In meetings with companies undertaking digital transformation or IT modernization, I often hear executives talking about advice they\u2019ve received from their consultants and advisors on how to plan and manage these initiatives. I consistently hear different versions of three points. \u201cWe must have a detailed road map of our transformation journey.\u201d \u201cWe will need to replace most of our existing talent.\u201d \u201cWe\u2019ll need mountains of money.\u201d Sound familiar? Consultants and systems integrators (SIs) consistently preach these practices, warning companies that their transformation won\u2019t play out the way they hope unless they follow this advice. But compare that advice with the real-life experience of CIO Toby Buckalew.\nThe odds for digital transformation success at Buckalew\u2019s former company were low. Steep challenges faced him when he joined the company as CIO tasked with managing the IT modernization and building a digital platform. That would be difficult enough for any CIO, but chaos was already bubbling at this company when he arrived to drive massive change.\nFacing a steep uphill battle\nThe company was once international and publicly traded. After some mistakes, the stock was de-listed and the company went bankrupt. When it came out of bankruptcy, it emerged as a new company. There\u2019s nothing like a company coming out of bankruptcy as, typically, no situation is where it needs to be because the company cannot spend money during the bankruptcy process.\nUpon his arrival, Buckalew found antiquated facilities and out-of-date hardware and software. Testing a system caused the power to go out, and they had no power for a week. Obviously, this had a negative impact on customer relationships. The company had an inflexible, expensive and fragile IT environment and a mind-set not focused on production.\nThe company wanted to build a digital platform to allow full visibility of the business. But it was saddled with many legacy applications, homegrown 20 years ago, which didn\u2019t communicate with each other. These apps were production systems; so, when they went down, the business stopped. And it had a cascading effect; a change in one application flowed to another system, which typically caused an error in another system. Operating assumptions were old and undocumented.\nChange introduced into this environment became a very expensive issue. Coming out of bankruptcy, the company lacked money to invest in moving forward, and they consumed most of the IT budget just keeping the environment up and running.\nMaking matters worse, the new company after bankruptcy became a service provider. This introduced a complete business model change since the pre-bankruptcy company operated on a different model. The company began providing many back-end services to clients, but there was no visibility into client interactions. One system tracked problem tickets but didn\u2019t allow tracking all the data. Another system tracked clients\u2019 locations and contact information, but the information disappeared from everyone\u2019s view if it wasn\u2019t a current client. Buckalew adds that \u201cno one could tell what the sales pipeline looked like.\u201d\nStaffing was another issue. \u201cI inherited an IT staff lacking a true customer-focused mentality. This was a huge hurdle to overcome in the change in business model. The staff needed to support our corporate clients\u2019 businesses in more than 30 states as well as our internal colleagues\u2019 work,\u201d says Buckalew. \u201cUnderstanding the customer relationship is crucial. The people portion of the equation is so important. You must get that right the first time. If that\u2019s not right, you won\u2019t be very successful in the long term.\u201d\nChange management on the scale of changing an operating model requires far more than communicating to people what is going to happen. There are talent model changes, policy and process changes, mind-set changes and changes in customer and business partner relationships. It\u2019s a profound level of change that requires swaying people\u2019s opinions about the change.\nBuckalew explains, \u201cThere are many more moving parts when you\u2019re changing a business model. And that\u2019s when you get a lot of pushback. It\u2019s one thing to tell people what will change and put them through training to understand which button to click. It\u2019s something else entirely to say, \u2018We\u2019re going to rip out everything you know and how you do everything and change it. And it has to happen.\u2019\nGuiding principles\nWhen I spoke with Buckalew about how he avoided pitfalls and managed the snarls of driving such massive change, it became clear that he followed several guiding principles rather than adhering to the common \u201cbest practices\u201d I mentioned at the beginning of this blog.\n\nBe realistic about what\u2019s possible\nEmbrace change with agility and allow the journey to unfold\nHow you leverage employees will affect the outcome\nBe poised to take advantage of challenges and turn them into opportunities\n\nBuckalew recognized that the best approach to the digital transformation journey and IT modernization is an agile, iterative approach. \u201cYou can apply agile principles to people and organizations. It\u2019s a powerful, flexible way to manage any process, not just software development,\u201d he says.\nThe company\u2019s goal was to centralize all customer-focused applications and combine them to a single CRM interface and digital platform.\n\u201cWe didn\u2019t start out with a detailed plan. We knew we would eventually change everything, but we started by breaking down the journey into small pieces. We started by working with the worst situations first \u2013 those with the most fragile condition and most important impact to clients and highest risk,\u201d says Buckalew.\nThey made an inventory of products and services and which clients and internal departments they affected. They also spoke with clients, department heads and random employees of the company as to their pain points, their feelings about the company and what areas should change first. The commonalities in this feedback enabled Buckalew to zero in on the technology challenges and the people challenges. He then mapped the pain points and challenges to the areas of biggest impact.\n\u201cFrom there, we started building technology road maps,\u201d says Buckalew. \u201cBut prioritizing the changes was not a simple matter of determining what we needed to fix. The bigger question was where the business is going and what it needs to go there. Of course, IT needed to make sure things worked so it could support the business today, but we had to undertake change with the future in mind.\u201d\nHe adds, \u201cWith so many different client services involved, and so many clients with different perspectives, a big challenge was that everybody had their own carrot they wanted to put in the soup.\u201d\nDon\u2019t change people \u2013 help them change\nA typical dilemma companies face in transformation is whether to fire the existing staff and build a new organization. As they did with implementing new technologies, Buckalew says the company broke down massive transformational change into small pieces for staffing in the IT and customer-service areas.\nBuckalew evolved the IT organization, along with the technology, over the five years it took to build and implement the digital platform. He says they lost only four people during the transformation but didn\u2019t need to replace them because the company gained efficiencies from the transformation.\nBuckalew says, \u201cThe morale was higher when we finished the transformation. It\u2019s shocking how much latent talent is in an organization, but most companies never investigate to see if they can leverage it. Some of our staff had a lot of personal attachment to what was going on and really wanted to see the company succeed.\u201d\n\u201cThey\u2019ll impress you with what they\u2019re able to do if you give them the opportunity to change instead of changing out the people,\u201d Buckalew adds. The agile approach allowed Buckalew to evolve the staff talent instead of replacing people. As a result, they worked more productively, and they brought institutional knowledge and relationships that allowed them to accelerate the transformation.\u201d\nIn the customer service area, the managed change by first spending a lot of time watching the customer-interaction processes (how they handled calls, followed up in email and handled problem tickets). They then audited those processes and then spoke with customer-service reps to get their perspectives. After that, they set expectations.\n\u201cI\u2019m a big believer that if you set a high bar for expectations, over time, people will recognize that\u2019s where they need to be, and it becomes second nature to reach that level of service,\u201d says Buckalew. \u201cIf you set a low bar as to what you expect of people, that\u2019s as far as they\u2019ll go. A few will reach further, but most won\u2019t. By setting a high bar of expectations, we started changing people\u2019s attitude.\u201d\nTaking an agile, iterative approach, they put expectations in place, monitored and evaluated results, obtained feedback from clients and employees, made necessary adjustments and continued repeating that process to ensure they made the right changes.\u00a0\nTurn financial challenges into opportunities\nComing out of bankruptcy, the company was financed and controlled by a hedge fund, which then sold the company to a new owner. As part of the due-diligence process for the sale, the company reiterated the challenges, then determined the capital outlays they would face just to get things working properly. A new CRM system was a part of that consideration, as the potential new owner wanted to know the future sales\/revenue potential so that the owner could forecast and plan the budget.\nBut getting everything working properly was a challenge since they couldn\u2019t make any large capital spends during the sales process, which lasted two years. Buckalew recalls they had to put a hold on a lot of the capital projects. For the necessary new CRM system, they decided to go straight to the cloud after the company was sold.\nBuckalew used an agile process to guide the company in overcoming the stopping and starting of the hedge fund selling, the new ownership and the cash-flow challenges while the sale was going through. The agile approach enabled them to make consistent progress in sprints in different areas during that time. For instance, while they lacked the capital to go to the cloud for the new CRM system \u2013 a major component of the integrated digital platform the company was building \u2013 they were able to at least work on the definition, the documents for requirements and the change management so they could push that system implementation along faster when they had the capital.\nThe outcome\nThe company obviously needed to drive digital transformation so that it could compete better and provide better customer experiences. Putting a new digital platform and new customer-interaction process in place would allow the company to grow its market share. But it first needed to modernize IT \u2013 while facing major constraints around funding, a dysfunctional organization, low morale because of the bankruptcy issues and antiquated technologies.\nBuckalew recognized the constraints meant they would need to move towards the vision in an agile way without a detailed plan. This would allow advancing in the road map iteratively until the constraints improved and gave permission to move forward further. It also allowed welding the IT modernization and business transformation aspects of the journey together instead of undertaking them separately.\nThe company developed a business transformation and IT modernization plan, but Buckalew says the agile approach allowed them to be opportunistic as to what part of the plan they deployed, and when.\u00a0\nDigital technologies were at different levels of maturity during the company\u2019s digital journey. The agile process allowed them to watch the technologies mature and take full advantage of the cloud. When the technologies were mature enough, cheap enough, and appropriate for the road map, they snapped them up and plugged them into the company\u2019s architecture. The timing for deployment of new technologies also was tied to when funding became available.\nThe agile approach to transformation enabled building a highly effective digital platform with a new CRM component, which enabled the data-driven management that the business wanted.\nDoes your company need to adhere to common \u201cbest practice\u201d principles?\nMy advice is to follow the principles that Buckalew used in the successful transformation he led. This use case proves that companies can succeed in digital transformation and IT modernization even in the most extreme environments \u2013 with limited capital, change in ownership, poor morale and even bankruptcy. The fact is disruptive digital technologies require a different approach than traditional transformation projects. Companies that apply the components of the digital approach together can achieve wonderful results.\nIn addition, as Buckalew proved, achieving digital success and IT modernization works better when the people change, rather than the company changing out the people. The company can change people by helping them lean into the new technologies and how to be more effective.\nFinally, although consultants and SIs advise it\u2019s best to separate IT modernization aspects from the business transformation aspects, Buckalew\u2019s experience shows that companies that weld both these paths together can be opportunistic and possibly gather more support and more budget.