Many Digital Transformation initiatives go horribly wrong; enough that a LinkedIn survey found that 70% fail. Failure can be defined in many ways, but as an operating executive I first focus on the impact any transformation can or will have on the ability of the business to execute within it’s expected margins for investment returns, operating profitability, and risk tolerance.
If a digital transformation doesn’t improve, or at least maintain, execution ability, it’s a failure.
Over the last three decades, either as an executive or as a consultant, I architected, led, or turned-around the digital transformation of processes, products, and companies in five very diverse industries: Transportation, Telecommunications, Finance, Global Risk Management, and Regulated Gambling. From the most spectacular failures I had to turn-around, I can always point to the same singular behavior by the leaders of that transformation. The same behavior that causes the failure of every initiative worth being labeled transformative, whether digital or otherwise; Not asking the three fundamental questions operators ask prior to launching headfirst into the fray:
So What? Then What? Now What?
Here is an example of the digital transformation of a simple aspect of a service organization in the automotive repairs industry that went horribly wrong.
So What? (aka, why do we care and what is it that we should do?)
The newly appointed Chief Digital Officer (CDO), who came from IT and had no operational experience, received a Marketing Department study indicating consumers expect to make most of their appointments online. At the same time, in an internal company survey of existing customer, 30% indicated that making their car service appointments completely online was critical to their selection of a service company. More digging by the CDO discovered a finance report showing that Vehicle Maintenance Bay revenue realization (the revenue produced versus the maximum theoretical revenue per bay) was below target and a 10% improvement would be a major contribution to the bottom line.
Meeting the needs of at least 30% of the existing customers, and making more money to boot, was a great “So What” for an initial justification, so the CDO and the CMO got approval and a budget to launch a digital transformation initiative. The goal was to make scheduling digital, rather than the old analogue way of doing it via phone. The vision was clear…
“Our customers will be able to digitally connect with us, see service bay availability in real time, and make their appointment to drop their car off for service from their device.”
Unfortunately, that fine line between a vision and a hallucination was crossed and this project became a major disaster I was eventually asked to fix. Noble as their vision was, the CDO and CMO failed to ask the next two questions. Had they asked, they would have modified their vision statement, ask for more money in the budget, engaged many more departments in their project, and delivered a great transformation project. This is what could have happened if they asked:
Then What? (aka, Now that we care, and know the first step, what happens next?)
The first thing they would have discovered is that matching customer preferences with overall Maintenance Bay availability was only part of the manual scheduling solution. Many times, because of the lack of parts, availability of specific technicians, and other service components, bays were occupied longer than the anticipated time of the scheduled appointment. Moving cars in and out of bays once service started was not practical, so for every delay, customers with cars already in the bay had to wait way beyond their scheduled time, and customers waiting for their scheduled appointment were often told to reschedule. That was one of the main reasons the analogue process worked, even if inefficiently. The schedulers had the experience to know on what was going on in the operation and were careful not to schedule much past their comfort zone.
Initially the more efficient scheduling of customer appointments increased volume. Unfortunately, because there was no digital transformation of certain back-end components inside the operations, it increased the inefficiency, customer complaints, and had a negative economic impact. The lesson here is that building a digitally enabled front end (Website for Customer Appointments) to an analogue process in the back end (Maintenance Bay scheduling) will most likely fail to deliver the anticipated results and exacerbate the problems.
A better “then what” would have been”
“Our customers will be able to digitally connect with us, see service appointment availability in real time, and make their appointment to drop their car off for service. To make that operationally sound, before making that ability widely available we also need to digitally transform certain other aspects of our operation”
Had the components below been included in the digital transformation project, even at a Minimum Viable Product (MVP) level, the transformation would have been a great success.
- Scheduling Service – Build automation that can reserve maintenance bay times based on customer preferences and service requirements for parts and mechanic skills.
- Service Specifications Management – Build a solution that identifies the parts, and mechanic skills required for the most requested service appointments, and feed that information to the scheduling service.
- Inventory Management – Make the inventory levels of the parts required for most common services available to the scheduling service.
- Human Resources – Make the skills of each mechanic available to the scheduling service
Now What? (aka – Once we have this up and running what are the operating implications?)
Even though initially the project was put on hold, and scheduling went back to the old manual system, the executive team recognized its importance, and a new team was engaged to bring it to market. Below are some of the factors considered and accounted for as we turned it around and re-deployed.
- What could go terribly wrong once the solution is up and running for a while and what would be our contingency plan?
- How would we leverage the data generated to create better forecasting capabilities?
- What changes would we like to see in other parts of the value chain to further increase the leverage from this transformation
Just like with any significant transformation, it is important to consider all the operational implications beyond a single project. Even though there are no guarantees, if you want to do Digital Transformation right, ask the three questions enough times to have a clear picture of the true scope before you start.
Institute Fellow
Chuck is a globally recognized thought leader, executive, consultant, and entrepreneur, known for designing and delivering digital solutions to complex problems in Transportation, Telecommunications, Financial Services, Light Manufacturing, Risk Management, and Online Gaming. He is frequently invited to speak, write, and educate both seasoned executives and aspiring entrepreneurs on the challenges at the intersection of Technology, Operations, and Go To Market strategies. He serves on a number of industry advisory boards, including the University of Tampa Center for Entrepreneurship and the Tampa Bay Wave. He holds an engineering degree from Fairleigh Dickinson University, and multiple certifications in Strategy, Enterprise Architecture, Product Development, and M&A transaction management.
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