Transformational Change Takes Transformational Leadership

As companies embark on new transformative initiatives, it is important for C-level executives to pay close attention to the execution of these efforts in order to ensure you are getting what you expect. Of course, strategy is your responsibility and is often viewed as “sexier” than execution, but that way of thinking just won’t cut it in today’s business climate. For decades, multiple studies on the success of companies in executing their strategic programs and projects have continued to demonstrate the same thing. Large, transformative projects fail—most of the time. As companies move from ERP and CRM efforts to digital transformation initiatives, this becomes more important.

Change how you execute transformation

We know that managing a complex effort is not easy, but like the famous definition of insanity (doing the same thing over and over and expecting different results), it’s important to not continue with the same way of executing large transformations. Unfortunately, we see this all the time.

• Why are C-level executives still accepting failure in delivery as an acceptable outcome for shareholders?
• How can companies begin to incorporate lessons learned in how they take on these transformational initiatives more successfully than prior complex initiatives?

Transformation is the difference

Let’s be honest, digital transformations are larger and typically more complex than most other program initiative endeavors. So why are these any more complex than prior large initiatives like ERP implementations? Let’s start from the beginning: What is the definition of transformation? According to Oxford dictionary, transformation is:

“A thorough or dramatic change in form or appearance.”

That’s a straightforward definition, but when you add digital to it, things get a bit murky. Ask five people what “digital transformation” means and you’ll get eight different answers (no, seriously). Even if you look it up, the dictionaries use a circular reference in its definition of the phrase. The best definition I could find is from Clint Boulton (CIO.com): “Digital transformation marks a rethinking of how an organization uses technology, people, and processes in pursuit of new business models and new revenue streams, driven by changes in customer expectations around products and services.”

Our clients see digital transformation as a necessary change in order to do better and be better in how they gain, support, and deliver products or services to their customer base; as well as how to gain a competitive advantage. For example, Google and Amazon use behavioral data they collect on anyone who visits their respective sites. The data collected, when analyzed, can recreate your customer’s experience and help you to understand a better way to maintain inventory, decide which product lines are more profitable, etc.

Key points for transformational success

So, what are the key lessons learned that CEOs should be aware of as they take on a multi-million-dollar digital transformation effort? What can we learn from the execution of prior strategic enterprise initiatives that didn’t drive out all the outcomes that you expected? Here are some lessons learned to guide the execution of your digital transformation initiative. 

Pick the proper executive sponsor

The right executive leader for a digital transformation project sets the tone for the team, keeps momentum for the project, and helps guide it to fruition. How do you find the right executive sponsor? Start here:

1. Incentive. Follow my golden rule of sponsorship: Pick the executive that will feel the most pain if things don’t go right. The CEO should have their eyes on execution, but at a minimum, designate someone at a high enough level (CEO/COO) to participate in steering committee meetings to gauge how things are going and ensure the desired outcomes are reachable.
2. Change agents. Don’t choose an executive that is too vested in the old way of doing things. Choose someone who is ready to completely overhaul a division, process, or initiative to make it better; someone who knows that there will be major resistance along the way and that it is normal. People generally don’t like change, so that sponsor will need to lead the charge to get people excited and to understand the value of the change.
3. Experience. Choose someone who knows how to be a program sponsor. I’ve seen a great deal of discussions through the years about the lack of good program management yet very little focus on poor program sponsors. Transformations require an individual that needs to set direction, knock down barriers for the team, be an evangelist, etc. Remember, digital transformations are not for the faint of heart, so choose properly.
4. Business driven. While IT will be heavily involved, digital transformation should not be driven by IT. This is the most common break in these engagements. Of course, IT is a major stakeholder and heavily involved yet there is no reason for them to drive the effort. I understand that digital transformation is about technology, but the desired outcomes could care less about how you get there (IT takes care of that part). IT is the tool (a very important tool, but a tool nonetheless) but should not be the change leader—the results will rarely be the transformation that you are expecting.

Keep the fox out of the hen house

Hiring tier one consulting firms and system integrators (SI) are critical due to the subject matter expertise that they can bring and the pure firepower in resources that are needed to accomplish these digital transformation efforts. Yet:

1. Their objectives and your companies’ objectives aren’t truly aligned. Understand that their objective is to make as much money on every engagement as they can. Thus, creating a conflict of interest (as many resources and as much time as possible is their success measure).
2. These large tier ones and SIs join in with a ready plan and answers. While that sounds phenomenal in theory, in practice, these plans don’t take into account the nuances of your company, your culture, and your needs. The plans they bring will address what their large team needs to accomplish but they seldom address the complete needs of your internal team’s tasks.
3. In a typical digital transformation initiative, there are frequently multiple third-party vendors, and they don’t usually play nice with each other. This disruption often leads to large cost overruns or missed timelines when the multiple vendors don’t play nice with each other.

The solution? Bring in a transformation/program manager to lead your overall transformation program team. There are too many different players (including siloed departments within your own company) that need to be brought together to work on a common outcome. Place someone in the role that knows how to manage disparate resources and can create an integrated plan while focusing on bringing together an integrated team. Tier ones and SIs have their own way of doing things and the focus is often “their way or the highway.” Hire a strong program manager who knows how to manage other people’s resources while bringing them all together into a cohesive team. Remember, you need some independence to run these efforts, like an orchestra conductor. The conductor may not know how to play all of the instruments, but they know how to get all the musicians to come together to make beautiful music (and they are always at least one step ahead!).

Set up the proper roles and responsibilities

I’ve seen many initiatives fail because the sponsor didn’t understand what was expected of them or their team(s). They didn’t ask some basic questions like: Who owns what? Who is the deciding vote? How do things get escalated? It’s vital to get started on the right foot.

• Begin planning on Day 1
  Create the program management deliverables for this transformation in the first one to two months. Governance structure, proper planning, and tracking of these efforts need to happen quickly. It is much harder to change the direction of a program team once they have been engaged for some time, than to take the time to properly plan in the beginning. Unfortunately, in many initiatives, planning is often viewed as unnecessary.
  A proper plan and governance structure for a transformation (especially a digital one) will go a great deal further when completed early in the process. The plan is a living document and changes may occur, but a program of this magnitude needs direction and a plan to avoid gaps and overlaps—so don’t skimp on it. If done properly, it will keep transformative initiatives on track and recognize problems early.

Scratching the surface

There is a litany of other things that are needed in order to drive a transformational effort. Most large organizations are in the midst of a digital transformation right and many of the others are beginning. As the CEO, you may feel that defining the strategy is your role and your team will help to deliver it. Yet something of this magnitude and importance should be taking some level of the CEO’s involvement to ensure that their strategy is being driven in the manner they planned. There are too many things that can go wrong on efforts of this size and scope. As the CEO or C-level executive, your job doesn’t end with the creation of a strategy. If not executed as desired, doesn’t the buck stop with you if desired outcomes aren’t met?

Written by Laura Dribin.