In the digital age, staying ahead means continuously adopting new technologies. Is your organization ready for the journey?
Digital transformation continues to be a hot topic in 2023. Despite a slight dip in interest since its peak in 2021, the trend over the past decade shows a steady climb. But just because it’s popular doesn’t mean it’s easy. The vast majority of digital transformations — a whopping 87.5% — fail to achieve their original objectives.
As the founder of a technology consulting company dedicated to helping organizations modernize their technology capabilities (a term I prefer over “digital transformation¹”), I have navigated the complex realities of this field for years. In this article, I aim to share some personal insights, as well as actionable advice and strategies for organizations just getting started on their digital transformation journey. You’ll learn about the unique challenges of digital transformations and how they differ from the technology projects of the past. This guide is intended for those at the beginning of their journey, aiming to avoid the common pitfalls that many have encountered before.
The Need for Transformation
Our world has changed dramatically over the past decade, driven by advancements in cloud computing, the widespread adoption of mobile technology, and leaps in artificial intelligence. These developments have not only transformed our daily lives but have also fundamentally reshaped how businesses operate and engage with customers. The pace of technological change today is relentless, and organizations that fail to keep up will be outmaneuvered by more agile competitors. Embracing new technologies and the practices that go along with them is crucial, providing organizations with the ability to innovate, penetrate new markets, and improve operational efficiency. Consider this: the average lifespan of a Fortune 500 company has dwindled to just 15 years, a sharp decline from 75 years half a century ago. In such a dynamic environment, failing to adapt doesn’t just mean falling behind — it could mean ceasing to exist.
Digital Transformation vs. Traditional Technology Projects
Is digital transformation just another tech project? The answer is a resounding no, and assuming otherwise is a critical mistake many organizations make. Unlike conventional technology projects with defined objectives, budgets, resources, and timelines, digital transformation is a fundamentally different beast.
Key Differences Between Digital Transformation and Traditional Technology Projects:
- Scope and Scale: Digital transformation goes beyond implementing new tools; it reshapes operational processes and company culture, often touching the entire employee base, not just the technology team.
- Ongoing Evolution: Unlike projects with a well-defined scope and clear start and end dates, digital transformation is a continuous effort that never ends. The ultimate goal of a digital transformation is to transform the organization into one that becomes self-improving, continuously adopting newer and better practices so that it never needs to be transformed again.
- Cross-Functional Involvement: Digital transformation requires unprecedented levels of collaboration and coordination across all departments and teams, making it more complex than traditional projects due to numerous dependencies and the need for organization-wide alignment.
- No One-Size-Fits-All: Every Transformation is Unique: While typical technology projects have risks to be mitigated and unknowns to be managed, digital transformations are infinitely more complex because each one is unique. What works at one company will not work at another, because an organization’s specific business rules, processes, culture and underlying data are all different.
- Mindset and Culture Shift: Transformation requires a fundamental shift in organizational culture. With traditional tech projects, the technology team is typically only responsible for writing the code according to the requirements they are given. If the code was written to spec but doesn’t create a better outcome for the business, the technology team is not held accountable. With large complex digital initiatives, tech and business teams work very closely together and are jointly accountable for business outcomes. To be success with digital transformation, bureaucratic structures² must evolve to embrace dynamic collaboration and the questioning of established norms for better outcomes.
- Success Metrics: The traditional definition of project success — “was the project completed, on time and on budget?”, does not apply to digital transformation. Instead, success can only be measured by the organization’s long-term value creation and its ability to continuously improve. For instance, in the realm of digital transformation, a successful outcome might be reflected in enhanced market adaptability, sustained innovation, or improved customer experiences. These metrics underscore the shift from viewing success as a one-time achievement to seeing it as an ongoing process of growth and evolution.
Why Traditional Project Planning Doesn’t Work for Digital Transformation
Relying on traditional project planning tactics for digital transformation is a recipe for a total disaster. Unlike conventional tech projects of the past, which have well-defined parameters and scope, digital transformations are riddled with ‘unknown-unknowns’ — challenges and requirements that are impossible to anticipate at the outset. This complexity and unpredictability make it difficult to coordinate and plan effectively using traditional tools like project plans, Gannt charts, RACI matrices, and documented assumptions.
Senior executives tend to fall back on two familiar tools at the beginning of projects to ensure success — budget and deadlines. They give their teams a deadline often months or quarters in the future, and are willing to allocate whatever resources necessary to get there successfully.
Picture This Scenario
Imagine a midsize enterprise undergoing digital transformation. They’re coordinating with several different consulting firms on a series of complex initiatives: introducing a new CRM system, migrating their ERP to the cloud, implementing Master Data Management (MDM), and overhauling their internal application integrations and ETL pipelines.
A significant challenge arises with the MDM implementation. The consulting firm estimates a 6–9 month completion timeline. However, haunted by stories of budget overruns and delays, the enterprise’s senior leadership demands a firmer commitment. They insist on a six-month deadline and ask for a detailed project plan, including Gannt charts and task lists, before proceeding. Their rationale is clear: they want to understand where they can allocate more money and resources to guarantee a timely delivery. This approach reflects a deep-seated reliance on traditional project management techniques, not accounting for or appreciating the unique complexities and uncertainties of digital transformation.
Enter the Project Management Triangle
The Project Management Triangle is a well-known model in traditional technology projects, illustrating the trade-offs between time, money, and scope and their collective impact on quality. For instance, if you shorten the timeline, that means you’ll need to either add more resources or reduce the project’s scope.
The problem with the Project Management triangle is it only works for predictable, repeatable, well-defined projects, and is entirely unsuited for the infinitely more complex world of large scale digital initiatives filled with unknown-unknowns.
Senior leaders, often subconsciously, fall back on this familiar framework, attempting to set everyone up for success. They might remind everyone that “failing to plan is planning to fail”, as they ask for more detailed plans for how a certain project will meet a deadline. Yet, the inherent complexity and massive scope of digital transformations, touching every aspect of an organization with numerous dependencies, make it impossible to coordinate with detailed upfront planning. You can give a team an infinite amount of time to coordinate the handoffs and dependencies between all the people involved, and you still won’t capture them all.
The unknown-unknowns and complexity of a digital transformation is why traditional project planning simply doesn’t work.
Laying the Groundwork: Key Dos and Don’ts for Getting Started
Since traditional project management is a recipe for failure, we need a new paradigm — one that values flexibility and long-term value over rigid adherence to time and cost constraints.
Leaning on my experience leading large scale digital initiatives and digital transformations over the past decade, I tend to recommend a set of dos and don'ts for organizations who are just getting started.
- Don’t try to use money to mitigate risk. Don’t get me wrong, digital transformation requires a substantial investment. What I mean here is don’t try to use money in the beginning of your project to gain more certainty about hitting a deadline. Avoid the temptation to ask “can we finish faster if we add more people?” The inconvenient truth is there’s no amount of money or additional resources that will guarantee a deadline can be met. Ironically, adding more resources often just adds more complexity, not speed.
- Don’t wait for more detailed plans. It’s tempting to hold off getting started until you have better plans with more certainty. Maybe you’re looking at a Gannt chart and you want more detail so you can hold people accountable and make sure you are staying on track. This is a reasonable ask when you’re working on a technology project, but with any large scale digital initiative that requires collaboration across multiple departments, when there are unknown-unknowns because you’ve never executed this type of project using your data and business rules, there’s literally no amount of planning or steps that can be taken to know in advance with certainty.
- Take a Foundational Approach (aka MVP). The one lever of the project management triangle that you do want to use to your advantage is scope. One of the biggest challenges I’ve seen in the past³ is a misconception about “done”; executives expect “everything” to be done by their deadline, but everyone has a different concept of what “everything” is. Reduce scope as small as possible to the minimal set of features you can go live with (MVP or minimally viable product), and then continue to ongoing iterative developments.
- Focus and Prioritize. Introducing new platforms, applications, capabilities, and ways of working will require a ton of focus. If you expect your teams to do it without reducing their day-to-day responsibilities, you are setting them up for burnout as well as failure. This requires discipline and courage to say no to almost everything else possible.
- Be Flexible. Avoid fixed priced, fixed scope, contracts and be prepared for flexibility. You don’t know what you don’t know. There’s no need to plan everything ahead of time. Be ready to flex up or down when needed. Work with partners who have flexibility built into their contracts. Have additional budget ready to flex up once you’ve gotten started and learned more. The start of an initiative when you know the least information is the worst time to make important decisions.
- Just Start. Don’t wait for perfect plans, especially since they are impossible to create for complex initiatives where the only way to learn all of your requirements is to start working. Start small, learn fast and iterate as you go. Combined with the foundational/MVP approach and built in flexibility, it’s best to get going and start banking some quick wins.
- Change your Mindset. A digital transformation is not a project with a start and end date. Everything being introduced during a digital transformation will eventually become continual. Because there is no end date, start thinking about continuous delivery of small business value as the ideal state, and avoid the fantasy that any one major thing in the distant future will solve your problems. (“Everything will be wonderful and easy once we migrate all our workloads to the cloud, in about 5 years from now”). The project management triangle of the old days taught us that speed and quality were tradeoffs — “you can have it good or fast, but not both”. But in today’s world, ironically speed is the best way to get quality (and it’s safer, and it makes employees and customers happier). Once you work this way⁴, it’s impossible to go back.
Embarking on a digital transformation journey is more than just adopting new technologies; it’s about reimagining and rebuilding your organization for the digital age. It requires a bold departure from traditional project management, embracing continuous evolution, and fostering a culture of flexibility and collaboration. By focusing on a people-first approach, maintaining a flexible mindset, and prioritizing incremental value delivery over rigid planning, organizations can navigate the complexities of digital transformation successfully. Remember, the key isn’t just to transform; it’s to evolve continuously, ensuring your organization remains dynamic, responsive, and ahead in an ever-changing digital landscape.
References and Resources
Footnotes & Resources
- I tend to use the words “large scale technology initiatives” or “digital modernization” more often than “digital transformation”, but for the sake of this article, I’m sticking with digital transformation.
- A lot has been said about the role culture plays in an organization’s ability to perform — from Peter Drucker’s famous “culture eats strategy for breakfast” to the common quip “technology is easy, people are hard”. For those looking to explore the role of culture in successful digital initiatives, my go-to resource is Westrum’s Organizational Topology.
- On the topic of the importance of taking a Foundational or MVP approach, here’s a case study from my consulting work about one such example where a company was struggling to launch a new implementation for Salesforce CPQ. They had been working for over a year on a project that was originally estimated to be a six month effort. We determined the biggest challenge was a moving target for what “done” was; scope got bigger with each UAT attempt and they would delay their launch until the new requirements could be incorporated.
- The “way” I’m referring to here is influenced by the DevOps movement, particularly concepts from the books Accelerate: Building and Scaling High Performing Technology Organizations and Sooner, Safer, Happier.