Recently, I read an article from Harvard Business Review on why so many high profile digital transformations fail. The article validated some things I suspected based on observing some of the companies we've worked with as well as the market in general. It also confirmed an approach Salient takes to projects which makes sure there are verifiable goals, and outcomes are tied to the objectives set early in a digital business automation (a sub-set of digital transformation) effort. There are four main points from the article regarding factors of failure in Digital Transformation efforts:
- No company should view digital - or any other major innovation - as their pure salvation.
- Digital is not just a thing you can buy and plug into an organization. It requires investment in various other areas of the business as well, including process.
- Make sure digital initiatives are tied to value.
- If the existing business isn't doing well, digital transformation is very tempting as something new to solve fundamental problems which may require more than just digital transformation. (One could argue points 1 and 4 are quite similar)
I'd like to focus on the tying digital initiatives back to value factor. While Salient doesn't typically get involved in corporate-wide Digital Transformation initiatives, part of digital transformation efforts usually end up having a Digital Business Automation ("DBA") component, which is where we play. One of the things Salient does on any project is our North Star exercise. At the start of our effort to map out DBA for a company, this North Star exercise makes sure the DBA effort is tied back to objectives within the company. It assures there are metrics captured within the process which allow us to measure whether the outcomes from the automated process are moving us closer to, or further away from, the objectives. This is key to success for not just DBA, but digital transformation as well.
From the article:
"There's something about technological change that causes senior executives in large, established firms to act differently than they might otherwise. When investing in a typical strategic change, managers are usually pretty clear about what they want to accomplish and what it will take to get there. There's a lot of work to get things right, but they know where they're going and how to measure progress. If the indicators move in the wrong direction, they can take action to set them on the right path, or can make the choice to de-escalate the investment. With innovative information technology, however, executives sometimes lose their rational decision approaches."
For DBA, the reason Salient takes the North Star approach is so we know what is important to measure, and that as outcomes are measured, we can determine whether the effort is on the right track or not. Many times, there is only so far you should take a technology. It really depends on what a company is trying to achieve. This should be determined up front and used as guard rails throughout the DBA initiative. This can be set up as high-level objectives the company is trying to achieve with Digital Automation. These objectives should be business driven, and measurable.
Another advantage of the North Star approach is it is highly driven by customer expectations. Throughout the North Star exercise, the continual focus is on what the customer expectations are and how those can be measured. This hard wires our DBA efforts to value. Salient makes sure the outcomes from the DBA initiative can be measured in such a way that the company knows not only if their company objectives are being met, but customer expectations are being met. Hopefully, the two are well aligned.
Salient's North Star methodology is a subset of our overall Digital Business Automation methodology. You can learn more about it here.