‘Why digital transformations fail’: Former P&G VP Tony Saldanha shares his insights

Digital transformation, which is the integration of digital technology into all aspects of a business, is a $1.7 trillion industry and yet 70% of all digital transformations fail! The issue is not technology, nor is it creativity, it is DISCIPLINE. That means a) discipline in setting the right goals for transformation (ignore the buzzwords), and b) discipline in executing the correct processes for executing the change. 

In his new book, Why Digital Transformations Fail (Berrett-Koehler Publishers, 2019), using dozens of case studies and his own considerable experience, expert author Tony Saldanha shows how digital transformations can be made routinely successful. Instead of representing an existential threat, digital transformation will become the opportunity of a lifetime. The key to success being that a person must disrupt before being disrupted. 

Digital transformation is more important than ever now that we’re in the Fourth Industrial Revolution where the lines between the physical, digital, and biological worlds are becoming more blurred. 

Tony Saldanha brings a proven track record of Global Business Services (GBS) design and operations, CIO positions, outsourcing, disruptive innovation, and experiences in creating new business models during a 27-year career at Procter & Gamble (P&G), where he ended up as Global Shared Services and IT Vice-President. His book on digital transformation is aimed at providing practical advice to boards and CEOs on executing sustainable transformation.    

In an interaction, Tony elaborates on why digital transformations fail, the checklists to avoid failure, and why it is the number one issue for companies. 

Why digital transformations fail

The whole arena of Digital Disruption, Transformation, AI etc. is become a complex field of techno-geek speak and buzzword marketing. That’s a problem because we need leaders and common individuals to take this seriously. If 40% of the S&P500 risks oblivion in the next ten years, and if 40-45% of all blue and white-collar jobs will be lost to robots in the next 20 years, then this is an urgent issue. I try to bring in checklist simplicity to this topic as a way to improve the 70% failure rate of digital transformation. I define digital transformation as the morphing of skills, capabilities and business models from what’s currently used in this third industrial revolution era, to the coming fourth. And I provide simple steps on how to accomplish it. My work of leading and transforming billion dollar operations in every region of the world has generated new insights and data which is called out in the book. The biggest insight is that 70% of transformations fail because leaders are neither clear nor disciplined on how to lead this change.    

The 5 stages of digital transformation

• Stage 1 or Foundation is about automating activities. So for example, this might be about doing customer orders using a system like SAP or Salesforce instead of Excel. 
• Stage 2 or Siloed is where parts of the organisations leadership start to see the disruptive potential of Digital Transformation and sponsor their own efforts. So maybe the Marketing Officer sees the potential of using Online for selling. 
• Stage 3 or Partially Synchronised is where the company leadership sees a need for a single coherent strategy. This is what Jeff Immelt did at GE a few years ago when he said GE will become a data company. 
• Stage 4 or Fully Synchronised is when the company has achieved a full transformation to a new digital business model. GE could not achieve this stage and paid the price in terms of the stock value. 
• Stage 5 or Living DNA is when the company not just transforms the business model but also its culture. So, it becomes a perpetual transformation engine which reinvents itself again and again. Netflix is an example. 

Some checklists to avoid digital transformation failure

• Committed Ownership of the digital strategy is about the leader publicly putting their resources and credibility on the line, and not just sponsoring digital transformation. Jeff Bezos did this in turning around Washington Post. 
• Iterative Execution is about taking the big transformation and splitting it into many small projects and experiments. The website launch of Obamacare in the US which ran into major issues when launched was caused because it was managed as one big-bang project. 
• Disruption Empowerment is about companies not just setting up but also providing exceptional air cover for their disruption leaders. They need to be incentivised to take massive risks when it makes sense. 
• Digital Reorganisation is all about taking digital technology from being just a function of the IT department and embedding the development and leadership of it into every function in the company. This prevents the IT function from becoming a bottleneck. 
• Staying Current is about driving digital learning and literacy into every level of the organisation. Recently, Amazon announced almost a three-quarter billion-dollar plan to retrain its workforce on digital skills. 
• Sensing risk is all about creating metrics that give early warning to companies using hard data when they are getting disrupted. It’s like a doomsday clock for their businesses. 

How these checklists were inspired by the methodology used in the airline industry to make aviation reliability 99.999999%

I noticed the parallels in the steps needed to successfully take off in an airplane and those needed to successfully take off in a digital transformation. The aviation industry realised in the early part of the twentieth century that instead of relying solely on the skills of pilots for successful takeoff and landing, it could create a disciplined process and checklists for every person involved in the takeoff, in order to drive reliability of flight. My Digital Transformation stages have similar series of items that need to be checked at the set-up, takeoff and maintain stages.

Why digital transformation is the No.1 issue for companies across the board

Based on several studies by McKinsey, KPMG, BT and others, Digital Transformation is a top priority for boards because they see their respective industries undergoing disruption. Media, Retail, Manufacturing, Medicine, Consumer Products, Finance, Banking, Advertising, Transportation - the list goes on. They realise that their respective companies need to digitise in order to keep up with and win against the competition.