Watson, we have a problem.
According to research from McKinsey & Co, 70% of all transformations fail. For transformations of the digital sort, that number rises to over 80%. Of those that don’t outright fail, only 16% actually deliver improved performance. For those that do, the improvements are difficult to sustain.
This is a dynamic that is already turning digital paragons into digital pariahs. (See GE Predix.)
So, as bullish as digital thought leaders have been about the exponential potential of transformation (guilty, as charged!) and as breathless as consultants and tech companies have been in their rush to become your provider of choice, it’s the sense of realism, skepticism and even fatigue on the part of actual corporate leaders that should give us pause.
So when Thinkers360 — an open platform for B2B thought leadership — asked me to share my thoughts about what the coming year has in store for digital transformation, I told them this:
In 2020, the digital transformation bubble will burst.
“While most leaders recognize that their organization must digitize in the coming years, most are already failing. According to recent research by McKinsey & Co, 70% of transformation initiatives fail and only 16% of those that don’t actually deliver improved performance. As reality sinks in, more corporate leaders will pump the brakes on their ‘big bang’ transformation programs. This is actually good news.”
A read through Thinkers360’s roundup of 2020 predictions from a selection of their Top 20 digital transformation experts shows that I am not alone in my thinking. Hayden Shaughnessy argues that many executives “will see why their digital transformations have gone wrong”. Charles Araujo predicts that the very term digital transformation will die, even as organizations get more serious about becoming digital businesses. And Kelly Barner writes that digital transformation “will be replaced by multiple, more specific initiatives as the failure to deliver concrete results eats away at corporate interest and willingness to invest.”
For me, it’s not a matter of whether or not digital transformation is necessary. It is. Or a question of whether the organizations that successfully navigate wave after wave of disruptive change will capture an outsized share of the opportunity that awaits. They will.
How these organizations get there, though, will be a world away from the ‘disrupt yourself’ Hail Mary gainers that fail to live up to their promise as they squander resources, scare workforces and sour executives’ urgency for change. As I concluded in my Thinkers360 prediction:
“The irrational exuberance over wholesale transformation will be replaced by a more measured approach to delivering a steady stream of smaller, successful improvements that – over time – add up to massive change. We will see the emergence of the truly adaptable organization – one that reliably and repeatedly adjusts to ongoing changes in the business environment in order to achieve revolution through evolution.”
Now, this is very much in line with the kind of approach I’ve been advocating — certainly in my conversations with incumbent industry executives and increasingly as a theme in my keynote speeches. And in synch with leading edge (pun intended- wait for it) thinking from experts like Deloitte’s John Hagel, who has long advocated scaling the edges rather than disrupting the core, understanding full well that no traditional organization wants to destroy its hard-won legacy in favor of uncertain gambles but that scaling the edge offers the opportunity to, over time, build a new core — and ultimately a new legacy.
Now, believe me, I am not advocating for slow motion change. I do still firmly believe that velocity (speed + direction) is required to keep pace with today’s exponential rate of change. In fact, it is by approaching transformation via a sequential set of well-chosen steps that large organizations attain the speed they need. Otherwise, the unfortunate alternative in many traditional companies is paralysis at the prospect of a too-big-to-succeed, too-expensive-to-afford, too-uncertain-to-justify digital pipe dream.
In so many ways, this is the business-wide application of the ‘get big results by thinking and acting small’ philosophy I laid out for marketers in microMARKETING a decade ago.
And it’s exactly the kind of thing we’ve aimed to outline in the Adapt Manifesto, our effort to align leaders around a core set of values and practices that help organizations reliably and repeatedly adapt to the changing environment in which they operate.
Adaptive organizations embrace the Power of And — an approach that blends the best of the new with the best of the old; that pursues what’s next without eroding the proven value of that which already works.
They achieve Revolution Through Evolution — through an ongoing series of changes, not a one-time event. As an ongoing journey of adaptation with a series of sequential steps that allow you to pivot within well-defined boundaries.
Ultimately — and this is my real point in predicting digital transformation’s demise — the transformation any organization should aim to achieve is not to merely become more digital but to become truly adaptable in the face of the unrelenting and never ending cycles of change.
And so as we lean into the coming decade, transformation is dead. Long live transformation.
