succeeded with your digital transformation efforts even seems to be an international sport. Not so long ago, I was browsing my LinkedIn timeline and I spotted something worthy of note.
Digital transformation failure is not an option
The LinkedIn post was from someone working for a very large international bank. Nothing wrong with that.
A very honourable banking institution goes digital and is happy about the result
This is a very honourable banking institution and I’m not quite the “Occupy Wall Street” sort of person, I do believe that banks have a role to play and even though I’m not in sync with the scandals that arose with the 2008 crisis, I really cannot imagine hiding wads of bank notes underneath my mattress.
That said, the Linkedin message was quite something. It stated that
” xxx [name of the top man] had written his first ever piece of PHP code!” and it added that “this [was] the proof that the Bank was digitally transformed.”
It’s almost laughable, but at the same time, I am quite sure that there are people — be it in banks or elsewhere — who believe firmly in the fact that
a) A multi-billion dollar top executive should start learning coding and PHP of all languages
b) Having just written a line of that venerable code (even though not a trending topic anymore) is sufficient to transform a very old and respectable banking institution into a maverick fintech startup.
Success and failure are sometimes hard to measure – in digital transformation too
“One man’s nightmare is another man’s dream” Rupert Hine was singing but still, the proof of the pudding of digital transformation is in eating the pudding. And if you want to understand innovation, you will have to get to grips with the history of innovation, which as Berkun stated in his book, no one gets properly.
In the following piece by Cyril Bladier, written for the digital transformation horror museum of our client iRevolution [disclosure], one understands that, and also the fact that digital transformation failure is not a technology issue. A fact that should always be remembered.
Digital transformation failure guaranteed
The words ‘digital transformation’ are the trendy buzzwords that people put in their special sauce to ensure the success of every article, course and conference they are involved with. Everyone is doing it, but decision makers seem lost when they have to try to tackle the subject for their own organization.
Transformation = Disruption
As Yahya El Mir, co-founder of IRevolution, says: “transformation is a breakpoint”. To embark on a transformation and end up reproducing the same processes or the same ideas will undoubtedly lead to the same results. This is one of the reasons why businesses need a digital transformation specialist to guide the non-specialists (but specialists in their industry) as they rethink their organization and operations.
A little bit of history
When we look at what has happened in recent years and we look more closely at companies that have been successful in transforming themselves or even transforming their industry, the greatest success comes from those who have managed to think differently. These are organizations that have not necessarily brought with them a technological breakthrough.
Most of the time, those who are behind these major transformations have identified consumers’ “irritants” – the things that annoy their customers, known to all but ignored by brands who believe that they are all powerful and unbeatable. These businesses have redesigned their business models through the resolution of these friction points.
How Apple solved its customer ‘problem’
Apple did not kill the music industry any more than it invented hard disk MP3 players. The first player was introduced in 1999 (the Personal JukeBox from the Korean firm Remote Solutions) and the first one to store 1,000 tracks was created by Archos. Apple’s real innovation in the MP3 player market was design and simplicity. It is worth remembering that Apple was almost bankrupt in 1997. As for the music industry, Apple killed the idea that you had to buy a whole album when you only wanted to listen to one or two tracks.
What problem did Uber solve?
Uber didn’t kill the taxi industry either. The company was born out of the frustration of its founder to find a taxi when he was at the LeWeb Conference in Paris. Uber did, however, put an end to the scarcity of taxis and killed the business of a small number of unethical drivers who would not hesitate to take the unsuspecting customer on the longest route possible, for the highest possible fare.
Amazon, the undisputed champions of customer experience
Amazon did not kill retail or e-commerce. Amazon did, however, capitalize on the bad customer service and bad user experience that customers had with other existing suppliers. For Jeff Bezos, the customer has always been “the most important person in the room” (even when you are not in the room).
Airbnb addressed 3 distinct issues
Airbnb focused in on limited hotel capacity. Airbnb was born of the impossibility of its founders to pay their rent. To help make ends meet, they rented out their apartment during a popular conference in San Francisco at a time when every hotel room was booked up. Airbnb responded (initially) to 3 customer needs: to meet people from around the world, to help make ends meet and to let people stay more cheaply than in a hotel.
Digital transformation is not a question of technology
These are just a few examples, but they illustrate a significant point: the technology in itself does not create transformation nor a rupture. Fundamentally, it is the fact of not being truly customer oriented that is the biggest threat.
This does not mean that technology has no value or no role. On the contrary: technology is at the heart of all transformations. But it is not the only way to reach one’s business objectives. What is at the forefront of technology today may be totally out of date tomorrow. The examples are numerous and the risk of being technologically overtaken is real. Especially since technologies live and die faster than businesses do. However, being customer-centric is a timeless principle.
And now over to Greg Palliere who is our top-drawer expert today:
The expert’s opinion: 7 pitfalls to avoid in digital transformation
There are many reasons and many ways to go if you want to stack the odds in your favor to ensure your digital transformation fails. To analyze these causes of failure, we asked Gregory Pallière, co-founder and Chief Development Officer of iRevolution to share his experiences in the field.
1st Pitfall: confusing projects and initiatives
This is seen in the overwhelming majority of failed transformations.
What is a project? A project has a beginning and an end – and that is very convenient from a budgetary point of view. It is a useful way of working on mature topics, for example, optimizing an ERP.
On new topics, such as digital transformation, we have to create spaces to maneuver and innovate – knowing that there is a beginning and an end means that there is a danger that we think we will be able to hit the magic spot with the first shot. That can happen sometimes but it’s often a fluke. Rarely is it possible to get it right the first time and it’s difficult to foresee exactly how users will react to the outcome of the project.
If the company has the ability to change the result, everything is fine. But if it has already spent a lot of money on the project and has decided to reinvest only if the project works the first time, you can be sure that this project will not make it past the first round, because they will immediately surrender themselves to the idea that it will fail.
2nd Pitfall: putting all your budget into resources
Let’s say that to succeed in digital transformation, you have to use your existing resources. So, we put all our efforts into the internal acquisition of these resources, and we invest in a “Digital Factory” and “Skill Center”.
All the energy is taken up by everyone’s contribution to the resource pot and this leads to an inevitable compromise in the majority of existing projects. Acquiring resources is a good thing but it must not become an end in itself. Also, it is an expensive way of doing things. Obtaining all the resources necessary for digital transformation is a huge challenge because the field of possibilities is pretty much infinite (for example, dealing with legal impacts, marketing, the supply chain and so on).
The impact of this way of working is generally bad. Companies focused on these schemes spend millions on the acquisition of resources. They have the satisfaction of having acquired them but wonder after two or three years what it has brought them. The answer is almost always disappointing.
Instead of focusing on resources, we need to focus on initiatives. You should only acquire the resources that will have the greatest impact on your business and increase them gradually, as you develop your initiatives.
3rd Pitfall: picking unwinnable fights (for example, keeping doing the same things or giving in to fashion)
To ensure digital transformation failure, just do not ask the right questions.
Often, we think we can use digital technology to solve everyday problems. However, while digital can be very powerful tool to develop new ways of doing things, using it to focus on existing problems is very limiting and takes up a lot of energy. And in the end, it is a very inefficient thing to do.
Let’s take a real-life example. The distribution of products through e-tailers is a complete paradigm shift. Looking at it from a purely defensive point of view while trying to protect your traditional sales channels, would be about as successful as King Canute’s attempts to turn back the sea.
Another trend that we often see is the launch of a large number of initiatives at the same time. “I heard it was important to have a YouTube channel,” “I was told it was important to have a corporate website” or to have an online “flagship store”, or “to analyze the behavior of my consumers through a neural network”, and so it goes on.
There is a myriad of buzzwords like those that make companies invest a lot of money in 50 or 60 different projects at the same time, but with no coherent plan or consistency. Result – someone gets rich and it isn’t you!
4th Pitfall: Failure to work Smart – and doing it for more than six months
In the collective imagination, the longer the project, the more important it is and the more important it is, the more important the company is. In addition, internal processes ensure all projects take an age to reach fruition.
Also, it is vital to do everything we can to guard against possible failure, because it is a known fact that, when it comes to digital, the road is lined with unending stream of crashed cars. Thus, we will try to protect everything, to make an expression of need within a set of specifications, to find suppliers, to do the development, and then to do tests … in short, a traditional project cycle, for a duration of one or two years, at best.
As a result of this very long time period, it is almost certain that the initial vision will bear no relation to the needs of consumers because things will have evolved considerably under pressure from the Market definition in B2B and B2C - The very notion of "market" is at the heart of any marketing approach. A market can be defined....
On top of that, it is very difficult to keep a team motivated for such a long time.
In short, if the first version of the project appears in longer than 6 months, it is highly likely that you will succeed in failing your digital transformation.
5th Pitfall: making do with best-effort instead of dedicating a full-fledged team on the project
A digital transformation requires a lot of different ingredients. Depending on the project, marketing, sales, distribution, and myriad other elements. But HR will have a hard time justifying the creation of posts for all of these things.
The trend is, therefore, to call in each department and ask them to contribute personnel to the project, for the greater good. It is possible that they stumble across some ‘heroes’ by accident, but most of the time, it is just amateurs doing their best and doing it in addition to their actual job, fitting it in where possible.
Result: it will take a real stroke of luck for it to work, because it is a part-time endeavor by people who are trying to do their day jobs at the same time. In order to ensure transformation failure, make absolutely certain you do not use a dedicated team. This can be one or two people and the rest can be picked from anywhere else within the rest of the organization.
6th Pitfall: doing something new using the old
Five or six years ago, you still had to explain that digital requires a change of mindset and culture and, crucially, a change of habits.
Today, most people understand that, and it has, instead, become a strategic issue.
As a strategic issue, the trend is to find and name the best lieutenant, then create teams made of people who work well in the company, who you will task with the development of the digital business.
However, as we just said, digital requires a change in your way of thinking, and the traditional way of doing things is not necessarily the way that will work in the digital world because it needs a necessarily different approach. Worse still, there is an inevitability that we will try to change the organization because, in the traditional way, we solve problems by tinkering with the organization instead of bringing in new ideas from outside.
So while you are persuaded that internal resources will be enough and that the ideas that have worked fine since the industrial revolution, based on intellectual property and the sure knowledge that we already know how to do everything, you will be safe in the belief that doing something new by using the old will work, despite the fact that the actual result will probably be pitiful.
If you want to succeed, you must be able to inject new blood and ideas and life into the situation through external services or recruitment.
7th and final pitfall: failure to set a goals and targets
Because digital is new and puts pressure on organizations to change their habits, the temptation to lighten the pressure by avoiding the additional constraint of setting goals will be huge.
“How many downloads will we get?”, “How much will I have sales?”, “When will I release this new solution?” The tendency will be to say: “we do not know where we’re going at all,” “it’s too early to say,” “there’s no rush, in 1 or 2 years,” or to believe that creating pressure through uncontrolled indicators is not worth it.
By thinking like that, you are guaranteeing that you will not reach your desired outcome. Worst still, you won’t even know that you have not reached your goal because you did not set any targets and are not entirely sure what the result should be.
It is vital to set KPIs and targets right at the beginning of the project unless you want to be absolute sure that you will achieve nothing.
Digital transformation is not a technological issue. Rather, it’s the evolution of your business model and your organization towards a customer centric model. You know your job, so surround yourself with good digital specialists and digital business models so that you can better understand the subject and move in the right direction – and that’s all the more important because there is no magic recipe or special sauce.
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