Despite our accumulated experience the proportion of business transformation projects that fail hasn’t declined in the past few years. In fact, the whole transformation thing is becoming a case of damned if you do and damned if you don’t. With such a high number of failing projects you can maybe understand business leaders’ attempts to avoid death by transformation by resisting any kind of change even though that’s a sure path to self destruction.
There’s no doubt, businesses have to transform and quickly in order to compete and survive, but transformation failure is costly, not only in terms of lost time, but expense and business morale too. There’s rarely an opportunity to try again and many businesses whose transformations fail fold as a result.
I’m not talking small percentages here either. It astounds me to think that after so many years of talk about, what many call “digital transformation”, something like 85% of transformation projects still fail.
Think about it. If anything else in your life was failing 85% of the time you would fix it. When it comes to transformation, however, it seems we have just been repeating the same old approach and expecting it to miraculously return a different result!
So why do organisations continue to bumble into projects that can only spell death by transformation?
The answer, of course, isn’t simple.
Firstly, surprisingly few people really understand transformation. The fact that so many still refer to it as “digital transformation” is a testament to this. So, let’s get this straight first. Transformation isn’t digital. You are transforming your business in an era when the resources you need are often (but not exclusively) digital, sure, but what you are doing is “business transformation”.
Perhaps the most outstanding feature of digital technology is the extent to which it has speeded everything up — product lifespan, fulfilment, innovation, iteration, customer journeys, manufacturing, business processes, evolution, even life itself!
That means that the vicissitudes of transactional and transformation phases typical of traditional business since the beginning of commerce have become compressed. There are no longer peaks and troughs in performance represented by alternating transactional and transformational phases. To stay in business today you have to continually evolve, reinvent, question and innovate while, at the same time, transacting. Transformation is and will continue to be constant.
You are only as good as your NEXT big idea!
To even stay in the game every business has to harness the speed of digital technology, but, as I have already said, this isn’t about the technology, it’s about what you do with it. The computer scientist Alan Curtis Kay is accredited with the statement “The music isn’t in the piano” and the fact that so many business leaders believe it is, is one of the most common reasons for our failure to transform.
The fact is, we are already getting a glimpse of the decline of digital technology and the emergence of new technologies that are even faster, such as nano technology or quantum and biomechanical computing. We need to understand the role of technology pretty quickly to have a hope of surviving in business, because there will be far more challenging concepts for us to master in the future.
Business transformation is primarily about changing mindset.
The problem with the high failure rate is it encourages business leaders who are already reluctant transformers, to resist change. They feel vindicated in their belief that transformation doesn’t bring a return. The truth is though, that it’s not transformation that’s failing, but our approach to it. We need a better way.
So now the good news. Digital technology may be raising the bar in terms of the performance levels you must meet to compete in the digital economy, but a fact that most business leaders seem to miss is it also provides us with the insights we need to do that.
Today’s technology enables us all to do things that simply weren’t possible before and that opens up a whole new world of opportunity for business.
A great deal of attention is paid to how, with digital assets on your side, you can design and test product far more quickly, speed up your manufacturing process and deliver better quality. However, an often-unrecognised benefit of digital technology is the ability it gives you to thoroughly understand your marketplace and consumer wants and needs, so that you can THEN design and produce the RIGHT products.
Never before in the history of commerce has confidence in the success of new products and services been more justifiable.
If you are thinking of digital technology in terms of automating existing processes you are missing the point. There’s no doubt you can achieve gains by speeding up internal processes and many business leaders have mistakenly believed that in so-doing they have “done transformation”. Results like these, though, can only be short-term. The transformation consultant Rob Llewellyn talks of transformation “delusion”. In fact, if you study many failed projects you’ll see that businesses that see transformation in these terms usually end up accelerating in entirely the wrong direction.
In the digital age your prospects are telling you everything you need to know to turn them into customers and your customers are continually giving you valuable information that will help you build lifelong “Brandships”. All you have to do is understand how technology can help analyse the data you are collecting with every interaction. There’s no excuse.
Brandships is a concept I’ve not talked about for a while and maybe I should have. Some years ago I coined the term to describe the relationships we have with brands. We choose brands as we do our friends, on the basis of knowledge and trust, so our relationships with brands are very much like friendships. Hence my use of the term.
So, here are five things you should do to avoid death by transformation and make your transformation a success
1 – Deliver needs not wants
Digital technology has provided us with the opportunity to right the wrongs of the past. The power it gives us to understand the needs (as opposed to the wants) of the marketplace means that rather than churn out best guess or nearly-solutions that require a sales force to persuade people are the answers to their prayers, we can deliver products and services that do exactly what’s needed, pretty much first time, every time. That’s what digital disrupters are doing and it’s why traditional businesses with their typically compromised solutions can’t compete.
The juxtaposition of needs and wants is an interesting subject that impacts the future of businesses. Greater awareness of environmental issues and increasing conscientiousness of younger generations see us emerging from an era of conspicuous consumption into one of responsible consumption. This is manifested in re-cycling, up-cycling, natural sustainable materials and early signs of a trend away from the frivolous and poor quality products.
Thanks to digital communications, today’s consumers are better informed than any of their predecessors and they approach a purchase in a different way. By the time they arrive at your door their purchase is pretty much a done deal. They will know what your competitors can offer them and at what price. They will have checked out your after sales service on review sites and read the comments of people who have bought before, revealing how the product performs over time.
Occasionally they may want to fill in some gaps by talking to someone on your team who has the product knowledge, but other than that they rarely want a conversation. You need to understand that to the new consumer, on-line is their preference not a second-best option, even though it may be to you. The customer is in the driving seat and you have to learn to make the most of it.
There is much you can do to turn this situation to your advantage, but a fast track to death by transformation would be use your technology to try to force a conversation.
2 – Get focused
All the big consulting firms have done endless research on the reasons for transformation failure and to a large extent their findings have been consistent. There are around twenty-five commonly quoted reasons. I mentioned a couple already, but the big one is “lack of focus”.
This shows in many forms from an uncommitted CEO, to an undefined objective or groups of people with conflicting ideas on how to proceed.
Any kind of change meets with resistance, usually driven by self-interest. As Greg acknowledges, people will lie, cheat and generally obstruct initiatives for change, variously because it disturbs their equilibrium, exposes their true worth (or lack of it) or simply because they can (People get a kick out of demonstrating they have influence. Some don’t care whether that is good or bad). Don’t think your organisation is above this kind of thing. People often don’t play nicely when it comes to things that change the status quo!
The answer to this is to provide a set of values and beliefs everyone can share in and define a single-minded objective that people can get behind. The result of doing so is what Greg calls “movements”, but I believe are true “brands”.
It’s my firm belief that a brand is a community of people with shared values and beliefs and a common objective.
I’ve done a lot of work on this and worked out a few things, including that brand communities always have the same six stakeholder segments — investors, partners, suppliers, distributers, employees and customers — and the task of a brand-builder is to make them all, equally enthusiastic about the idea of contributing to the success of the community. This is what I help organisations do.
3 – Learn how to lead a community.
It’s essential to understand the role of leadership in a community. Successful communities are far more democratic and less hierarchical than many traditional businesses. Business leaders have to get used to the fact that command and control, which has been at the centre of business models in the past, simply doesn’t work anymore. For one thing command and control is founded on the assumption of infallibility. However, any thinking person will recognise the components of any contemporary business are far too diverse and numerous for any one person or even a small group typical of a company board, to have the knowledge to make the right decisions, even most of the time. Infallibility isn’t a credible concept.
This raises another reason why traditional business leaders may resist change.
They are preoccupied with the belief that transformation will create a business that holds no place for them. This isn’t true, of course. Most senior executives have experience and skills that are valuable to any organisation. The problem only arises if they lack the flexibility to operate in an environment where they are not a dictator. My Brand-Led Busines Transformation programme helps senior executives adapt to the new leadership role with mentoring and other forms of suppor. It also introduces them to the new processes they need in order to execute.
The principle of transformation is pretty logical and straightforward. Primarily, what you are doing is identifying market needs and delivering solutions. As I have already mentioned, this contrasts with the tendency in the past for businesses to create a solution and then look for a problem that it could solve. Often when businesses focus on needs they come to realise how far off the mark the products and services they provide are. Addressing that is very much what business transformation is about.
Organisations that get to the point of knowing what’s required often fail at the delivery stage, which is why any transformation programme has to follow a clearly-defined process. My Brand-Led Business Transformation programme incorporates ways of managing project teams, reporting processes and criteria for measuring the progress or viability of individual initiatives. You’ll need all of this if you hope to succeed.
4 – Decide what you can afford to invest?
The timescale involved in bringing a traditional business to the point of being able to compete in the digital economy, is subject to numerous factors, including their starting point, their sector, and competitors positions. Most importantly though is funding. The more you invest, the quicker you can progress and, if you are only now turning up at the starting gate, you’ll need a sizeable pot.
When you have money to invest you can hire the best talent rather than spend time re-training your existing teams, invest in software and equipment from day one, bring in the best consultants and acquire competitors who already have at least some of what you need.
Once you have identified the scale of your transformation project you’ll need to decide on a rough time-frame. Expect to find the pace, as you enter the digital paradigm, significantly faster than you will have been used to in a traditional business. You’ll struggle to keep up until you discover and master some of the ways digital businesses maintain their pace.
Ronald Heifetz coined the term “adaptive managers” to describe business leaders in the new paradigm. They spend less time agonising over decisions or preparing detailed plans for the future. In the digital world things change so quickly the kind of three-year plan a traditional manager may be used to is useless. In fact, if they were honest many of these kinds of plans have probably been nothing more than an executive security blanket for years.
Adaptive managers identify key indicators and harness the power of their community to make decisions quickly, whilst being flexible enough to change direction at any time. However, you will get a boost from being prepared. After that it’s all down to how deep your pockets are.
5 – Prepare for a long journey
It still won’t happen over night though. It takes even a well organised and funded business of average size around three years to transition to the point where it can hold it’s ground against digitally-driven competitors. If you consider that a digital disrupter arriving in your sector could effectively “own” it within a matter of a few months, you’ll get an idea of the urgency of transformation. This is why you need good funding and a different approach to that which has failed the majority of organisations so far.
This is not to say that it’s unrealistic to expect short-term improvements. Provided your approach is correct there’s no reason why benefits shouldn’t emerge early in the process. If time is on your side, you can also use early wins to finance subsequent initiatives, but, if the whites of your disrupters’ eyes are already in view, there will be no alternative to substantial investment.
I’ve found my Brand Discovery programme, which is the first stage in my Brand-Led Business Transformation programme, will change the perspective and introduce new thinking among senior executives who take part. I try not to waste valuable time and effort on short-term, temporary fixes, but prefer to invest in projects like this that address immediate issues, but also contribute to the make-up of the long-term strategy.
Transformation isn’t a single project, but innumerable inter-dependent projects of varying scale, some of which have to be completed sequentially. Comparing market needs with your ability to deliver solutions will highlight gaps in your resources, which these projects will be designed to fill. It’s unlikely you’ll be able to tackle all of these projects at once, even if you wanted to, so you will need to prioritise.
The pace of the digital environment will certainly intervene many times along your journey and you’ll want to adapt or change your plan. Some of the projects you have in your pipeline may be come unnecessary. Others may need to be created. Such is the nature of the digital marketplace.
Often the full benefit won’t be realised until the final project is completed. Then it should all come together like a finely-tuned machine and you will have avoided death by transformation.
January 19, 2022