How to avoid hitting a wall in a digital transformation

I recently spoke with Alexandre Pereira, Global CIO at Vale, a Brazilian multinational mining company, who told me about a conversation with one of the company’s business leaders when they considered launching a transformation initiative. The executive asked Alex, “Why do cars have brakes?” The answer: “It allows cars to go faster.” When it comes to advice about how to build a foundation for success in a transformation initiative, the comment about car brakes is one of the most insightful analogies I’ve heard, and I want to share its deeper meaning in this blog post so you can apply it at your company.

How does being able to stop a car allow you to go faster? Because it puts you in greater control. It would be very foolish to drive at 70 miles per hour if you can’t stop. Of course, there are other things associated with stopping — such as the steering wheel and being able to see and sense what’s around you so you can maneuver. But brakes are really important because they deal with the risks associated with going fast.

Vale’s Global CIO had a vision of the company making a performance breakthrough — a big productivity impact through technology and advanced use of information to improve predictability and optimize processes. Naturally a lot of expense, time and effort would go into the initiative. The business leader who mentioned car brakes was reminding the CIO that the business executives would need to be in control of the process. Their enthusiasm for the multi-year project and their support on an ongoing basis would be mitigated by the amount of control they would have over the risks. They needed assurance that the business would be able to manage risks.

A parallel conversation is, “Why is change hard to achieve in government entities?” Because government entities are run by bureaucrats, and their mission is to ensure nothing goes wrong. They are there to manage risks in driving change, not to drive comfort with change. They will allow change initiatives as long they can manage risks. Hence, government procurement is more about safeguards. Their focus is primarily around probity and structure — which aims to make sure that nothing goes wrong, rather than ensuring a great outcome. That’s what bureaucrats are told and incentivized to do.

The same applies to non-government organizations. CIOs needs to ensure ongoing successful execution of what their organization is doing. The organization needs to continue to run, and run well. As CIO (as with other top executives), you can’t allow new initiatives to put the operations at risk. You must keep the “car” (business) operating and therefore are understandably concerned about the risks associated with changing any attributes of the business.

Many studies find that failure is actually the “norm” for most major business and IT transformations. This is a disturbing fact in view of the number of organizations currently or soon undertaking digital transformation projects. A McKinsey study found 70 percent of transformation programs fail. Of the remaining 30 percent deemed “successful,” several studies reveal that “success” only means they finished the project or broke even — it doesn’t mean they achieved their end goals.

John P. Kotter at Harvard University conducted a study on why transformation efforts often fail and found that more than 50 percent of the companies failed in the first phase (getting commitment and cooperation). In my experience of working with many companies undertaking transformation projects, I see executive discussions in the initial phase are where the questions around controlling risks become a major barrier.

How to build control of risks into a transformation initiative

How can you as an executive leading a transformation project gain control of risks? Think of the car brakes. When driving, you need to know where the road is headed; but with car brakes, you don’t need to know every aspect of the road. With brakes, you can adjust to road conditions as you encounter them. Brakes allow you to stop and start again.

Applying the same braking capability to a transformation initiative, you need to structure the journey by breaking it into much smaller projects — or sprints or phases — rather than planning for one big initiative. Transformation initiatives are complex and take a long time, and you can’t know all the factors up front that you’ll encounter on that journey.

You can drive your car fast for a short distance if there is not another car ahead of you and you know that section of the road will support your increased speed. But if you come to a tight curve where you can’t see what’s around the corner, you need to slow down until you can gain control again in the new territory. This same strategy applies to transformation projects — you need to avoid building plans that stretch beyond your visibility of the oncoming challenges.

Traditional approaches to transformation initiatives involve creating a meticulous plan or road map up front and don’t recognize that the terrain and visibility will change. Such a plan puts your business at risk and very likely sets the stage for a failed transformation project.

The successful approach uses agile methodology principles, breaking a transformation initiative into a series of small sprints. You can control the risks in a smaller sprint. Before moving on to the next sprint or phase, you and your teams can reflect on your accomplishments and lessons learned in the previous sprint to make necessary adjustments.

Most importantly, if you find an aspect of the design isn’t working during a sprint or phase, you have the freedom to apply the brakes and change course without risking the business. You can back up and reverse those changes, make additional changes, implement a different technology, etc. Once you have visibility into what’s going on and have control of risks again, you can continue to the next sprint. As Vale’s Global CIO says, “Brakes will allow you to exceed the limits of your organization.”