Successful digital transformation hinges on a combination of critical success factors.
Your strategy and vision for the future are paramount – but, alongside this – you need to give equal consideration to how you are going to control the delivery of this strategy. So it can be undertaken smoothly and quickly.
While this part may seem a little less ‘sexy’ compared to the creation of a compelling strategy, the most successful change programmes are the ones where the approach is supported by a structured, feasible and measured programme of change. A robust and clear plan that harnesses the energy and passion for bringing your vision to life and coping with the unpredictability’s that complex change can bring.
A feasible plan, with clear objectives and measurable strategic outcomes that will deliver direct value from your investments. From this interview with our Senior Partner, Andrew Salmon, we get answers to the following questions:
- Why planning and measuring change is so important.
- What are the complexities of digital maturity?
- The importance of setting and measuring the right KPI’s
- What about Agile?
- The common issues that crop up
- Successful projects – some examples
- Some final tips
Our Digital Transformation series aims to share some practical insights and expertise when it comes to creating the right strategy and how to implement and manage change. Provided by experts who are actively involved in helping many different organisations successfully undertake business transformation.
Our digital transformation series looks to share practical and proven advice for businesses faced with the need to create and execute a digital change strategy. Providing you with approaches to avoid common mistakes and ultimately make change more successful. If you haven’t had a chance already, you may find these other blogs useful:
- What is Digital Transformation and the Best Way to Get Started?
- Moving Your Business up the Digital Evolution Curve
- A Digital Change Framework to Drive Successful Digital Transformation
- How to Create a Clear Vision and Strategy for Your Digital Transformation
- A Communication Plan to Bring Your Digital Vision to Life
Sophie: Andrew, when it comes to digital transformation, why is planning and measuring change so important?
I think planning and measuring change becomes more important as a function of the complexity of the change that you need to go through.
If you’re a small organisation and there is not a great deal of complexity to your change, then you don’t need a central planning function.
Similarly, if you’re a software development house developing an application, you can do that in a very agile fashion and be very reactive to your customer needs.
However, when you’re talking about fundamental customer-led business transformation, in a medium or larger business – say a 250+ person business – you need to start thinking about investing in central planning.
Sophie: So, how complex can digital change get?
If you look at our digital evolution curve, there are three main stages associated with digital maturity:
- Marketing transformation
- Company-wide – usually stimulated by a need to change the end-to-end customer experience
- Game-changing innovation
Broadly, things get much more complex as you transition through 1 to 2; and simplify again when you move from 2 to 3.
For example, if you’re undertaking your (stage 1) marketing transformation – changing your website, adding digital marketing to your go-to-market approach, updating your technology stack to add marketing enablers, rationalising suppliers and building out your organisational structures to accommodate new skills – while that may seem like significant change, you probably don’t need a central planning function to manage this. Unless you are a truly enormous multinational, when doing this across multiple geographies, brands and products and services may mean you do.
Conversely, if you are undertaking company-wide transformation – typically to solve end-to-end customer experience needs – then you are going to need to invest in a central change function even if you are a smaller business. To control the changes in your go-to-market, product, operations, organisational, and technology areas.
So the complexity of digital change is a function of ‘stage’ and ‘organisational and market’ complexity. And the more complex, the greater the need for a central change control function.
Sophie: How about as you move into company-wide transformation efforts?
As I said before, as you move from marketing into company led transformation, thinking about the full end-to-end customer journey – which is often multi-device, multi-channel and very complex – this is usually where you realise that your organisation has been constructed vertically, rather than following the customer ‘horizontal’ journey. This means changes are going to be made all over the place.
It’s probably going to make changes in the way that you do your operations – both back office and front office; the customer experience in both your physical environment if you have stores, and in your digital environments. It will also change your go-to-market activity, and it’s going to transform products and the delivery of those. And there will most definitely be changes in your technology and your data stack, and in your organisational structures and beyond.
Suddenly, you’re fundamentally modifying every moving part of your business. So even if you are a smaller organisation, you are going to have to do some significant planning.
If you are a complex multinational – for example, Sony sized – with complex territories and brands, it is even more critical that you control those moving parts. It’s all about the complexity of your environment, both internally and externally, as well as the complexity of the ‘stage of change’.
In these cases, planning and measuring the change in a pure and freeform agile process is going to lead to disaster. You need to have some form of control and streaming to ensure that all of those integrated and interrelated parts change at the right point in time. And when you have this, then, of course, you can deliver the individual actions in an agile-like approach as you like (speeding up the delivery cycles). Ultimately helping to deliver appropriate change for the customer, company and for all of the internal operators you’ve got in your business.
If you are undertaking complex change or change in a complex environment, then a central change function can help with this. Doing critical tasks such as calibrating the change amongst teams, working with senior teams/HR around communications into and out of business, and supporting the financial team on developing the picture of investment (level and timing) and if you’re on track (or not ?).
Sophie: Do businesses underestimate the importance of this step?
Many organisations will say that this is what a project management office will do. And that’s true, but an appropriate central change function is right at the heart of the change and is empowered to help deliver it fully.
You need them to do the program control, inform senior stakeholders, work with the right teams and subject matter experts, drive awareness of what’s going to come, give clarity on responsibilities and accountability, calibrate activities, raise awareness of issues, and help investment control and benefit delivery.
Many organisations underestimate the importance of planning and measuring change at both ends of the scale. We’ve seen significant change programmes which go out of control, principally because people haven’t invested well enough in this process and approach.
For example, we worked with a large FMCG organisation who were big proponents of using a federated and ‘it will happen’ approach. And it caused them some problems along the way because it was a complex business, with multiple brands and geographies and it just wasn’t moving fast enough or producing the ROI it required. Conversely, we’ve also worked with organisations who have become ‘plan paralysed’. So there is a real balance in getting it right.
Sophie: Have you found an approach to planning and measuring change that works?
That balance sits somewhere on the spectrum of agile to full waterfall, but where that resides is unique to the conditions of each organisation and the market it operates within.
However, for the majority, it’s going to be a mix of ‘right to left planning’ (waterfall) and ‘left to right’ agile delivery. My advice is to do this mix and if you find that one element doesn’t work for you, change it, until you get it right. But this ‘mixed approach’ and iterating it until you get it spot on is right for the majority.
So why not pure agile? Well for many this can often lead you in an incremental direction you don’t want to go, especially for complex organisations which are not just about software development.
So why not pure Waterfall? While this can lead to knowing precisely where you are going and how, by the time you jump through the hoops to do it, the market conditions may have changed, and there’s no room to adapt to the market, and you are heading in the wrong direction again.
Transformation for a large organisation across the stages typically takes two to three years, and undoubtedly the market is going to move in that period of time. So if you think we’ve done all we need to do ‘upfront’ and we’re going to stick to that tightly, then you’re probably going to come unstuck at some point. Markets are now so dynamic and changeable that you need to be able to balance those two elements.
The key is getting a balance in the mix, a function of the complexity of change and the pace that market conditions change. This is a middle ground to achieve in that spectrum. This is an option where you use a framework with the security of right to left planning and long-term direction in core areas of your business but executed in a more agile and flexible manner.
You keep the appropriate control through your central planning function, with the proper breadth and depth of planning to provide guidance, but ensuring you allows yourself to be agile and flexible enough to change direction to stay in line with market, customer and company needs.
Sophie: When you have seen success within organisations, how has the planning been achieved?
The way I view it is through a concentric circle model.
In the middle is what I would call the ‘drumbeat’ of the transformation. This has got to be the remit of the PMO function, programme and project teams – but empowered as above.
This core central team sit at the centre throughout the whole process. They control the plan of when it’s going to happen — working with subject matter expert teams on ‘what’ needs to be done (typically commercial and product) and how (usually technology). Controlling the pace of planning and setting the drumbeat in the creation and change processes.
In the next layer, you add subject matter experts and who is sponsoring the change. If you are at stage one – your marketing transformation – you’re probably going to add more marketing and commercial people into it. If you are at the next stage – company-wide transformation – then you need expertise around customer experience, operations and business architecture regarding organisational shifts.
And in the next layer are adjacent teams who can support critical functions of the change. Working with the HR/talent and senior team to deliver great communications and ensure it all works culturally. Working with the finance teams to ensure you are tracking spend when it is happening and the impact back into the organisation.
So you then have a central planning function with cross-functional working practices and collaboration. This is how I’ve seen big-scale change succeed.
Sophie: How important is it to set and measure the right KPI’s and track these through change?
For the business and financial model, these are critical.
Although change has to driven by your customer needs, it fundamentally also has to be tied to the business model and translated into measurable KPI’s.
When it comes to customer-led changes, you’ve also got to be clear you are doing the right things at the right time from a company perspective as well.
So you measure and track the benefits – be that revenue, cost reduction, profit, market positioning or strategic advantage. If you’ve got that worked out, measuring against those KPIs will keep you on track.
And as part of the above, you’ve also got to control your investment and part of the central planning team’s role is to ensure that’s managed and included in the reporting process. The reporting needs to be measured in the right way also, so you’re getting the results you set out to achieve.
Other elements are internal, such as are we affecting the right cultural shift and skilling capabilities? They must be measured.
Sophie: How should businesses set the pace of change?
First and foremost, break change up into manageable and successful chunks.
Please don’t boil the ocean. If you take on too much, all at once, you will most likely fail. If you break it up into manageable parts, not only does it allow you to control it, but importantly, you get momentum, and this builds success within your business.
Ultimately, change is difficult. You’ve got to motivate people to want it to work. So split your roadmap up and do small iterations – that’s your agile – and it enhances your chances of being successful.
And the next thing I’m going to say is much more difficult to balance.
Yes, you have to change, and the market is moving incredibly quickly, but you’ve got to move at the fastest pace that is feasible for your organisation.
Don’t set unrealistic targets that you have a minimal chance of achieving. That’s just too high. The only time to ignore this rule is if that pace is going to make you go bust.
Feasibility broadly falls into two categories. Firstly, you have got to look at your organisation’s skills, capabilities and capacity for change, and the ability to control it. Then you work out pragmatically what is the fastest period. Secondly, you have to ask what can we afford to invest in enabling the change. Together, they give you some answers to the question of feasibility.
Sophie: Any final words of advice?
Be resilient through the change.
Ensure that whoever’s undertaking the change – from your senior team, all the way down – is supported through this process. Reward in the right way, intrinsically and extrinsically, so people are motivated to achieve something which is often very difficult to do. But don’t support mediocrity or the wrong behaviours. And resist the temptation of finger-pointing and blame when things go wrong unless someone truly deserves it.
Finally, never forget to celebrate success and have some fun along the way…