Why do so many brilliant companies fail to transform?
150 years ago Western Union was one of the most powerful companies on earth, thanks to its monopoly of the United States’ telegraph network. Gradually, its leaders spotted a threat: a tiny start-up with a breakthrough communications technology.
The company was Bell (later to become AT&T) and its technology was the “telephone”. Western Union had the firepower to dominate the new telephone business, but instead of focusing on the opportunity it was more concerned with the threat to its telegraph business.
So Western Union struck a bargain: if Bell stayed out of the telegraph market, Western Union would stay out of telephony.
History is littered with examples of companies that have missed opportunities, and there isn’t a CEO I am aware of who needs lecturing on the imperative “transform to survive”.
In fact, if you gather 100 CEOs in a room, 90% will tell you that their organisation is already on some kind of ‘digital transformation journey’.
But look closer, and the vast majority are not in fact on a coherent path.
Worse, many of the CEOs who are not doing digital transformation are under the illusion that they are. To understand why, you first have to remember that true digital transformation has two defining characteristics:
- It’s driven by the CEO
- It involves a fundamental change to your operating model
Most digital transformation projects don’t come close to meeting these two criteria. Instead, they’re more like a fragmented collection of projects.
CEOs are responding to the need to transform by doing what they know best: launching initiatives. They’re throwing darts at the dart board in the hope that some of them will score a bullseye. But the hard reality is that disparate initiatives don’t deliver digital transformation. You can't strike oil by digging a hundred one-foot deep holes.
Digital transformation isn’t an imperative that you can hand down the organisation on tablets of stone. If you do that, what you end up getting back is a piece of technology – not real change.
In fact, dabbling with digital initiatives can hurt your chances of ever achieving the organisation you want. Unless you take a joined up approach you can be left stuck in a phase of ‘digital adolescence’ – a frenetic period of adrenaline and momentum that rarely generates anything of lasting value.
(I heard a story about a retail bank that still has its core standing order system written in pounds, shillings and pence with a translation routine running on top of it. Many of these systems were supposed to have been rewritten as part of the millennium-bug investigations. However, most of this didn’t happen.)
So – as a CEO – what’s stopping you from personally driving top-down digital transformation projects?
In my experience, there can be several reasons:
- You’re worried about the risk
- Your board doesn’t understand the need
- You just don’t know where to start
You might feel like you’re fighting too many fires to engage in digital transformation. The irony here is that very often these are challenges that only true digital transformation can solve.
Ultimately, digital transformation isn’t something you can ‘dip your toe in the water’ with. One thing digital success stories all have in common is that – like Netflix’s transition from DVDs to streaming media – they’ve all gone ‘all-in’ on digital transformation.
In each case, they believed in digital and its opportunity to transform their business.
So how do you get started? How do you get a plan for action? How do you make sure you do the right things in the right order?
Over this series of blogs we will answer these questions as we exploring what digital transformation really is, and how to strike the right balance between laying down the foundational capabilities and getting on with changing stuff in line with what customers are telling you.
About this author
Head of Digital Strategy and Transformation
As Vice-President and Global Digital Transformation Lead, Craig is responsible for bringing together CGI’s global digital transformation point of view, solutions and services portfolio. With more than three decades of transformation expertise, Craig provides portfolio management, thought leadership, counsel and support for clients’ digital transformation ...