Change is never easy and always disruptive. And when that change is overlayed with the impact of digital disruption, it is beholden upon company leaders to understand the serious and significant potential pitfalls.
This column is the fifth part of an eight-part series.
During the course of this series, we’ve already identified a number of key attributes of successful programs — so the downside of those won’t be addressed in detail again here. However, it is worth recapping some of those vital areas from a negative perspective:
- An unrealistic timeline
- An overwhelmingly technology-centric view; and
- Too many moving parts.
The first three points are relevant to all major business project of any scale, digital or otherwise. The latter two are more specific to digital initiatives.
The first is pretty self-explanatory. Technology is only an enabler to a broader customer outcome — for example, a product being delivered on time in an easy way, or an enhanced, quicker communication experience. The last bullet is a particular risk if an organisation attempts to go from a low level of digital capability to an advanced level in a short space of time.
This could be triggered by a new CEO who fears digital disruption and decides the whole organisation needs to be transformed almost overnight, despite no track record of having done so previously.
If you’re a Board member in particular, be alert to this and provide a constructive challenge. (The next part in this series considers the role of the Board in digital change more closely.)
There are six other pitfalls being called out here because they tend to be more prevalent in digital projects than in more general business change programs.
Layering on top, not fully integrating
Hopefully, this is less common than it was in the early days of “e-commerce” when many companies — retailers in particular — charged in, only to bemuse and annoy customers with inconsistent pricing between online and physical channels. Worse, they would take orders for out-of-stock items that only became apparent to the consumer when 80 per cent of their goods were delivered.
Customers expect a wholly consistent, transparent experience. That doesn’t mean the price is identical, but if there’s a delivery charge for the online version it must be disclosed at the outset. Increasingly, it’s better to delay than launch early with a disconnected digital product or service that’s not consistent with the existing experience and expectations of your brand and promise.
Swallowing the vendor hype
Let’s acknowledge a hard reality here: there are many excellent technology salespeople in the world who are handsomely rewarded for their success. Being Latin, “caveat emptor” dates back through millennia, yet was never more relevant than when buying technology today. Define your business requirements and user needs, then test and refine them over and over — but on your terms, not a vendor’s. Run a competitive process. Ensure you have a diverse selection panel including some hard-bitten cynics (as opposed to Luddites). If possible and appropriate, structure a vendor’s remuneration in a way that rewards quality, ongoing performance, not just an upfront sale.
Inadequate testing and/or customer-centricity
While many organisations are now adopting practices such as co-design with customers, continual beta, agile etc. as development modes, they’re not yet universal. One of the great advantages of most types of digital technology today is that it is flexible and open to continual refinement in response to real-time feedback. There is no longer any need — or indeed any excuse — for rigidly framed old-paradigm IT projects that once designed were impervious to further change until the next “release” came along post-completion.
In small organisations this is less likely to be an issue. However, in larger ones — particularly with multiple divisions that traverse both B2C and B2B — it can be. Specifically, the issue is where to locate and how to manage digital expertise in an organisation, especially where some divisions are moving quicker than others.
An example illustrates this best. Excelsior Limited has four divisions: A, B, C and D. C is in the consumer market and is undertaking a digital transformation; the other three divisions are all industrial and are not yet ready for such a change, though it is on the roadmap. As Excelsior builds its initial digital capability, it has the following structural choices:
The new Digital Team is recruited into and controlled at Head Office, even though it is known that it will be 100 per cent seconded to Division C for the first year or so. The advantage is that it is clear that it is a corporate resource and whenever any of division A, B or D are ready to accelerate their digital capability, they have a legitimate claim to requesting resources from this team.
The new Digital Team is recruited into and controlled by Division C. This leaves no ambiguity for the team or anyone else and means it can be specifically skewed to consumer market needs only, without any regard to the industrial divisions and what they may need down the track. The main drawback is that divisions A, B and D are unlikely to gain any learning benefits when they want to accelerate, and there is a risk that the group will replicate skills.
A hybrid is to start with the second model, with the expectation that it may morph into the first over time. This brings a further set of challenges and is even further complicated if the model is to second staff from Division C outwards. There is no definitive answer to this choice — it is circumstance-dependent — but it must not be ignored
This potential risk can be related to the previous one if not dealt with decisively from an early stage. At a time when a whole range of words and phrases such as digital disruption, innovation, crowd sourcing, transformation, fail fast etc. are in vogue, there’s a risk that those people explicitly working in areas that they perceive to be part of this future-focused vanguard can regard their work as inherently more valuable than that of their colleagues who are keeping the existing core running. Any such attitude must be actively monitored and stamped on hard the instant it arises. The potential downside to the organisation of any elitist behaviour is almost unlimited.
Don’t play it too safe
Whilst over-ambition in a short timeframe and too many moving parts both carry risk, so too does playing it too safe. As the rate of technology change becomes ever faster, if a major program is to be undertaken that creates significant organisational upheaval for a period of time, you want to be confident that the end result will create a competitive step change for a reasonable period afterwards. Whilst the journey will never actually end and there’s certainly no such thing as “future-proofing”, nonetheless the new capability you create should be capable of evolving as an ongoing capability without the need for another major transformation too soon.
The CEO and senior management are responsible for guarding against the pitfalls identified here. However, the Board also potentially has a role in some of them. In the next part of this series we will look more closely at the role of the Board in a time of digital change.
Authors note: This is the fifth of an eight part series by Orchestrate founder and Which-50 contributor Malcolm Alder. It is available due to the sponsorship of Expert360