In the previous blog we discussed how to identify what technologies changes game for your industry or business but that is only the first step. The next one is the hard part – making it a reality!

Multiple things can derail your technology transformation strategy, as I have seen over the years:

• Bottom-up enthusiasm-driven initiatives failing due to lack of management buy-in.
• Top-down pressure to “just do it”, lacking vision and people-oriented change leadership creating immense change resistance.
• Even If in some cases, there’s buy-in both from management and people in the frontline, but organisation’s complexity, internal culture, politics and lack of maturity to run large-scale technology-driven transformations can become a major hurdle if not managed well.

But the most common reason for failures I have seen is complex organisations taking on complex transformation initiatives while lacking maturity to implement the strategy.

Overcoming Challenges in Technology Transformations

When an organisation grows in size, it does so also in complexity of its internal structures and decision-making. If this complexity is not managed well for long, inefficiency becomes part of the organisation culture. As inefficiency grows, performance drops and change becomes inevitable.

But if there has been no major shuffle of the cards at the mid and top-levels for long, imminent power struggles make any potential change initiatives even more challenging to manage.

The reason is that technology-driven transformations often require major operating model changes to reap the benefits of introduction of new technologies. And operating models often come with structural changes which are difficult with pre-existing power struggles, unless there is strong leadership to break such established moulds.

So even while technology can have the greatest power to accelerate growth and improve profitability significantly, such organisations fail to reap the benefits and instead get caught into myriad of these internal challenges for lack of strong leadership.

Based on my experience, I offer next some of my tips how to avoid such traps, and if you do get into the trap, how to manage change effectively.

Step 1: Address Organizational Complexity Before Starting Any Transformation

First step in the playbook is to acknowledge the complexity of your organisation and its numerous customer and/or product segments, which make the operating model very complex to manage. My pro tip is to address this complexity outright even before starting a tech-transformation.

Look into divesting away your non-performing segments or re-organising internally as you’d like to be perceived externally e.g. as customer segments instead of as core businesses. I have lived through these changes myself in my past jobs and have seen the significant positive impact it can have on companies in unlocking growth.

When reorganising, make sure to shuffle the deck with highly customer-minded and collaborative individuals. The latter is where most of the change initiatives fail; expecting drastically different results with almost the same crew.

Step 2: Prioritize Where To Play With The Game-Changing Technologies

Step 2 in the playbook is to look at game-changing technologies that simplify either your internal operating model and/or how you serve your customers. Down select only to two or three initiatives specially if you have not got rid of your internal complexities at this point. Anything more is nice to have but won’t cut through the existing operational complexities to really deliver an impact.

This step will totally define the failure or success of your initiative. You will be tempted to please all the business or market segments and while there’s nothing wrong with it, more is neither merrier nor fruitful in this case especially in a politically complex organization.

My pro tip for prioritisation is to focus your technology transformation of those segments where there is room to grow to #1 in the market position or stay as #1 (if threatened by low cost or niche providers). Once you have done that successfully, then build on this success by taking on initiatives for such segments which have potential to be or to retain the next #2 in the market.

Step 3: Define and Monitor Key Success KPIs

Step 3 is absolutely paramount to the success of the transformation – be deliberate in defining the key success KPIs of this transformation initiative and disciplined in following these up.

About 50% of the failures I have seen are related to lack of such success KPIs and the follow up. Focus on customer-oriented KPIs rather than internally focused KPIs when seeking growth through technology introduction. Many companies make the mistake of choosing very internally-focused enabler KPIs, which only serve to hide the true impact of these strategic initiatives. For e.g. number of people hired or fired are not a measure of the direct success of the strategic transformation, rather the increase or decrease in costs or revenues certainly measures.

My pro tip is that keep it really simple and consider what is that one KPI in your industry that brings money through the door or helps add dollars to the bottom line. In essence, measure outcomes not output. The DuPont or Value tree is a very good tool to come up with powerful concrete success KPIs.

Step 4: Accelerate Technology Adoption through Strategic Partnerships and Investments

If you have a very traditional, complex organization where some specific technology is emerging as a clear business accelerator, do not fall into the trap of trying to build it ground up. Such development efforts in complex organizations often go nowhere. Consider fast tracking such as technology acquisition through strategic partnerships with exclusivity, M&A, joint ventures and/or shareholdings in promising relevant startups.

My pro tip: These transformation costs often run in double to triple digital million euros for companies and such costs are most often allocated as operational expenses. Frankly, no one likes operational expense allocations especially with all the uncertainty that new technologies bring – it maybe a success if well handled or then not. If you can already foresee the complexity of such transformations in your context, its best to start small and focused and fast track new revenue and/or customer acquisition through M&A or strategic investments with intent to buy out.

And prioritise intensely as discussed in step 2. What you are doing here is moving the focus to customers and revenues instead of internal challenges and cost discussions from the get go. The latter derail the success of even the most visionary and purposeful transformations.

Summary

In summary, it takes leadership and foresight to recognise the risks related to such challenges and common sense to manage such risks. The common risks and pitfalls I have seen emerging from such internal challenges are not just derailment of the strategic transformation but literal postponement of potential revenues often risking market positions of companies.

Read the first part of Kasat’ blog series, ‘What Strategic Ingredients to Consider in Your Technology Transformation Recipe?'” here.

Author

Rashmi Kasat has a long background leading IT and Digital transformations in B2B global Industrial companies. She currently leads Equipment Performance for Metso’s Mining customer segment. Her daily work is about making minerals processing equipment more intelligent & sustainable with use of sensors, data, AI, cloud and other digital technologies. Kasat is a Boardman Member and a Member of the Boardman International Working Group.

Read about Boardman’s English-language membership