[Music] welcome to the masterclass series facilitated by the UC MBA program and Executive Education today we're talking to Hamish stuff about why digital Transformations fail tell us a little bit more about yourself Carol thanks for the introduction I'm an independent technology management specialist so that essentially means I work with small and medium-sized businesses to help them to use technology more effectively in their business and to position their businesses for that future of Rapid technology change you're also the industry lead on the MBA digital transformation and Technology preparedness course and we teach their course together don't we that's right and it's actually it's a thrill I say it's an honor to to be a part of that and to be able to share my 25 years of Technology experience with senior Managers from all around Canterbury in that class I think that's really exciting you look at all the technology Trends and everything that's happening and how Industries and companies need to really gear themselves wealth for these new technologies that's right I think it's uh under understood from a lot of people they they don't understand just how fast technology is changing and the the pressures that that puts on a modern business the technology is rapidly changing it's just not evenly distributed we're not seeing all of the latest Technologies available to every business you I think it's quite a challenge for bigger companies especially because of the larger firms that I've worked with certainly are much much slower to move much slower to adapt and adopt new technologies they've encumbered by that status quo of of how things are done here that's been developing over 25 or 30 years and that can be a significant detractor and success in these projects so what's that statistic that you said well they say that 70 of All Digital Transformations fail whether they failed to achieve the objectives of the project or whether they've failed to uh to live up to the expectations of the business is probably the the function and I would say it's it's more the latter than the former because business executive expectations of what a digital transformation or a digital intervention can do for their organizations are often quite different from what is practical and pragmatic to be done within their organization I say it all the time in my class and I repeat it over and over as technology is not the Silver Bullet people think it is in implementing technology won't solve your business problems you need to take business changes and make business decisions to change your your approach to your business your business operating model in order to take advantage of that technology not just simply Implement Technologies you and I always debate this term digital transformation and it's actually highly contested in the literature as well I mean what does that actually mean right and a lot of organizations digital Transformations are are simple Point solutions that change one operating aspect of their business they may be transforming that operation but they're not transforming the entire business approach we see quite a difference I think between digital transformation and how it's spoken about with corporates and large budgets and large staff who applied to a project versus that's me environment where actually it's usually about transforming a process at a time and working towards a longer road map a longer Road longer term change most of the small and medium-sized firms that we come to to start working with are typically running on a a system they've got maybe got their inventory management system and then the rest of the business is running on spreadsheets that are tacked on around that and that's very very common in the small and medium-sized environment that they've digitized some processes and put some information into spreadsheets but they still don't have a joined up view of their data or an understanding of the data that drives the purchasing decisions from their customers or drives operational efficiency for their for their organization well you told me a really good story where this this is concerned yeah so this is is a manufacturing client and that manufacturing client has got a process by which their customers can say I think I'm going to order those products you'll call them widgets I think I'll order those widgets in six months time so can you make sure that you've got the manufacturing time for my order into that schedule in a few months time well over time all of the customers who want that that lead time to be shortened on their manufacturing put in these early orders where they're managing to to keep those orders in the in the process so they could have an ETA for their product and actually they end up swamping the manufacturing process so we remove all of those and we automate the scheduling of the manufacturing process then actually their lead time goes from six months down to only six weeks which is a dramatic Improvement in that customer experience which is one of the things we focus on on digital transformation yeah so a relatively simple change which looks on the surface like a is going to negatively impact on a customer experience actually improves the throughput and improves the utilization in the factory and improves that customer experience overall I think it's really powerful by allowing that customer to have that flexibility and and um and put in their order when it hasn't been signed and hasn't been confirmed actually creates a whole lot of Downstream issues for requirements planning for for the manufacturing process and for changes to that order yeah how often will the order come through and actually be double the quantity or half the quantity therefore affect all of the downstream manufacturing orders it's a really significant problem to deal with and at the moment in this organization all of those issues are dealt with manually by good staff who are working very very hard so this comes really to our point this sounds like a very eloquent solution that is going to be good for everybody involved yet the wildlife will be quite significant because it's lots of people's who people people who used to do something in one way now doing something in a different way and stuff goes wrong right we always know it goes wrong and it just fails to meet this beautiful promise that you now promise this is what your your process is going to look like now what goes wrong and this way this highway it's hopefully not going to fail to meet their promises um what goes wrong uh look across 25 years of projects and seeing it projects I've seen an awful lot of failures that stat of 70 that failed to meet expectations as reflected in my experience with it and I think there's some there's several things that I think cause really significant issues if I can again use some stories from um from the Consulting past so I can try and try and relate these one client who um we're doing a very complex Erp implementation that's an enterprise resource planning implementation so the system that runs the whole organization and its financials they um they decided to choose the the most engaged and most busy and important people within their organization to inform the requirements of that project so they they went to a cup some of these key people subject matter experts they called them within the organization they took them out of their normal day job these people are very busy for a reason they're very competent they took them out of their day job and backfilled them with staff that were new to the organization and had to be trained up so it's a significant challenge by itself but then spent the next couple of years working with the subject matter experts and developing what that Erp would look like when it went live only for it to go live and to discover that they'd picked the wrong people those people didn't have the breadth of understanding and knowledge about all the operating processes of the organization so therefore when they went live they were missing critical parts of the operation significant problem and in that case I think it was another 15 million dollar investment to get it back on track so significant money there very large organization nursing well I think you've touched on two key things who leads the change but also that upfront planning and maybe just spending a wee bit more time in that upfront planning making sure that all the key decision makers have been consulted you have a really clear view but then also maybe almost contradictory to your instinct is who to choose to run with that change you would think that it's that business leader it's that it's that busy person like you said but actually well there's a couple of points there I'll touch on so yes the Business Leaders in that case were not tech savvy they didn't understand the implications of the decisions that were being made secondly and and siguing off that they brought in a team of consultants and experts to do the implementation those Consultants sure they bought some best practices for how to run a large manufacturing operation they bought in some expertise with them however the organization because they weren't technically Savvy and didn't understand the capabilities of the system that was being implemented they abdicated their responsibility for making business decisions to these Partners so therefore the partners were making Mission critical business decisions based off their experience with other organizations and that's a really a significant risk for any organization in this case the partners did not understand the entire operation of the organization they didn't understand enough to be able to drive the right best practices into the organization yeah yeah and and you would say they didn't understand what the value is that clients actually get so so really not understanding that business value and so not making the right decisions absolutely but I want to go back one second and say but do we really need to take Savvy people implementing because sometimes they're very tech savvy people and the I.T team with all due respect as not as well balanced as you are in the sense that they don't necessarily go to that strategic level because that's where these projects need to sit right at the Strategic level not at the operational level there's a a theme here with I.T people and developers especially and I've run civil development teams in the past so and and I I'm an I.T geek definitely and happy to be so is that we love complexity and we love to be useful and to say yes and to make exciting and innovative solutions and in a lot of organizations if you have the business team with a wish list of all the things that they would like to implement for their digital transformation that wish list is not not related to the capabilities of the system that's being implemented at all so so there's a real disconnect there but then you get a team of I.T people who are super clever no doubt about that at all and love that complexity will say yes and will make it work and will create a whole lot of complexity within the organization as they're implementing the tool to do all the bells and whistles that's that have been requested versus having the business understanding to be able to take a step back and say why repeatedly why are you doing that taking that approach why is how is that going to add value how's that going to change the customer experience how's that going to improve productivity when quite often the the wish lists of things to be implemented have been bubbling away based on the system that was being used at the moment let alone what the actual what what is actually required what capabilities are required in order to support the business into the future yeah quite quite a shift there required and that's a not necessarily an understanding of the tick it's an understanding of the capabilities of the technology and what those capabilities can enable within the business that's where it's most important it's not again the technology is not the Silver Bullet yeah the technology supports new ways of working and new ways of operating well I think it also talks to kind of the skill development that's needed in the market now and especially for these kind of broader projects that's definitely that t skill set where you have some deeper knowledge within maybe the systems Etc but also to be able to talk two different areas of the business and just understand not just you know operations necessarily all the systems but also the businesses responsibility towards sustainability their goals around that just the overall business strategy accounting functions Etc we talk about having senior buy-in as being a critical success factor for digital transformation programs and I think that's where where that comes into play because the senior executives are really the only people in the organization who have that across the organization a holistic view of what's important for the whole organization versus what's important for any particular Silo you probably know from your own corporate experience that that every part of every Silo within a corporate thinks that they're the most important part they're they're the ones who are driving the the engine you know from your HR to your I.T
to the finance team that they think that they're the ones who are in control and are really delivering the best value in reality we need to look right across to look at how these Tech technologies will change that entire operating model the entire process yeah that's where you'll get most value from so this is an important segue into something that you and I talk about a lot and that is the role of leadership so we've hinted at kind of who leads these processes and how important it is to understand that why behind it Simon sinek's work on start with why right doesn't change because it's a technology implementation um but can you speak a little bit more and tell us some stories around just the role of leadership within this whole digital transformation process leadership is important to set the scene and to remove obstacles and to keep the project moving forwards and to set set the right objectives and standards for the project as well however actually where I want to touch on is something slightly different where more often than not I see leaders within organizational change projects such as such as digital transformation saying this is the top priority for the organization and everybody needs to be behind it we're all going to be working towards that however a week after the start of the initiation of the project they'll be almost always assigning additional projects and additional Project work to the team so within an organization I think that's one of the really real keys that a leader needs to understand if you've got an important project that's delivering on strategic value for the organization and and really these projects are are exactly that they're strategically important projects that we need to be able to allocate staff to it and give them the headspace to be able to to focus on the project and not focus on another 10 projects at the same time yeah that's very very rare in organizations and I think only the largest organizations that I've worked with have had the the wherewithal to be able to assign a team of people to the project more often than not they assign a single person who's the internal champion and usually a project manager as well to the project and then bring in resources from outside so you know it's a it's a I think the wrong approach for obtaining long-term strategic value we need to be able to build those skill sets within the organization to skill transfer from external Partners to your internal team and to then recruit longer term the resources that are going to help support the organization so data awareness data survey staff who can then look at what's being created and look at the data it's been produced that's being produced and help the organization to make better decisions you know those sorts of skills yeah to really be brave As Leaders I suppose protecting that team and also just reminding them all the time about why and what they're busy with and keeping everybody on track but also just setting that culture yeah so I think a really important one that we haven't spoken about is just the sharing of information so we know that whenever there's big change people go into this almost fight-or-flight mode and or the three rigidity response so they buckle down and they do things exactly like they used to do them and even though maybe it's a new context and a new process and we need for them to change and the second part is we buckle down in terms of our information that we hold on to so both of those things really critical aspects that that influence implementation absolutely and I think leaders have such a key role in really just making that communication platforms such a big focus of the whole thing if I can speak to that first one the resistance that we get from staff when they're going into a project like this more often than not they hate the existing system they are singing from the rooftops about all the issues they're encountering and how it's not fit for purpose and it needs to change then no matter how good the new system is and no matter how many of those of those issues are addressed and risks are mitigated they still hate it they will still resist using it and that's essentially because it's a change used to their habits and their behaviors their pattern of work that they get into that Comfort spot where they get into doing the same process over and over and over again even if that's a horribly manual and repetitive process people sometimes quite like those parts of their roles yeah well again we've spoken about it before that we're heading into a time where all of those repetitive tasks that we do are going to be automated you know that might be five years away that might be 10 years away but the time periods we're talking about are relatively short and there's an awful lot of of most corporate roles which is repeated processes yeah standard operating procedures so those standard operating procedures are likely to be processes that are targets for for automation so hopefully removing some of that repetitive work from there from their workload the piece that I always process I always Target when I talk about this is accounts payable and many many organizations there's somebody whose job it is to bringing in the invoices from the from the vendors and suppliers and the into all those vendor invoice details into a system and then process the invoice for payment and these days that's an automated system that reads PDF and enters the system the data in it just needs to be checked by a human otherwise that's processed automatically and I find that's you know some organizations that's a week out of somebody's month that they don't have to do work anymore so we need to be able to look at those people and and re-task them into other parts of the organization but I think these where the disconnect is so if you're an employee and you did that before that was your responsibility you think that your value lies in the knowledge that you have around that system that process Etc so you hold on to it and we almost weaponize information and the more complex we can make a process and the more unattainable to automate and we can make a process the more we feel that will be valuable as people yeah I think that's where the disconnect is is for to let your people know what it is that you value in them I don't value you sitting and doing that for a week what I really value is you project managing this or you potentially play playing a relationship role or something like that and I think that's where it also falls short it's really taking that people approach to technological change where you talk to people around this is what I really want you to focus on because this is what I feel your strength is um versus this repetitive task and I don't need you I don't need you to do that we I want to take that away from you and yet when we take it away from people there's really that almost that whole afterwards that that's there's a loss that they experience even if it's a loss of a bad thing and also understanding that loss and that emotion that goes with that and and almost the Readjustment and taking people through that adjustment phase absolutely if I can speak to again a story about the experience of exactly that working with the sales team who create a cast custom bespoke product for their customers and they are essentially the pre-sales engineers and they developed the the engineering for this product I won't name names or anything obviously but their perception was that they were doing a fully bespoke product for every customer and actually on analysis of the data there's a lot of variability in that in that product but it's variability within boundaries so actually we can turn that product into a configured product which has multiple options for each level of the product design so they might be choosing for example we've got a disk in front of us so we might be choosing what type of top that desk cares and what type of Base it has and does it have any Electronics embedded in the top of it and those sorts of things but those choices add up very rapidly we multiply those out to become variants and this case this had to be bespoke product that they were developing and designing for every single customer order weighed down to about 20 choices that each had a range of options each and came out over 20 million different variants wow so therefore that from a customer perspective they're getting massive variability in a custom designed product from an internal systems perspective we've got standardized processes and a modular bill of materials and modular we know how long that's going to take to manufacture and we therefore have all of that information that helps to improve the processes internally while still giving that appearance to the customer is a great customer experience now the sales team in that case did not or do not like their value of their bespoke product being taken away from them however this process is probably going to only suit 70 or 80 percent maybe even less maybe 60 percent of their product that they're selling it's still going I mean the Automation and streamlining and and much faster quotation in sales for sixty percent of their work and it should free them up then to spend the time on the real bespoke product the real um whether where they really add value and consequently with the organization really gets its profit from yeah so streamline and standardize where it's possible where it makes sense working with those people who are resistant and getting them really involved in that process versus just standardizing the whole thing and actually we're getting the Best of Both Worlds we're not throwing the bad baby off the bath water yeah so we've spoke about people we've spoken about leadership but I think a really important thing that we also need to talk about is just data and the quality of your data because that's Central to all of the citizen yeah absolutely and actually that's where a lot of these projects become unstuck because the data that's inside the systems that they've been using for some some significant period of time is dirty data it's a it's probably got customers or vendors in in the data which don't exist anymore and haven't been used for a long time that's almost always the case then it's likely to have inventory that's not up to date that's not real that's not not available anymore you know that's always a significant issue to get that data into the system we always say garbage in garbage out yeah if you're going through a digital transformation project that always has to be a data cleansing approach however it's best if that data cleansing approach is done at the same time as you're looking at your overall data management in the organization who owns that data who manages it who's responsible for its accuracy long term yeah it can't just be up to a system to manage it can't just be up to one person to manage either we have to be able to spread those responsibilities to be able to to ensure that data quality continues to be going into the future garbage in garbage out when we're implementing a new system like an Erp where changing the operation but we're also changing the data that's captured from the operation and I think that's really the the key enabler here for for a future focused organization to be able to have good data quality that then informs decisions about their business management or about the operations and continues to inform those into the future and of course in today today's world we're moving into big data and analytics and having much stronger tools for doing the analysis it's no longer just a reporting data that happened last month and figuring out what went wrong and figuring out what needs to happen it was the old school reporting way of data now we're looking at Trends and analytics and seeing the kpis of the organization and What needs to have attention on it right now in order to correct course rather than that that backwards looking reporting is kind of old school list yeah so getting good data quality getting it into a system and then learning how to use that data most effectively in order to drive business decisions is really critical element there so yeah and and I actually think that's that bridge is quite a steep learning curve if because you have data in the organization everybody has data and you have business decisions that you make but it's almost going what are the business decisions I need to make and what data do I need to get in order to make those critical business decisions absolutely and and actually looking at it from a business decision point of view versus saying here's a big pool of data that I have what decisions can I make based on this data you should actually start with the strategy first absolutely yeah look once again we're moving into a period where the tools that are available for us may are increasingly powerful where um even in the past scenario where they had very disparate systems and lots of satellite systems and that data couldn't easily be joined up we're moving into their modern data and analytics where they could have a data Lake where they pull all of the key operational data into one place make sense of it and then report on it there versus having one system that manages everything yeah of course as those one systems that manage everything the erps become more mature and more accessible for smes we're able to get all of the data into one place becomes even more powerful to then do project active analysis and say what types of customers are our most profitable customers at the other end what products are actually costing us more to produce than we're earning in terms of margin yeah it's really important information but for a lot of smes with that those disparate systems and lots of information off in spreadsheets on people's personal laptops or desktops yeah that's very very hard to do any kind of joined up reporting like that yeah I think that's really important so well data lake or data lake house I suppose there's a lake house with a boat okay and a fairy that is one of the key things so so let's get into that section of today's talk what are the key things that you as a business can start focusing on now in order to make sure that your chances of success for a digital transformation project is greater well that's great timing else for me because we've just finished the final assignment for the um for the year for the MBA course and that assignment uh asks students to to use a subject organization and to create what we call a digital roadmap or a digital blueprint for that organization which includes uh what is their current state and where are they now I think that's really important to the organization and actually I usually start with an engagement to do an inventory of all of the systems and all of the business processes and which business processes are adding value within the organization to the customer or to productivity internal operational efficiency and I think that's really important to have that understanding of where you are now an assessment of your digital maturity yeah I think that's that's probably the next step I would do so I would do a technology inventory of what we've got right now because it's really important to know where all the working parts are right now yeah then a digital maturity and digital leadership assessment then leads on from that to what's our current state what's our attitude towards technology what where do we need to improve the understanding of that technology and how it's going to add value and I think that's again a lot of business executives are not data savvy are not system Savvy they've got technical people who do the technical work for them and they don't understand the value that it's going to add I think that's really important um there but I think that's important though that that and I think this is also where a disconnect happens is there is managers and CEOs and and think that because they're not tech savvy that they can't necessarily make those decisions but essentially it's all strategy it's still strategy based business decision based and your questions might be different so how can I get data to support this or how can we automate this or something like that but those business foundations stay the same don't they we're back to again business that technology is not a silver bulletin doesn't solve the business issues again we're back to uh this is a change Pro project and just like any other change project although this one is supported by new technologies and new capabilities to help the work in new ways that's not no different from any other change all change project we have implemented four years yeah it's uh just now happening at a more rapid Pace the technology is changing more rapidly yeah yeah so definitely assessment of where you are at the moment yes start thinking very clearly about your data infrastructure absolutely it's going to be the foundation of whatever project happens next absolutely so um there's there's always an element in these pro programs of of quick wins or fixes to current issues and more often than not with our clients it's that initial implementation of a system or a platform that gets them into a with all those hygiene factors we talked about before with all of the key functions that they need to operate their business first there's always gaps in those systems and processes and my experience of it so getting them into a strong platform upon which they can then adapt and evolve their business operation and do that with some strong data to be able to understand that's a really important piece because cause we don't do that right we appoint people and then we say solve this problem but we don't often ask them please map out this process what do you do what are the key decisions that you make and people don't share that and again when once you start automating those processes then that change is so dramatic because you're almost trying to get what whatever is in their head into but if the if it's institutionalized that you map out that process everybody knows what the process is we can all have an input on how to improve that process whether it's digitalized digitized or not I think sharing that information and and really being intention about mapping our processes and procedures is really important I think it's really important for alignment of the team around the project as well because more often than not if you go into an organization there are 10 sales teams same sales staff members there'll be 10 different sales processes being used there's no standardization of approach there's no best practice there there's no standard metrics that can be pulled out because of all those different approaches and that's a real challenge uh you mentioned again about that reluctance to share information I've found with organizations sometimes will be a year into a project and then I learn about a process that's critical to them that they just haven't mentioned in an entire year yeah and that's that assumed knowledge is there they're in the organization and they've been working on in those processes for a long period of time so that status quo and how things have always been done here yeah is up here yeah it's not something that they can articulate easily because they're unpicking all of these processes that they've been building and working on for a long time yeah and I think it's good practice even if you're not going into a digital transformation project or anything like that it's really good practice to build in that time for reflection to say this these are these are assumed pieces of the job and this is what I assume and just to compare that and to say where can I improve what absolutely you know checking those assumptions and checking those constraints and seeing how they are affected by the technologies that we're implementing is the key as well because some of those constraints and assumptions that you make about your operations are simply not relevant anymore in the new technology world that's right that's right so we were in those steps before we were talking about you know that the initials their current state and your digital maturity and I think it's really important to get the right team around that um the program who will help guide it and and manage it going forwards we always talk about change management we talk about change governance having the right leadership team that's not necessarily all senior leaders but having the right team involved who can lead that project who will inform that project who will be involved with aligning all of the different changes that are going on with the overall program objectives and and the benefits you're trying to achieve for the organization is is probably the next step that I would take it's really important to have the right team around that and upscaling that team but I also think digital change companies need to realize is a colorless change so it's not a blue color change or a white color change everybody in the organized organization needs to change and I think understanding that you also need to build people's DQ so not their IQ not only their IQ and their EQ is important but also their digital intelligence so it's really important that the whole organization Buys in and understand this changed environment that we live in now and those technological forces bringing in change and our chances of disruption and understanding why it's important to change because also we've seen that most digital Transformations the team that drives that change this this massive churn within that I think these projects can be incredibly high pressure and Incredibly stressful for especially for internal team members there are more often than not being asked to make decisions which they're you know they might understand some of the long-term implications but actually they're typically a lot of people out of their depth and having struggling with the level of change and struggling with the at the complexity and the responsibilities that are lumped on them in one of these projects and that can be really quite hard to manage um for for an internal staff member especially um but that's that's one of the reasons we get that staff turnover that people just get burnt out by the fact that these projects are pretty intense and pretty hard to work on and and I think there's there's always going to be some churn there as people decide that it's not for them and they'll go in a different direction but so we think that these change projects um is going to take a year or six months or eight months but because it's such a big project most of these digital Transformations and these bigger processes take way longer than that right and it's just setting that expectation at the beginning just so we're running a marathon let's Pace ourselves let's look at those short-term wins um just to keep everybody energized everybody thinks that this is a like it implementations of of old where we put in a new system and there's a big project and there's a capital spend on that project yeah a digital transformation is not a one-time project it's an evolve evolution of the company it's a an iterative process you'll need to continue you're embedding these new behaviors and you're continually improving processes using the technology so it's not a one-time project this is not a done and dusted at the end of it it's the starting point getting the right fundamentals in place I think that's really important to understand thank you Amish as always so much fun to talk to you and um yeah we're super fortunate to have you on the MBA program with us and teaching into Executive Education as well thank you Allison Marie really appreciate it
2023-08-19