Why is meaningful digital transformation hard for enterprises? Here are 2 common culprits

By | 3 minute read | June 4, 2021

The Evolution of Transformation

Business as usual simply doesn’t work with today’s continual disruptions. But the transition to a new way of working hasn’t been simple or easy.

The first challenge — finding out what works for creating new innovations. In recent years, companies of all sizes and in all industries have jumped on the bandwagon with their own flavor of innovation often moving through two distinct phases of transformation.

Phase 1: Random acts of digital innovation

The special projects, and sometimes even the departments, go by many different names: innovation labs, design studios, venture incubators and others. Some companies get especially creative, while others create a special position such as Chief Innovation Officer or some variation. Whatever the title, the goal is usually the same: increase the organization’s agility through innovation.

By design, these programs were created as separate and disconnected departments from the core business unit to keep the typical organizational processes from slowing down innovation. Sponsoring executives often impressed the board by showcasing the “art of the possible” through proof of concepts (POCs) generated by these programs.

But even with clever names and top employees, and despite starting out strong, most of these innovation efforts quickly fizzled out. Typically, the slowdown could be attributed to the inability to scale the innovation back into the enterprise. Other issues arose when the high-performing team members recruited could not remain dedicated after being challenged to go back to business as usual (BAU).

The lack of success was usually attributed to traditional roadblocks such as legacy IT, slow decision-making, capital misalignment, incentive misalignment, talent, skills or other forces within the enterprise. However, executives often blamed the lack of success on the initiative sponsor’s inability to drive innovation into the organization. Initiatives often experienced certain death once fatigue had set in from too many attempts and failures from banging into the back of the BAU bus.

In hindsight, these initiatives and the multiple attempts at success were perceived as “random acts of digital innovation” lacking broader management across the entire enterprise.

Phase 2: Enterprise-wide coaching approach

After innovation projects failed or departments reverted to processes similar to those followed by the rest of the organization, the next stage of the transformation began: consultant-led efforts.

As the self-proclaimed answer to achieving broad adoption of new ways of working and a successful transformation, consultants began to teach, coach and advise the entire organization on key methods such as Design Thinking, Lean Startup, Agile and DevOps. By highlighting the benefits of achieving increased operating efficiency or using curated case studies as examples, their answer was to change the entire organization en masse.

With executive buy-in, the top-down transformation program was usually funded by a workforce restructuring program that reduced workforce operating expenses by 5% – 10%. The adjacent HR program funded this attempt at transformation, including the consulting fees. As the program rolled out from the top down across the organization, employees faced two dilemmas:

  • How to prioritize program requirements against business as usual
  • How to unlearn knowledge and practices that helped them achieve their current level of career success

It was the second dilemma that proved to be insurmountable in many organizations. It’s not only a bit scary to learn something unknown and uncertain; it can even feel unnatural to take a seemingly counterintuitive approach to both company and career success in a leap of faith.

With BAU pressures constantly challenging the need to learn these new methods and practices, most organizations eventually succumbed and reverted to business as usual. The business pressure caused the collective consciousness of the organization to snap back to the old way of working, which created organizational doubt in new ways of working. The lack of certain success also legitimized the notion that the business-as-usual mindset must be the right way of working.

If executives don’t achieve their transformation goals, they’re faced with the choice to either stop or iterate on (i.e., just repeat) the coaching-based transformation program.

On the surface, both transformation approaches appear to be failures or, at best, ineffective at creating lasting change. The coaching-based approach, however, did leave behind numerous positive effects, especially in terms of increased organizational literacy around new methods and practices.

Moving toward “The Fishbowl”

After moving through both phases and experiencing the difficulty of both approaches, some companies went back to business as usual with incremental improvement because they felt they were out of options.

But our work has proved there is another option: the Fishbowl. With this approach, organizations take the most effective environmental aspects of startups and exponential organizations and combine it with the leadership of the consultant. The result encompasses the speed of a startup with the scale of the enterprise, accelerating innovation and transformation.