by John Belden

10 steps to avoid digital transformation failure

Mar 11, 20216 mins
Digital TransformationIT LeadershipProject Management

Executive sponsors play a key role in the success (or failure) of digital transformations. Taking these essential actions will tip the scales in your favor.

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Most companies will face the moment where digital transformation will come to the top of the executive stack of priorities.  Typically, one or two executives are selected as the sponsors tasked with putting together the business case and the team to lead the organization into the future. 

It is no secret that a high percentage of digital transformations will fail in some aspect.   We have all seen the stories of companies that have gone wildly over budget or, worse yet, tanked the business with a failed go-live.  Much of the blame can be laid right at the feet of the sponsors.  

One reason these failures happen so frequently is that many companies have not attempted an IT-enabled transformation for about 10-15 years. In that span of time, a new generation of leaders have typically taken the reins and the role models or mentors who completed the last successful transformation have moved on.  The new executive sponsors often don’t know what they don’t know or are too proud to ask for help. 

The next thing you know, a system integrator (SI) has been hired to bring the company a methodology for change and the talent to get things done.  Typically, these SIs come with governance models and playbooks that define the role of executive sponsor with words and phrases like:

  • “Leads change”
  • “Makes senior executive decisions”
  • “Removes roadblocks”
  • “Allocates talent and resources”
  • “Signs-off on the business case”

The buzzwords can make your head explode.  Nowhere in these methodologies or playbooks do the SIs explain how to accomplish these actions.  This is not an oversight on the SI’s part: Failure of the sponsor to perform their role will lead to change orders that are to the benefit of the SI.

Here are some specific actions that executive sponsors can take to raise the probability of transformation success:

  1. Make the business case clear. Business cases for digital transformations can be pages and pages of required capabilities, anticipated costs, and expected returns. For a business case to be truly a tool to enable transformation it needs to be clean, free from business jargon, unambiguous, and brief.  A clean business case will enable the team to quickly make tradeoffs and decisions that are aligned with a vision.
  2. Be the communicator-in-chief. Organizations need to have confidence that the transformation can be achieved. As an executive sponsor, building that confidence is your responsibility. This means that you need to stand up in front of the entire organization and do four things:
    • Communicate the business case
    • Lay out the overall plan and journey to achieve the goal
    • Acknowledge that there are going to be risks and bumps along the way, and
    • Do all of the above with a high degree of confidence.
  3. Hold the organization accountable. I know, I just used the buzzword “accountable,” so what does it look like? It means rigorously tracking that all impacted areas of the organization have allocated the required talent, implemented tactics to mitigate risks, and incorporated forecasts of benefits into future business plans. Visibility of these preparations needs to be raised to the executive level and illustrated on dashboards.  
  4. Take care of your team. Another non-secret to success is allocating the “A-team” to the project. These are the folks that have established themselves as top talent in the eyes of their peers and who the organization trusts to make good decisions.  But allocating the talent is not enough. Some of these A-team players may see this as an opportunity, but many will see it as derailing them from their future goals and aspirations.  Executive sponsors need to take this A-team under their wings and consistently and regularly provide them with a roadmap of how the initiative will allow them to achieve their career goals. 
  5. Elevate operational continuity as a priority. Project teams get focused on budget and schedule right out of the gate. They happily report to the steering teams on how well things are going early on.  As the project moves forward and budgets and schedules begin to slip, the teams will feel compelled not to report bad news, leading to taking risks that can lead to poor implementations and operational disruptions.  By prioritizing operational continuity early on, you create the right conditions for early discussions on project priorities and reduce the probabilities of catastrophic failures during implementation. 
  6. Lengthen decision lead times. All large-scale transformations require thousands of decisions. Many of these decisions will require executive involvement and buy-in, which will take time. Push your SI to provide an inventory of key decisions that will be required over the course of engagement.  Take this inventory and socialize it with the steering committee to confirm they are on board with making these decisions and that they have allocated the talent they trust to make them. 
  7. Be a shot caller. The team is going to need a decisionmaker who is prepared to make hard calls and live with the consequences. Part of the secret sauce for this is making sure you make good on lengthening decision lead times and getting executive involvement buy-in on key decisions ufront. 
  8. Set and communicate priorities. The organization will be overloaded. Teams are willing to work in overload situations if they have a clear direction on priorities.  Failure to communicate priorities will lead to losses in productivity as teams attempt to establish their own priorities or simply stall, not wanting to make a wrong decision.   
  9. Leverage your vendors. Establish and actively manage your key vendor relationships by calendaring regular meetings with senior leadership counterparts. Set these discussions strategically before significant milestones. You will be surprised how much more engaged your consultants are when they know the big boss will be looking in.  Top-to-top discussions can also be leveraged to increase vendor accountability.  I have seen vendors perform great feats to complete a job when they know a positive reference can be obtained.   
  10. Establish a management reserve. I have yet to see a project that is not in some way influenced by optimistic estimates upfront. All parties are vested in putting forward the lowest possible cost as part of the business case.   Here is a bulletin: The team will rapidly consume its own contingency.  Keeping a management reserve will allow you to take the pressure off the team when times inevitably get tough and will allow them the ability to make the right decisions for the organization. 

If you are currently an executive sponsor or are likely to be one in the future, check yourself against this list.   If there are gaps, build out specific plans to close them.  High quality executive sponsorship is a lot easier to achieve if you know what “good” looks like.