Digital transformation involves implementing technology to effect change. This shift we seek may refer to improved business processes, products, or business models, or some combination of improved outcomes. At a high level, it involves two phases: implementation, followed by continuous improvement.
According to apocryphal reports, it fails 70% of the time. Yet, businesses still keep trying to make it happen. They persist because it is strategically vital to keep up with the competitive environment. Doing what you’ve always done is a luxury few organizations can afford in a dynamic system.
The more central the underlying process, the more difficult it is to find the will to transform. Procurement is a core process. Implementing a new solution that will change the business model, even at the margin, is as difficult to contemplate as swapping the transmission of a car hurtling down the freeway.
Articles abound with explanations for why projects fail. Here are some of the more common arguments that experts suggest, starting with a summary from Forbes:
- There is no consensus across all the project constituents as to why change is necessary, what change they want to pursue, and how they will all collaborate for success
- Organizational leaders fail to focus on a handful of high-impact projects, ending up instead chasing the latest hot new thing, switching frequently and prematurely
- Central planning dominates a culture of experimentation and risk-taking
- The way in which the organization allocates resources does not distinguish between traditional projects and risky ones, disadvantaging the latter
- The organization lacks critical capacity and capabilities, especially when it comes to talent and data
- The culture may not be well-suited to exploiting technology
Here are some more manifestations of the conditions laid out above:
- Employees resist the change that senior management has selected
- Communication between and across functional groups is siloed
- There are concerns about cybersecurity or fit with the current IT infrastructure
- Organizations may not be able to change as fast as requirements fluctuate
Generally, we can summarize these as mismanaged expectations and weak digital culture.
The experts all agree on what doesn’t work, but the majority of projects still fail, nevertheless.
We need a different framework for understanding what is happening.
The explanations above are not causes for failure, but merely symptoms. What is the connecting thread underlying all of these assessments?
Digital transformation failure (be it in procurement or in other areas) is human failure.
We need to understand the subtext of the drama that is a project. Peter Atwater’s recent book, The Confidence Map, provides us with a framework for understanding this human dynamic. Fix this and change is feasible.
Counter-intuitively, we should focus on feelings because feelings drive actions. Confidence is a feeling that summarizes how we feel about the future. When we are confident, we brim with certainty and control. We know what’s going to happen and we believe that our actions drive outcomes. The opposite of confidence is vulnerability: the absence of either certainty and/or control. When we lack one or both of these conditions, we feel vulnerable, and we’ll do anything to restore our prior position of confidence. We see this in every story ever told. Some inciting incident knocks the protagonist from a position of comfort, and they struggle to overcome myriad obstacles to return to a position of prior comfort, transformed.
Given the two dimensions, Atwater talks about four separate quadrants:
- Comfort Zone: high certainty and high control, e.g., a stock market bubble
- Passenger Seat: high certainty and low control, e.g., being an airline passenger
- Launch Pad: low certainty and high control, e.g., a startup
- Stress Center: low certainty and low control, e.g., suffering through a crisis
Our level of confidence has disproportionate influence over the way we perceive ourselves and our situation, in turn determining our behavior.
Digital transformation of any kind is closest to a crisis. Digital transformation puts people into the Stress Center. Vulnerability tightens us up mentally. We overthink in Kahneman’s System 2, instead of enjoying the cognitive ease and flow of System 1. Everything is difficult.
Launching a project to change the technology organizations use to purchase goods and services is disruptive. We eliminated a known system in which staff felt as if they had some control, replacing it with a new unknown approach. They feel insecure about their jobs. They don’t know if the project will succeed. They feel vulnerable. To get digital procurement transformation to work, we need to put in place the conditions that enable the project constituents to navigate their way back to the position of confidence they enjoyed previously. They need to see an attainable path back to confidence.
Atwater talks about the “Five Fs” of the Stress Center, tailored here for individuals involved in the transformation project:
- Flight: creating distance between us and the change that manifests as change resistance
- Fight: asserting control in an attempt to move to the Launch Pad, generating conflict
- Following: ceding control to a trusted expert or consultant in exchange for certainty in the Passenger Seat
- Freezing: being overwhelmed by vulnerability to the point of inaction
- F*** It: checking out and refusing to engage, reduced to phoning it in
We can see now that we can explain the symptoms by analyzing them in the context of the feelings of those involved with or affected by the change.
What then is the best way for us to arrest the emotional spiral that leads to failure? Here are some steps to put the project members on a path back to confidence.
To address the need for certainty, everyone within the project must communicate the truth frequently and immediately, whether it is good news or disappointing reports, in plain jargon-free English.
For control, management needs to decentralize decision-making to the lowest practical level, as much as feasible. Give people on the team permission to take risks and experiment, starting small and learning. Proofs of concept starting at small scale are a great option.
The transformation projects that fail are more likely to be top-down directives that are planned centrally, often with insufficient input from those closest to the problem. Too often, there is infrequent messaging. What’s worse is if the content is overly optimistic or unrealistic. Combine these things and trust breaks down, forcing people into a position of irretrievable vulnerability.
Digital transformation is disruption, radically shifting team members from a position of confidence to one of vulnerability. They want to return to certainty and control. If you as a leader can align that natural, instinctive imperative with the goals you hope to achieve, then you will succeed. Deal with feelings of uncertainty and powerlessness and the project will take care of itself by releasing the energy and the intelligence of the team. Wrap this leadership in stories that are relevant and resonant to give the team added impetus on the journey back to confidence.
EdgeworthBox is designed to be easy to implement as part of a digital procurement transformation because it aligns with these themes of certainty and control. We offer tools, data, and community that permit decentralized collaboration with real-time communication using our messaging tools. We’ve partnered with a leading Canadian IT services company to craft an approach for rapid implementation and continuous improvement. If you’d like to learn more, please shoot us an Digital Procurement Transformation with EdgeworthBox. We’d love to help you.
