Why digital transformations fail

Welcome to Definitely Maybe Agile podcast where Peter Maddison and Dave Sharrock discuss the complexities of adopting new ways of working at scale. Hello and welcome to another exciting episode of Definitely Maybe Agile with your hosts, Peter Maddison and Dave Sharrock. How are you doing today, Dave? Brilliant, Peter. How are you doing?

It's been it's it's a lot has changed, I think, since that we last talked. I mean, the weather has all turned, uh, conversations were in different locations, so a lot has changed in the last few days. It has, hasn't it? And uh has it been a successful change? Definitely. The turning of the seasons is always fun, right? So now we've we kind of know, you know, things are looking up in different ways to the way they were a few weeks ago.

And we're we're going to be talking today about digital transformation changes and why they fail. So unlike the seasons, which never seemed to fail or change.

I was just yeah, well, they they fail in different ways, don't they? But what I find it's interesting is right now is that end of financial year, buddy new financial year time. So it's that it's that changeover. It's a great time for us to sit and and sort of look back and think about what worked, what didn't work, if you're in the organizations where that financial sort of financial year is shifting right about now. And uh what I always find interesting is it's that time when we we claim success in order to be able to keep things moving forward. And yet in many cases, these big transformational changes uh are it's right in that middle of our things working, our things not. How can we tell what's going on? Why did they fail? Why did they not succeed the way we hoped they're yeah, it's it's very interesting, isn't it?

Um I I also I think the other thing that happens this time of year as well is the uh the annual performance reviews, but that's a topic for another day. But I something that occurred to me there is the uh the number of people I've spoken to in the last couple of weeks who've uh they have their annual performance review, and so they're the what they're talking to me about is they're just sitting down to write what their targets are so that they can fill in the responses to having met their targets all at the same time.

And it's it's uh what I always find quite interesting is where we spend a lot of time working towards iterative and incremental changes, small steps forward, re-evaluate, small steps forward, re-evaluate. And of course, what we're describing here when you talk about annual performance reviews 12 months forward, re-evaluate, recency effect, and everything that comes with that finance and accounting and annual plans, big steps forward, re-evaluate. We're in that process right now, and it it is I think this is a great sort of segue into one of the biggest challenges we see with digital transformations. They're considered as these big changes, and yet everything that we are talking about is lightweight, small steps, learn as you go, iterate as you go forward. And maybe this is a good point for us to just sit down and say why do we recommend these small steps forward, reevaluate, small steps forward, re-evaluate versus realistically what we've done in many organizations for decades, which is plan 12 months at a time with an eye to three years out.

Why does it not work? So, I mean, there's a couple of pieces there. It's um I I think it's never worked well. I mean, it it sometimes works, but it does if it does ever work, it's uh because there's somebody there who's managed to steer it with a great amount of influence and a sufficient amount of um respect and charisma to be able to keep it all together, and and that's very, very difficult to do, and very few individuals can ever make that happen, especially not across a much, much larger organization. It becomes very, very difficult to keep all of that together because there's so complex, there's so many people involved, there's so many different things that need to change, there's so many uh areas that uh you're just not going to be aware of everything that needs to happen. So yeah, uh the that's why you really just need to start with like the smallest possible changes. It's uh if I mean the if we we can talk about things like the Kubler Ross curve. I mean, we've talked about that in the past, but this idea that we um that that when we go through change, we we have to go into the the dip of chaos. And uh the bigger the change, the deeper the dip, and the longer it's gonna take to get out of it. So we're far better off having a series of smaller incremental changes that uh we can come out of faster and learn from than we are going through these massive changes that not only may take a very long time, but we may never come out of. We may just go into the chaos and just remain there.

Well, I and I I want to take issue a little bit with when you started that saying these big changes never worked. The reality it has worked for many decades because if I look at the uh the NASDAQ or the FTSE 100 and you look at how companies have performed, they've performed using this annual model for many, many years. But I do think there's a significant change out there, two changes really that I look to out in the wild. Uh one of them is just complexity of change, and I I find it quite you know, every now and again you sit and you stare at or you look at the economy or you look at what's going on. And in the last 10-15 years, we've had 2008 the financial crisis, and then uh the pandemic comes through, and then there's this change, and these are these are huge events without then looking at you know more regional impacts and competitive marketplaces and things like that. So the pace of change and the complexity of the environments we work in is is just chalk and cheese different to what it was 20 years ago. But the other thing that really comes to mind, and this touches on another element that I talk about when we look at why big changes struggle to uh get the results that they're looking for, is that the people in the equation, I mean, last year we were talking about the great resignation, and I get that that talk is changing a little bit, but the reality is with remote workers, a lot of people all of a sudden have choices of where they work, who they work for, that they didn't have three or four or five years ago. And I certainly find that I'm talking to a lot of people who, you know, are shrugging their shoulders. They I I mean, I'm ignoring right now the economic concerns for next year, but generally they're confident that if they're not working here, they could go find something else to work, somewhere else to work, or some other place to work. And so that whole issue of complex environment plus employees that actually have more choices than perhaps they've had in the past means that the unintended consequences of making big changes very rapidly snowball and dominate any conversations that you have and trying to get.

Yeah, I'd agree. I think that's very fair. It's the um as we look at um the the world around us has changed. Right. It's the there is so much more complexity, not just in our organization, but outside of them too, which is driving um a lot of the change. And it's uh and the mobility of people is so much easier now, and COVID has driven a lot of that. That to be able to say, hey, I want to go work over here, and I don't actually need to leave my home to do so. It's uh that possibility is opened up for within knowledge work and uh in technology in a lot of those spaces. Absolutely. There's a lot of fields where that's not true.

A lot of there's a lot of yeah, uh for sure. Yeah. So just if I summarize a couple of the things that we're looking at there, because there's two important messages. Um, one I think is the idea of of you know big change with big plans and rolling that out. The problem is that's like you know, pushing a huge boulder into the kind of smallish lagoon or lake that we're in. The consequences of the waves that go out that wash over the shores and come back and get reflected at you are much, much bigger, and they're amplified in a complex environment. So the the way of navigating that is making smaller disruptions to your organization and learning from the unintended consequences that are generated and then make another small change and learn from the unintended consequences. So that sort of shift from big change, you know, sitting in a room, come up with a plan, a change plan, communicate it out from 1st of April, this is what we're going to do, and then just trace that through, is uh is not as easy to do today because of that complexity in the environment. It changes how we look at things, and so a much better way is this sort of I don't know that I'd call it softly softly approach. I don't think it has to be soft, but it does have to be smaller changes, watch for the unintended consequences, another change, watch for the unintended consequences so you can manage the unexpected uh rather than get caught out by an avalanche of unexpected events.

I think one of the interesting pieces that we've been talking about there when we started this by talking about uh like that we're in annual budgeting season for a lot of organizations, uh, and that's a particular example which can also drive some of the problems because not only are you being asked to come up with what are your plans, but now we're with segmenting the funds into buckets, and that drives certain sets of behaviors and and can often prevent some of those smaller incremental changes if things aren't well thought out around how are we funding the way that we change as well as uh and there's there's the emotional tie-in, right?

If I spend eight weeks pouring over a plan as to how I'm going to do the change, I'm emotionally tied to it. I'm not I struggle to adapt to change because I've invested so much of myself. So there's that sort of element that comes in as well. And I think the other thing that we were touching on is the people-centric. We've talked a lot around digital transformations really being a big key difference, is the cultural transformational organization as the people's side. And I and I think it's this is part of the agile community has always said let's put humans at the center of whatever is happening. And I I think we're now seeing in knowledge work in certain fields the you know, uh an area where that's really becoming very, very relevant. People can get up and leave. We want to make when people do get up and leave, then come to our organization because of the environment we support, because of what we do. And I think uh we hopefully will see a lot more of that sort of um uh I think it's uh Gary Hamill talked about making um companies uh fit for human beings, and I think that's uh that's quite an interesting little message every now and again. We should have a little note to make sure we're doing things.

I believe I I started off uh the the course I'm recording at the moment with a sentence along the lines of our organizations are broken. Yeah, just a good way die.

Maybe we have a few. This actually brings us really nicely on. I know we've we put a few thoughts to this one, but one of the reasons that organizations fail in their transformations, what would you say to Yeah, well, because they didn't engage us. They didn't move, right? Exactly. Well, and and I I sort of I think joking aside, what's interesting there is um there are some brilliant people in out there who've had experience going through these transformations who, when you're talking about what Gary Hamill talks about making um companies and organizations fit for human beings, when you're talking about most companies are kind of broken, there are people who have crossed that divide, if you like, and spent time working with organizations that are challenging that status quo. And I think what I pick up from that sort of they didn't engage us is go talk to the people who've crossed the divide who change challenge that status quo, learn from them, listen to them, and try and figure out what is a value that you can take away from that. Because this is that opening up your ears to listen to what can sometimes feel uncomfortable, but to sort of get the innovation flowing.

Yeah, that that piece of uh you can help make your transformation more successful by ensuring that you're listening to others. We're not looking to copy, we're looking to learn. And how can we take that and learn from it and see what might work here? And those are when we're talking about those small incremental changes, this is this really ties into that because we go, we can learn, see what others have tried, try it here, see see what works, what doesn't work, and learn and improve and move forward that way.

Well, and and I I find it I was just at a conference earlier this week, and um uh one of the speakers there was uh in the field of privacy and security, and it's I it was just a fascinating, like it's not normally a topic that I sign up to go and listen to. It's not something that's high up on my reading list. Um the speaker made it was just brilliant, right? And and really engaging and made it relatable. And I walked away with a whole page of notes thinking, okay, we've got to start thinking in slightly different ways around these things. So it's interesting just having that. Um having those experiences where you bump into people who are immersed in their field and uh learning what's kind of really going on in that space. Uh maybe there's another kind of area that I'm often looking at is I think with digital transformations and the things that can make them really struggle to achieve any real outcome that they started off doing is um we called it here lack of alignment. Uh it's the you know, starting it off over in one part of the organization without really getting getting buy-in or alignment across the organization. So it stutters really without a chance to succeed just because everyone's not on the same.

Yeah, and then that's and the another the note that you put there too as well, around uh conflicting priorities, because that's then what occurs is that if uh one person over here has this set of objectives and this group over here has this set of objectives, but to what's required means that they need to collaborate, but they've got a different set of objectives, which were set at this time of year by the funding that was put into the bucket to say you go that way, you go that way, but these two things are not going to get you to where you want to go because they're gonna be two different pieces that don't meld and it doesn't work.

I I think it's it's really interesting because I I think we're leaving um uh a period when when new initiatives and strategic priorities were additive. They they were added on to the responsibilities and the direction and the things that are going on in the organization already. And part of that challenge that we're now seeing is, and there's a lot of reasons that we've talked about in many different ways that drive this, but those changes can no longer be additive. We only have so much attention. They can't so the one of the hardest things to address is if you're going to take this step forward, whatever your strategic digital transformation objective is, what are you going to stop doing? And and that one that's a tough conversation.

Yes, yeah. So and uh right, well, and and this is this is the focus conversation, like a strategy being to what are you saying, notice when the really big, beautiful, shiny object that looks so so good, and you say, Nope, not gonna do that. I'm focused on this, and but and having that alignment to all be focused on, this is where we're going, and the agreement, this is what we're gonna try now, and until we've learned from that and we're ready to reassess where we're going. Um I like the the idea of change as BAU, and it's uh which I think is where you were going with that and touching on it. That it's that it can no longer be um additive to the operational work that we're currently doing. We need to constantly be changing, constantly be adapting and looking at how do we build this into our uh standard way of operating and standard way of uh delivering.

Yeah, and I'd also argue it's it's not as simple as freeing up capital to be able to invest in that big change because it's not something that you can do outside of your daily piece, so daily operations. So that then becomes something where the reality is it's an it's really raising up to the level on a leadership level of there has to be those conversations around priority and really consequentially, what opportunities are we not going to chase? And I think that conversation is something that is quite rare.

I would agree. So so how shall we sum this up for our listeners today?

Yeah, sure. So there's a there's a few things. I think we started out recognize big change versus iterative and incremental. This is a theme. If ever there's a thread that goes through all of our conversations, I think it's that focus on iterative and incremental, small steps, small unintended consequences. You can handle the kind of pushback and the ripples that come back at you. Big changes, big unintended consequences. You spend all your time swamped by things you never even thought were going to be a problem. So I think that's a huge kind of takeaway from it. Um uh the it I'd like to just pick up that the final point that we mentioned. Recognizing that sort of big change versus iterative and incremental change doesn't mean those changes can't have ambition and be large over time. And that speaks to that whole strategic transformation being um, you know, making sure there's alignment, making sure priorities are discussed, and the reality being opportunities are actually left on the table by choice. There's a conversation about what are the opportunities which are in focus.

What else would you add? Well, I think the other two points that uh we were including there, well, one was around the the making sure that it's about the people and that that the people are the who need to change, that the the technology and the process are the easier parts. It's uh but the people come first. So start there, work out how are your people going to need to change as you go through this transformation. And the other piece is uh, as we put it, they didn't engage us, but the the uh point being more about go outside, learn, look at different spaces, learn from different fields, learn from different areas, because it will spark ideas that you may not have thought of that may apply uh to what you're doing and give you some more insight that is going to be specific to you and what you're looking at and the problem that you're looking to solve. So that's why it's really important to be going out there and talking to others and learning uh what's worked, what hasn't worked, uh, how else might you approach this? Great point.

Uh Peter, thank you very much again for a fantastic conversation. Uh as always, uh any comments, questions coming in, uh, comments at definitely maybeagile.com.

Okay, and uh till next time. Thank you. You've been listening to Definitely Maybe Agile, the podcast where your hosts, Peter Maddison and Dave Sharrock, focus on the art and science of digital, agile, and DevOps at scale.