I read in a Harvey Nash annual survey that Australian companies today feel less equipped to deal with digital disruption than they did in 2014.
Then Forrester published a paper saying 60% of digital projects fail. I suspect the real figure is higher.
I have a couple of theories on why this is the case.
The first culprit is the technology vendors. They sell their platforms as ‘digital transformation’ when they are really no more than technology upgrades. They don’t actually do anything without a lot of time, money and expertise.
It’s no surprise that instead of investing in these platforms, standout digital players such as eBay, Uber, AirBNB, CarSales are making the decision to run in Open Source.
For the digital failures they report, Forrester points the finger at the CMO. In my experience, CMOs are under increasing pressure. They often don’t have the resources or expertise necessary to make the right decisions when it comes to the digital space.
The boring details of technology, integration and user experience are not taught at marketing school and these are not easy skills to acquire. It’s not all the CMO’s fault. Marketing departments are not getting bigger and making decisions in this space can be complicated.
An IAB study into the econometrics of digital showed that while advertisers were realising significant efficiencies by spending less on media, the additional resources required cost more than what was saved. I’ve yet to see marketing properly resourced. A marketing director of a major consumer company once told me he would have doubled his Internet expenditure in a heartbeat, but that he knew he’d never get the headcount to make it work. Good digital strategy requires good resourcing.
Then there is the CIO. Only two years ago the CIO was primarily involved in reducing costs. They did this by being so difficult to work with that the business did it themselves. So IT ended up looking after the desktops and servers and dealing with risk. It’s pretty clear that digital leadership leads IT but the CIOs don’t have the skills because it’s just not been their remit. IT has been around risk, cost and compliance.
The reality is that none of these people or positions is responsible for the fact that companies feel less prepared for digital disruption in 2015 or for the 60% plus of projects that failed.
So who is?
There is only one person in an organisation who can ensure that a company’s digital transformation is a success and it’s the CEO. For true digital transformation, the correct resources need to be allocated and deployed.
And that requires a huge cultural shift. The CIO/CMO connection alone will create complexities and ambiguity as these two people come to grips with the realities of working together.
As anyone who has ever worked in an organisation that’s experienced change will know, shifting a culture is hard. Just ask David Thodey, who in my mind is responsible for the transformation of Telstra into a digital powerhouse. He said it was the cultural shift the organisation underwent that took the longest and was the most difficult part of the company’s transformation.
So how do you start this process of change?
You adopt and embed the 6 rules of digital innovation:
- As negative judgments dissolve, digital is liberated. This means the old days of defining yourself by today’s rules are over. The impossible is now possible, and the mantra “we don’t do that here” needs to go.
- Be the change you seek. Digital leadership and transformation will never start if the CEO dictates his emails, the CIO doesn’t have a Facebook account or the CMO has never tried Snapchat. To be truly digital, the CEO and senior managers need to live in this space.
- Everyone is a genius – transformation is everyone’s responsibility and staff need to be trusted and empowered. Every study of innovative cultures says that to work, they must be collaborative. Certainly every successful project is a collaboration.
- The universe is of infinite abundance – the constraints are gone. If you can sell an 18-month old company with 12 staff to Facebook for $18 billion, anything is possible.
- People are not their behavior. I worked with a company where the IT department needs 6 weeks to raise a purchase order. Marketing rarely works with those deadlines. So marketing people spend their time working a way around these systems and IT think they are just a bunch of cowboys. The truth is in both cases the people are not the issue, it’s the environment they are required to work in. Permission to change comes from the top.
- The message is the feedback. I read about a start-up who made a restaurant booking service free to the restaurant but the diner paid a small fee. It did not work. They even found a link on Google to an article calling their scheme a scam. A large organisation would have spent months trying to be “right” and ignore the feedback, having invested too much in the idea already. The start-up changed and moved on. Sometimes listening is hard!
Digital leadership is a cultural issue and until the culture changes, the failure of digital projects will continue. Culture needs to be addressed first not last.