$900 billion will be wasted. Companies are expected to pour in over $1.3 trillion into digital transformation yet 70% are estimated to fail. What are the common reasons digital transformations fail and how can companies create lasting transformation?
What are the common challenges?
Companies use innovation to evolve not transform
The pace of innovation (creating a new technology or way of doing something) has increased. But companies try to plug-in innovations into their existing ways of working instead of using innovations to rethink how they fundamentally do business.
For example, consider a factory in the 17th century. Electricity is discovered. The immediate reaction is to use electricity to turn the turbine (instead of wind), which continues to move the existing machinery inside the factory. Transformation happens when electricity is used to rethink and modernise all of the internal machinery.
Buying the latest technology
Companies are too focussed on spending millions of dollars buying the latest technology platforms, systems and features. However, employees are simply given training on which buttons to push, instead of how to use the technology to change what they do. Ultimately, organisations are sending increasingly expensive emails.
Focussing on ‘human capital’ not humans
When organisations do consider the people side of transformation, there is a tendency to forget about the humans. Fogg’s behaviour model outlines the need for high motivation, high ability and triggers to create change. However, too often when companies embark on organisation transformation programs, they hope that people will change just because they’ve been asked to.
Motivation. Transformation efforts usually try to rationally motivate people to change. Organisations typically use both soft tactics (e.g. top leaders announcing changes) and hard measures (e.g. KPI changes). Transformation efforts seldom get employees to emotionally care about the behaviour change – people need to believe not just buy-in.
Ability. Companies spend enormous efforts to ‘create ability’ through training modules, documentation, and classroom-based training. But, they don’t try to work the changes into existing routines or making it convenient to apply them. Transformation efforts need to move beyond just creating ability – they need to make the behaviours simpler to apply.
Trigger. Triggers are too often office posters, little booklets that go out to employees, or one of 50 company emails sent on a Friday afternoon. The worse offenders are the emails containing obscure links to the intranet where a PPT document sits. The triggers tell people what change managers want to say, not what employees need to hear, where they need to hear it, at the time they need to hear it.
Creating lasting organisation transformation
Lasting Digital transformation requires focussing on people. However, without high motivation and high ability for change, an apathy barrier exists. Overcoming the apathy barrier requires focussing on both the metaphorical left brain and right (or System 2 and System 1 thinking in Kahnemen’s Thinking Fast and Slow speak). To do this, leaders need to follow their own rhetoric to embed empathy and design-led thinking when designing the transformation program.
Successful companies like Microsoft, Adobe, Lego have three things in common:
- Create both motivation and ability to break the apathy barrier
- Nudge both the left brain and right brain towards the desired change
- Focus on meeting employees where they are, not where you want them to be
Create both motivation and ability
Overcoming the apathy barrier necessitates creating both high motivation and high ability. ‘Increasing’ motivation and ability isn’t enough to get people to change – you need to ‘get them over the line otherwise they’ll revert to their old habits.
In Microsoft’s journey to becoming more customer-centric and agile, they focussed on growth mindset. This learning mindset allows employees to become more open to new ways of working and ideas. To encourage a growth mindset, they encouraged all leaders to form their own ‘personal narrative’ of why change is required (motivation), coupled with learning Fridays when all employees are encouraged to dedicate time to learning skills (ability).
Nudge the left brain and right brain
Transformation programmes need to not just focus on the ‘left brain’ or logic system. Existing ways of working are deeply embedded into the habit and muscle reflexes of people which facts, figures and training can’t overcome. Companies should use ‘Nudge Theory’ to tap into the ‘right-brain’ or the instinctive system to nudge existing behaviours towards the target. Whilst left-brain tactics are usually creating or doing more, right-brain tactics are about reducing inertia.
To make testing and gathering feedback easier, the Microsoft Office team introduced the ‘Insider Slow and Fast’ updates to test beta versions with existing customers; additionally, all customers can provide feedback right from within the MS Office app. Most organisations can introduce similar tactics to reduce inertia to customer testing, by organising for a pool of customers to be available for testing by anyone every Thursday for 2 hours – if employees don’t have to recruit customer, but can just turn up and test they’re more likely to drop by.
Focus on meeting employees where they are
Designing ‘nudges’ to the right brain requires focussing on understanding and empathising with employees existing behaviours and motivations rather than the target behaviours. By understanding how employees behave, why they behave that way, you can identify moments of truths where you can subtly nudge behaviours.
Microsoft included all of their leaders in a role-play based training for the target behaviours they wanted to create. Leaders were then able to identify the type of changes or nudges they needed within their teams to shift the existing behaviours.
I’ve compiled a list of tactics and hacks that I’ve used to help the organisation become more customer-centric or roll out new ways of working, that push motivation and ability past the Apathy Barrier.
- Build the plan. People are more likely to stick to a plan if they made it themselves. Move beyond the commitment card and ask people to plan how they would role out the ‘change management activities’ to get everyone else to buy-in.
- Peer pressure. Publish compliance results and communicate how many people or teams are already using new ways of working. Simple statements such as 8 out of 10 teams are already using customer-centric methods can have an impact on adoption.
Explain what stays the same. To get people to embrace change, emphasize what will stay the same (read more). People are more likely to hear messages that seemingly confirm their view of the world than something that says they’re wrong.
- Branded Template. Most organisation have a brand template with default content. Update the brand asset project plan template that includes design and test activities. This forces people to ‘opt-out’ of these activities rather than have to ‘opt-in’ to it on their plans.
- Test Thursday. If teams have to go out and find customers to test their ideas, they never will do testing. Organise for a pool of a dozen customers, available for 2 hours every Thursday, for any employee to drop by and test what they’re working on. Of course how many customers, when, and how frequently are all up to you…Thursday was chosen for alliteration and because it falls naturally in the cadence of a weekly sprint.
- Design Thinking Toolkit/Playbook. Give team leaders and employees convenient access to very simple methods. The methods should break down customer-centric techniques like customer interviews, prototyping, ideation to very basic steps (no more than 5–6 steps). Both Ideo and Google Re:Work have created simple method cards for new ways of working. Remember to host your Toolkit/Playbook where employees already are, rather than the obscure intranet link.
- The Customer Chair. Amazon puts a red chair in every meeting to symbolise the customer.
- Test Thursday. Same as above for ability, with the added benefit that Thursdays become a trigger to be customer-centric.
Most digital transformations fail because companies handle the people transformation poorly. To successfully transform the people organisation, you need to:
- Create high motivation and high ability to change
- Effect motivation and ability through nudges to the left and right brain
- To design the nudges, focus on where people are, not where you want them to be
Thinking, Fast and Slow by Daniel Kahneman
Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard H. Thaler , Cass R. Sunstein