Work snippet - Why digital transformations fail (2)

Why digital transformations fail - Planning all at once, spending all at once

Digital transformations within traditional companies, especially the bigger ones or those with some kind of monopolistic power over the market, are usually kick-started by start-ups attracting market attention and growth giving them a wake-up call.

The kicks are usually quite brutal, and these companies are likely to panic. They will start believing that the future is here, and the start-ups will grab it all unless the company acquires similar digital capabilities today or as close to today as possible. The 'next step action' is predictable - big announcement to the press that a lot of money will be invested in technology and a 'digital division' will be responsible for all these initiatives.

When you give a large sum of money to someone to spend with few directions & control, they will squander the money, and the same goes for digital transformation. The new division has the board's blessing to be bold, experimental, and start-up-like, yet it doesn't have the start-ups' natural constraint of limited funding and pressure to generate revenue (or traction) soon. A lot of projects will be scoped, including ideas that are so bold & wild that start-ups dare not touch, ideas that may overlap with each other, or ideas that need a lot of work on both the front end and platform which only deep-pocketed companies could afford. If a product is being launched by a start-up, it will be copied; if a new technology is emerging and praised by some tech blogger, a product would be scoped around it to make the division sound bleeding-edge; if the directors have their pet ideas, they will be realised into projects; if someone within the company had an idea or a problem statement, yet another new project would be established. With healthy funding, there is little need to prioritise, rationalise and be focused.

With so many projects starting at the same time, a large team would be planned & hired. Lots of seats to fill within a short time, wages would be inflated or contractors are hired. A hierarchy riddled with senior positions would emerge - each project would have multiple engineers with a lead, UX and UI designer with a head of design etc, then the leads would be led by heads of, the heads of led by directors and so on. When a lot of people join without common processes & culture being in place, you will need a lot of consultants and coaches to add to the huge team.


The cost of this transformation approach is heavy. With lots of projects working in parallel, the division roadmap becomes very complex to manage and keep on track - different projects may require the same platform to be configured differently, and whose view should prevail? Overlapping projects are naturally creating tension; a number of projects are about to launch at the same time and the supporting departments may be stretched; if one project is delayed, it may have a knock-on effect on all other projects, and suddenly the whole division is paralysed.

With lots of people hired externally within a short time, it's equally tricky to keep people happy & productive - without a strong culture and framework to galvanise team members together, people stick by their old practice from previous workplaces and collaboration between and within teams become hard; when the directors want to harmonise the culture & processes, the entrenched practices become hard to change; a new division is like a virgin territory which everyone fight against each other to maximise their power, and any minor issue would quickly escalate into a political incident; each team & technical function would try to prove their value, and gain overall control of the project or even the division. The directors may want to stamp out all these troubles, but they are overwhelmed by the variety, scale and complexity when there are so many players.

One more thing to mention - lots of projects plus lots of people, this can only mean programme management is next to impossible, with projects' progress easily delayed by each other's minor hiccups and utilisation of each team member hard to keep high. Delivery cost goes up, and project timelines are wildly inaccurate.

Sounds like a chaos? Even if you have the best senior management at helm and the hiring process is rigorously controlled to get only the most capable hands, it will still happen, guaranteed. The vast funds will be quickly spent, results are not delivered, the team members are unhappy and start churning, and the board quickly realises that the value-for-money is poor.

The hell situation doesn't end here. With funds spent and projects late, the board get angry and want to scale back or get the shop back in order. People will have to be let off to 'start again', projects will have to be pored over and prioritised, and this introduces either a sense of fear or anger, and people either pack their bags or try to demonstrate their projects' value (against the other teams). No funding, half built products, and severe in-fighting, it's hard even to say 'time out' and re-group. Not to mention getting the inflated wages down to the market rate.