Why Digital Transformations Fail?

Around 2015 there was a huge fuss about Digital Transformation. 70% of all Digital transformations fail(According to Tony Saldanha).  For sure, you are thinking, this is because of the lack of proper Talent Pool, or wrong technology choices. Fore sure that things matter a lot, but surprisingly the number #1 problem is lack of discipline. Lack of discipline in Defining and executing the right steps. IMHO lack if discipline is also the issue of why hard things dont get done or executed. To define and execute the right steps, you need to have VISION and know what you are doing and what problems you are fixing. If you dont understand the problems you are fixing, how do you know you are fixing the right ones? How do you know you are doing the right things? Well, often, companies don't know, or they think they know. 99.999999% of aircraft takeoffs and landings are successful compared with only 30% success in digital transformation initiatives. 

Why is there a need for Transformation? 

Simple because of 2 main factors. (1) We need to innovate, create new business models and better product offers to stay relevant; re-invention is a requirement for survival. (2) There is a huge cost in old technologies and manual work(Compared with agriculture to the industrial revolution), we need to produce more with less in with more quality and speed. Lots of companies kind of want to be Digital or kind of want the benefits. However, the pre-requirements are not there. If you can't do things on a small scale, would you do them on a large scale? 

 It's not the first failure at All. 

You might live or hear about the famous 64% of the features that are not used, or even classic chaos and PMI reposts saying the project failure rate is 45% or more. So If we can't make a single small project work, can we make a large one? We have a binary mind most of the time; if we do it once we think we always did or we will always do, thats really not the case. We all want to be successful; we all want to be top performers and deliver things on time. However, companies and software products are complex entanglements of technical debt and people debt. Unrealistic, short-term project thinking kills any chance of transformation or even real learning. Goals and performance can always be gamed.  Lean is all about long-term thinking; Agile is all about Effective Learning, however. As a result, we have a devastated wasteland

The Need for Waves

Any real change happens in stages. We cant do things binary atomically. Saldanha proposes 5 stages to Digital Transformation:

 1. The Foundation - Get Technology right and CEO commitment 

 2. Siloed Innovation - Empowerment to Transformation Leaders 

 3. Partially Synchronized Innovation  - Chance management

 4. Fully Synchronized Innovation - Continuous disruption and Capabilities  

 5. Living DNA - Lean/Agile Culture at the Business level

Kanban is also all about waves, so as CMMI was. I believe CMMI had the wrong ones. There some implicit things here. 5 Levels do not mean 5 years; all companies want to fix all their issues from 1-3 years, which is completely unrealistic. IMHO if you can change ORG structure and break siloes, you should be able to do it faster, but in reality, that's not the corporate reality. 

Forget Companies look the world out there.

We still use lots of Coal as an energy matrix. Climate change and clean energy still bullshit for lots of people. So luckily some countries and cities will be in a better place by 2050(luckily). I can only estimate companies will get business agility and digital transformation right in 100-300 years. As we all know, estimations can be very wrong :-).   There is a reason why innovation happens in startups and not in big corporates. Think about it. Let that sink in for a moment. 

Education is the only way. Pitching ideas to executives(C-Levels, VPs, Leaders, Architects) and luckily, with the right amount of talent density, can be improved. Can vendors provide help? Well, yes, and No. Vendors can help to execute and even guide; however, no other company can learn for you. There are 2 kinds of vendors. (A) the cheap ones who know less them you. (B) the ones who have the talent and actually know what they are doing. Type B is hard to find. Often vendor strategy is all about cost reduction, not about specialized execution or responsibility shift(a.k.a, blame the vendor). 

Having realistic expectations is a super important step in the right direction. Throwing aggressive estimates and deadlines is easier. However, it does not translate into results. Not anymore. Dysfunctional structures create these issues when one deparatament estimates and the other department delivers. Often n win-win in the long term results in a lose-lose.  

We are in the middle of a pandemic, it easily could be other pandemics, and we still dont face fully all the pandemic consequences (economically). Re-invention it's required. However, sometimes not moving is better than making the wrong move. Companies will be in Holding Pattern for a while, IMHO.  

How can we go forward? 

Patience is required. Learning comes with time. Sometimes to learn failure is required. Doing things in waves can be a path forward. Start small, make it work, and slowly scale(Discipline will be required). there is no way to speed up learning by keeping the same people, the same technology, the same culture, and the same mindsets, time is required.  

Complexity is the defining characteristic of our society and world. However when we look into individuals simplicity and linearity still the dominant traces. How can we fix a hard and complex problem with a simple and linear solution(pretty hard) - thats why we need to learn. Either by hiring more talent or going to events, reading/listen to books, talking to people from other orgs. Complexity needs to fight with complexity. Newtonian simplistic thinking will never allow us to understand complexity. 


Diego Pacheco

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