Five ways to avoid digital transformation disasters
Businesses are racing to keep up with new technology, but if it’s not implemented successfully it can cause untold damage.
New technology is just a small part of the solution for any digital transformation project. The impact on the people and processes surrounding it can be far bigger – and the key to effectively embedding the change.
Businesses need to embrace digital change – and those who are too slow to do so won’t survive. No one wants to be a Toys R Us in an Amazon world. So an organisation invests in technology. Great! But putting a new system into place isn’t a magic bullet in itself.
If a digital project isn’t implemented successfully, it can have big implications for the bottom line, of course. But there are many other ripple effects. Experienced staff can leave, due to either falling morale or inadequate training (or both). And often it’s the very best staff who’ll jump ship, as rival companies snap them up.
In addition, if digital projects don’t land well, it can lead to a huge loss in customer confidence. The BBC’s doomed Digital Media Initiative (DMI) aimed to modernise production and archiving, but after five years – and a £98.4m cost to taxpayers – it was scrapped, causing untold damage to the corporation’s reputation.
Digital-change failures also dent shareholder confidence; this is often seen when members of the senior team are ‘reassigned’. In 2001, General Electric (GE) embarked on an ambitious attempt to transform into a ‘digital industrial’ company. The $4 billion project suffered technical problems, delays and poor communication, and eventually CEO Jeff Immelt, a powerful advocate of the company’s digital ambitions, departed the company under pressure from activist investors.
So how should you approach digital change in your company in a manner that will keep your staff and shareholders happy and – crucially – achieve lasting benefits? Here’s an instant guide:
1.Talk to the people affected – and really listen to what they say
Digital changes in a company can affect a vast number of staff and customers, in ways managers may not have considered.
Simon Puryer is MD of business-readiness specialists i-Realise. He describes how his team helped a large logistics company implement a new payroll system: “Part of the project was introducing online payslips; from a change perspective that’s huge, as it impacts every single individual in an organisation – in this case, 50,000 people! And in a logistics company you’ve got drivers who don’t use computers very much, and warehouse operators who might be fresh out of school, all the way up to senior directors.”
They listened to the staff’s concerns and helped them understand the changes. This involved explaining the benefits of the new payroll system and how it would make their lives easier, but also its positive impact on the whole organisation. “That’s really important,” says Puryer. “You’ve got to make sure you take them on the journey with you.”
Companies experience changes in different areas, but staff can be particularly worried about digital change, as they may feel underskilled – this is where training comes in – and worry that their jobs will become obsolete. Good communication throughout the project can alleviate these concerns and prop up staff morale.
2. Examine the ‘As Is’ process
Skip this step at your peril! Too many businesses prefer to focus on the more exciting ‘To Be’ process. But it’s essential to find out what’s really happening in the company at the moment – the ‘As Is’ – and where problems lie. In reality, some processes are not documented at all and others that are documented aren’t followed.
What are the reasons for not following processes? Puryer explains: “It may be that there’s a good business reason, or maybe there’s a need for training.” If you don’t talk to people on the ground, you can end up with a huge gap in your new system.
A high-street retailer wanted to improve their warehouse operations and approached i-Realise for help. The team mapped the ‘As Is’ processes end-to-end and discovered there were £45,000 of savings to be made by reducing non-value-adding tasks, which had been taking more than 100 hours a week. Without this knowledge, the retailer might have assumed that the whole system needed to change.
3. Get everyone involved
It’s vital to identify the key people in a business to help design the change; people will probably be highly motivated to do this, as the changes will impact their jobs. It will also help morale if staff members feel they’re being listened to – and can actually see the results of their decisions.
You’ll need to get input from different parts of the business. You may assume that the IT department will be the key people in a digital transformation, but you’ll also need to bring HR, Finance, Marketing and others to the table.
Puryer says: “You need to understand people’s current roles, responsibilities and remits to understand what training you’ll need to deliver, and how to get their buy-in.”
4. Check the project’s pulse
Once the project is underway, don’t assume it’s working successfully. Engaging with people and taking regular ‘pulse checks’ is essential. This means checking that communications have been received, read and understood correctly, making sure there’s real buy-in and that the changes are embedded. “Don’t leave it until the end to find out that no one is with you,” says Puryer.
5. Be prepared for the long term
Problems can arise from digital projects because too many assumptions are made, and not enough questions are asked. It’s all too common for businesses to see digital transformation as a simple system change, when it’s also about how it will impact people and processes.
When retailers first started installing self-service tills, they assumed it would allow them to get customers through the checkout quicker and relieve checkout staff but, as we all know, results were far from perfect… Technical glitches and theft meant that supervision staff were still required – and some shops even made the decision to remove self-service tills altogether.
Businesses can think that the end point of the transformation is installing the new system, but it’s usually a much bigger change, that takes longer to embed than managers expect.
The article was published in People Management and Management Today in September 2018