26 June 2019 | Joanne Cox
What to Do if You Want Your Digital Transformation to Fail
Dmitry Bagrov, UK Managing Director of DataArt, spoke earlier this month at an event hosted by the Digital Leadership Forum. The event brought together over 100 digital leaders to explore the topic, “Digital Transformation Success Stories.”
In his talk, Bagrov took a tongue-in-cheek approach to this topic by discussing “What to do if you want your digital transformation to fail.” As Bagrov explained, research consistently suggests over 70 percent of digital transformations do not achieve their intended outcome. Thus, failure is “easy.” In fact, according to Bagrov, failure in digital transformation comes down to three basic rules:
Rule #1: Outsource it. For a company like Hertz, outsourcing a digital transformation to the technology consultancy Accenture resulted in “a tragedy of Shakespearean proportions.” Now, around “$32 million [and] many months later, [the companies] are taking each other to court.” Why? Because Hertz believes Accenture did not deliver what was requested and Accenture believes it did what Hertz asked, but did not know what Hertz wanted.
Nevertheless, a strong partnership between client and consultancy can prevent outsourcing from resulting in failure. For example, when NASDAQ asked DataArt to create a system, the stock exchange “knew exactly what it wanted”: blockchain technology that would protect its data’s integrity and enable reliable tracing of “the provenance of every security back to its origin.” Meanwhile, DataArt delivered a product that required so little maintenance NASDAQ can now run the product itself. Though, as Bagrov joked, his company consequently lost out on a lucrative maintenance contract, it gained something much more valuable: “very loyal fans.”
Rule #2: Create detailed long-term plans... and stick to them. “In reality,” explained Bagrov, the “plans you create will become irrelevant within twenty-five nanoseconds after you’ve done them.” To illustrate his point, he visualized starting or transforming a business as looking down an “empty street with no one there. You can clearly see where you are going.” But when you begin looking around, you “start thinking about things like: ‘I need to make sure I get around the guy with a rucksack and make sure I'm not killed by that suitcase...’ These are your detailed plans. You start focusing on obstacles and lose sight of your destination.”
Like a city street, the world today is continuously changing. To keep up, companies increasingly plan for the short-term, not the long-term. For example, after about five years of working with a home security company that is now part of British Gas, DataArt retrospectively analysed their partnership by plotting time versus the number of DataArt employees working for the client at a given time. The shape of the line repeated each year: DataArt downsized around September, peaked around May, and then began downsizing again. This trend reflected the relationship between long-term and short-term goals: the client’s long-term goal––providing unified security systems––remained constant, but it achieved this goal through modifying its short-term goals, working with DataArt to adapt its product to changes in the technology landscape, such as the emergence of the Internet of Things (IoT) and competitors such as Nest.
Rule #3: Don’t ask “why”. To develop this rule, Bagrov took his cue from business and marketing specialists Simon Sinek and Martin Lindstrom, whom he had a chance to see and talk at a recent conference. For Bagrov, their talks boiled down to the same idea: business-to-business (B2B) and business-to-consumer (B2C) transactions are now obsolete: “we no longer buy from companies; we buy from people.” This new reality of “human-to-human (H2H)” transactions provides substantial advantages: whereas many of us previously struggled to understand our business and that of others, “we all know how to deal with people.” When technology consultancies can take a human perspective to understand why their clients want to undergo a digital transformation, they can build strong solutions and even stronger relationships. After all, this “why,” says Bagrov, ultimately amounts to a goal consultancies and their clients both share: “making people’s lives better.”