Why Digital Transformation is so hard
How not to be part of the 87% failure rate.
The success rates of digital transformation projects are abysmal – as low as 13 percent in some studies – and they have barely shifted in 30 years.
In 1995, John Kotter published Leading Change, arguing that only 30 percent of change initiatives succeed. In 2008, a McKinsey survey of 3 199 executives found that only one in three change projects hit their targets.
Two decades ago, McKinsey suggested that successful change requires:
a purpose people can believe in – they must see the point;
reinforcement systems that support the new way of working;
the skills needed to operate in the new world; and
role models who actually live the change.
Having worked on several large-scale change and digital transformation programmes worth millions of rand, I can say this is sound in theory – but not helpful in practice.
Out with the old, in with the new
Greg Satell, author of Cascades: How to Create a Movement that Drives Transformational Change, notes that going big up front is the old way of doing things. The company-wide roll-out comes from a manufacturing mindset, where most transformation involved physical assets such as stock and machinery. Today, most transformation is about people, processes and technology, which calls for a more innovation-driven approach.
The logic of that approach looks something like this:
identify a specific problem worth solving;
secure majority buy-in from leadership;
define what success will look like and how you will measure it;
tackle the resistance that arises as the pilot succeeds;
get more people involved until adoption reaches 20 percent of the organisation (we’ll come back to this); and
scale through the network of teams across the business.
The risks to watch out for along the way are inflexibility, a lack of discipline, and a disengaged workforce.
Watch on YouTube here.
Interview time 52 minutes
“Change management is really people management.”
The crux of the matter
Kotter was right when he said, “Change management is really people management.”
So why don’t people like change?
South African psychologists Frans Cilliers and Pieter Koortzen’s CIBART model (2005) is useful here. CIBART stands for Conflict, Identity, Boundaries, Authority, Role and Task.
When an organisation redefines boundaries, authority, roles and tasks, it triggers a flood of questions in people’s minds and hearts about what this means for them – which quickly leads to conflict. Failure to work through that conflict is the single biggest reason for the high failure rate of change and digital transformation projects.
The second big challenge is that the boundaries, authority, roles and tasks assumed by executives during these programmes are often not in line with what is actually happening on the ground.
To understand why, we need to look at the nature of teams and organisational charts. Marcus Buckingham’s ADP Global Study of Engagement (2018) shows that, among people who say they work in teams, 64 percent work on more than one team, and 75 percent say their teams are not represented in their employer’s organisational chart.
Executives often assume that the org chart accurately reflects boundaries, authority, roles and tasks. In practice there is an informal network of teams and individuals who get the real work done every day. If influential people in that informal network feel threatened by, or disagree with, the formal decision-makers, the chances of success drop dramatically.
What to do about it
The first thing not to do is announce a grand digital transformation programme to the whole organisation. That made sense in old-style manufacturing transformations, where large-scale coordination and safety were paramount. For most organisations today, it is the wrong move.
A better route is the Viral Change approach developed by Dr Leandro Herrero.
Recognising that the informal organisation is the de facto organisation, Herrero advocates working with influencers to co-create narratives about where the organisation is going and to generate success stories. Pair that strategy with deliberate design of small, predictable teams, and you start to align real work on the ground with the transformation story.
The tipping point
Time: 2 mins 5 seconds
When populations adopt something new, they follow a predictable pattern:
Innovators (2.5%) – risk-takers who are first to experiment and are willing to fail.
Early adopters (13.5%) – opinion leaders who embrace change early but carefully, and help legitimise it for others.
Early majority (34%) – pragmatists who need to see proof that the change works before they commit.
Late majority (34%) – sceptics who come on board once most others have already adopted.
Laggards (16%) – traditionalists who hold on to the old way for as long as possible.
If you want digital transformation to take root in your organisation, you need to get to 20 percent adoption. That puts you well into the early-majority phase, where momentum becomes self-sustaining.
You get there virally – not through a big-bang launch. Move gradually, pulling more people into the new way of working through stories, peer influence and wins. If you opt for a grand reveal, your innovators and early adopters may embrace it, but your early majority is likely to resist from day one.
Shift the focus from announcing change to building movements, and you give yourself a far better chance than 13 percent of making your digital transformation stick.