Undoubtedly, digital has huge potential: to fundamentally transform the business operating model; to unlock the “impossible challenge”; to greatly accelerate change; and to intimately connect a company to its customers in real time. However, digital can also expose a company’s inner contradictions, reveal hidden pockets of poor performance, and even lead to perceived core capabilities being seen as critical weaknesses. Digital also adds more uncertainties, particularly around customer expectations, which are increasingly defined by the technologies they use in their day-to-day lives.
So while digital has the potential to bring huge value, it also brings more chances to fail. In our work with clients we see commonly recurring pitfalls that all too often lead to failure in digital implementation, including: unrealistic expectations of technology; believing a new technology system will fundamentally transform the organisational culture and employees will simply adapt; creating a constrained environment by, for example, shooting down ideas too quickly or generating false certainty through overly simplistic or deterministic metaphors; and failing to adequately consider employees before embarking on change, often while misapplying or failing to appreciate behavioural levers.
The companies that are most successful in overcoming these pitfalls tend to be those that don’t allow themselves to become distracted by the “digital hype” – in fact, they often find answers to these “new-world” challenges in approaches that predate the digital revolution by many years, or even decades.
Enabling the strategy with five key tactics
Assess and revisit
Companies can all too easily become focused on delivering large-scale, three-year plans (e.g. major enterprise IT projects). Invariably, this involves detailed, up-front program specification and extensive “left-to-right” planning, leading to outcomes that directly undermine the ability to turn strategy into successful execution.
Some common pitfalls include:
- Costly, lengthy, monolithic projects with an inverse relationship between budget and chance of success.
- Creation of a path of no return.
- Promising to deliver in the future what is required today.
- No appreciation for an ever-changing landscape and use of excessive complexity to justify failure to adapt.
- Danger of irrelevance by the time the “solution” is delivered.
In combination, these factors can lead to a mentality of “we know what we need to do, if only you would let us get on with it.”
The most successful companies use data analysis and insight from adjacent industries to continually assess and regularly revisit the decision whether to invest further, pivot or stop. Once a trajectory has been agreed, they adopt a “right-to-left” planning approach with agile delivery. At ADL, our own internal manifestation of this approach is a short Phase 0 (rapid analysis focused on a clearly bounded “exam question”); Phase 1 (to prove the “art of the possible”); and a Minimum Viable Solution (MVS) (to answer the exam question and build momentum through rapid iterative enhancements to the solution).
Design, then technology
Putting technology before design, which is effectively setting the “how” before the “why,” and failing to address underlying organisational and communication structures, will simply widen the gap between strategy and execution, and between anticipated outcomes and reality. A “design first, technology second” approach is much more effective: consider the underlying purpose of the strategy and carefully design it, with the employee or customer in mind, to take into account the functional (i.e. technically required) and non-functional requirements (i.e. how people actually will use the technology) before defining how best to implement the solution.
Programs and projects are typically defined by language and nomenclature that aims to set goals and targets, define activities, and identify and manage risks. The shared language used is an important factor in determining how the team perceives values and priorities, and how it behaves in relation to risks and outcomes. Language can also leave little room to move sideways or explore new ideas, which can lead to promising opportunities being discarded too early and failing ideas persisting.
The people side
Implementing change is hard because organisations are composed of people, who have different perspectives, incentives and motivations. Often referred to as the “soft” side of delivery, it is invariably the hardest. In our experience, companies that do not obsessively consider employees before and during each stage of strategy execution are likely to fail.
Traditional “best-practice” approaches assume we can precisely predict the outcomes of strategies and projects through detailed “left-to-right” execution plans. Yet this rarely goes to plan, as “best practices” are almost exclusively designed for closed systems, where all the inputs can be controlled and managed. In reality, digitally enabled strategy implementation, especially in large companies, takes place in complex open systems. These open systems comprise interactions from a diverse range of individuals, acting with a degree of autonomy and unpredictability. Trying to oversimplify such a system in order to implement a rigid, deterministic strategy is destined for failure.
Instead, companies need to identify and acknowledge when a system is open, with strategic plans that assume emergence and uncertainty. Management should maintain a clear view of the desired outcome and goals, but focus on delivering the next part of the plan rather than adhering to the longer-term program, while providing “invest, pivot or stop” decision points when new evidence challenges the initial strategy. This evidence should include internal data analysis combined with an external and forward-looking focus on similar and adjacent industries. This type of adaptive approach, which we refer to as “next practice,” has been shown to be far more successful than the traditional best-practice approach.
Turning strategy into execution is always difficult. Digital technologies can seem to solve many of these problems, providing more speed, learning opportunities and chances to pivot away from failure, but they can also amplify weaknesses. We have looked at common execution problems and shown how they can be overcome by focusing on some fundamentals that are often neglected in the “new world” of digital.
About the Authors Greg Smith is a Partner at Arthur D. Little. Mandeep Dhillon is a Manager at Arthur D. Little. Laurie Guillodo is a Consultant at Arthur D. Little. Xabier Ormaechea is a Business Analyst at Arthur D. Little. Carl Bate is a Partner at Arthur D. Little.