The world of start-ups and digital pioneers amplifies this perception through stories of empires that started out of someone’s garage, growing larger one step at a time. In the corporate world, you often hear “you have to learn to walk before you can run.” But when it comes to large-scale strategic projects, do established companies have the luxury of acting like a start-up?
From a tactical standpoint, this iterative approach has clear advantages, but does it really help large-scale strategic projects?
The baby-step approach is an attractive prospect for any well-established company wishing to test digital channels without upsetting their traditional ways of doing business. However, this apparent good idea risks causing a good deal of harm down the road. Here’s why.
By aiming for short-term gain, the quick-wins approach ignores the more complex processes that can often be the most beneficial for the organization.
One of the principles of agile development is to first attack the area that carries the most risk but also the highest potential business value. This creates unrealistic expectations for the future of digital: the transformation of core processes will always be more difficult than a little initiative launched in parallel to the real challenges.
The adoption of digital can and should affect the very structure of a company.
In betting on speed, we adopt systems on a one-off basis. Pleased with our apparent progress, we spend on sites and campaigns full of functionality and content that might become obsolete or poorly aligned as the company transforms. Worst of all, we align the priorities and motivations of our teams to these ephemeral efforts rather than on the real challenges.
Companies that are successful at digital like Facebook, Google and Amazon have one thing in common: they have clear, simple offerings that get straight to the point.
However, companies in need of a digital transformation are in the opposite situation: with their years of history, they’ve become saddled with assets, processes, services and even skill sets suited to yesterday’s needs… And it can sometimes appear to still be needed today.
But these choices can be harmful or at least inefficient in a digital context. By launching one-off, gradual digital efforts, companies actually accumulate more baggage without stopping to question how they’re adapting to the world of the future.
To guarantee incremental results, we generally explore the market we know, without developing new perspectives. If we allow this to be an acceptable tactic, we will never find the next big opportunity.
The development of a truly new initiative, something that would allow the company to become a disrupter, involves risk. While, on the one hand, taking a step-by-step approach can often lead to an aversion to this type of risk, on the other, if a test project explores a truly innovative avenue its success is absolutely not guaranteed and is no guarantee of the success of tests down the road.
We must not confuse tactical growth with strategic testing.
The adoption of digital offers untold opportunities for organizations to transform: transform products into services, transform services into products, reach new markets, completely revise their value chain, rent rather than buy, rent rather than sell, pay or invoice on a per-use basis, etc.
These changes are major and concern nearly the entirety of the organization: from finance to marketing, IT to customer service, not to mention procurement and human resources.
By going after just one small part of the business model, for example logistics or marketing, we deny ourselves the chance to achieve greater synergy.
However if we want to involve more business units, or simply work with them to manage change, we can expect a longer process before we see any gains (although this internal transformation is itself a gain).
By their very nature, small projects need to be light and efficient for the organization, but can we really calculate the performance of high-growth projects in the same way as their smaller counterparts?
Whether it’s IT, marketing or even the team of a Chief Digital Officer (CDO), no one team can carry the weight of a real digital transformation all on its own. It needs to be a company-wide initiative, driven by upper management, often tackled as a whole.
Without a deep commitment to digital from management, even the most competent, well-intentioned team will have a hard time setting up all the conditions needed to make digital enough of a real priority (read: more than other channels) in the organization to effect a transformation. Too often, we see tactical projects led by IT or marketing qualified as “digital transformation projects,” while years later the operations of that same company have still not been transformed.
In addition, electronic business can be daunting for lots of people in and around a company. Under-informing or restricting a project to a single team is a good way to sneak a project through without properly involving all the stakeholders.
A large-scale digital project necessarily involves numerous actors, internally and externally, and these people need to fully understand and be committed to the project if it’s going to succeed.
However, projects that are too small, aiming for superficial or short-term results will never motivate the best resources in the same way as a project that promises to change the world.
It’s easier to assure internal collaboration, to recruit and even to get budget if we propose something that inspires or promises a significant return.
Another major challenge with digital projects carried out in small steps is the time it takes to make significant advances.
Even though it’s easier to get small budgets and minor approval in the short term, projects carried out bit by bit suffer from this subdivision of budgets and approval that immobilize—and demobilize—teams and suppliers.
Though some managers may believe they’ll have an easier time selling the project step-by-step, they end up with no guarantees: each round of approval adds time and risk to the project, all while making a big-picture view of the project harder for the decision-maker to see, and drastically reducing their commitment to the project—it’s simply too small.
In other cases, we give the impression that the transformative project is made up of a string of small initiatives, while simultaneously trying to achieve a whole that is greater than the sum of its parts.
One constant in digital projects is the use of technology to scale up activities that are less profitable through non-digital means. For example, we put products in-market online to more easily communicate their characteristics to a larger market, or we implement a process to automate tasks.
Regardless of the strategy, the profitability of digital is a direct function of the scale on which it’s used. So you can be sure that the results of a partial implementation (e.g. in a single region, for some orders only, etc.) will be far less positive than those of a broader project… And paradoxically, that partial implementation can prove a hindrance to the full-scale project if a manager gets nervous partway through.
We can’t allow ourselves to get impatient if we don’t see in a couple of quarters the type of results that even the most on-the-ball companies took five or ten years to accomplish.
We’ve all hear the expression “fail early, fail small” but this is rarely well exploited in the context of major projects.
In 2017, the online market has achieved sufficient maturity that certain approaches are tried and true… On the condition that we put in the necessary work and investment.
For example, while Amazon rightly tested whether e-commerce was viable in its first years of operation (more than 20 years ago), it’s now clear that any merchant who “tests” e-commerce in 2017 with an online offering that’s too limited is bound to fail, and not because e-commerce isn’t viable, but because anyone who jumps into e-commerce today has a lot of catching up to do.
The prerequisites to successfully catch up don’t need to be tested, even though they represent numerous steps that will take time to bear fruit, precisely because the company was late to the game.
That said, testing is still very useful and desirable for innovation in cases where a practical example hasn’t been clearly established by the competition.
Most managers need to be able to navigate between daily operations, tactical initiatives and major projects. However, because short-term results are usually easier to prove than long-term potential, we need to resist the temptation to judge long-term strategies by the same yardstick as short-term tasks.
Whether we’re prioritizing projects, choosing a technology or hiring and training staff, it’s more and more essential to reflect on our goals: do we want to operate rapidly or invest in the future? Often, the road to immediate results is directly detrimental to investing in the future.
Finally, we hide the status quo behind a safe little project.
Though there’s still a place for quick successes online for a few ultra-niche business models, the most attractive markets (generally those occupied by long-established companies) have already been aggressively exploited by the major online players, and the more time passes, the higher the stakes to play.
In this context, the projects that will make a real difference are usually the most transformative ones for organizations.
It might be time to replace “you have to walk before you can run” with “you can’t make an omelette without breaking a few eggs”.