Introduction

Implementing new solutions, systems, and organizational processes is a significant challenge. In December 2005, Queensland awarded IBM a contract worth AUD 95 million (USD 72.2?million) to replace its aging payroll system.

Three years later, the project had yet to make much progress. IBM estimated it would take AUD 181 million (USD 154?million) to complete the project. The project was swiftly descoped to cover only the health sector for AUD 6.2 million (USD 5.3?million).1

In 2010, after 10 aborted go-lives and two and a half years behind the original deadline, the new system was finally operational at a cost of AUD 25.7 million (USD 23.6?million). However, the system did not work. It produced 35,000 payroll mistakes. At the peak of the errors, 1,010 employees were required to fix the data to make the fortnightly payroll run, at an annual cost of approximately AUD 170 million (USD 156.1 million).

An inquiry into the saga found many failings of governance, technical specifications, frequent scope changes, and a lack of project management capabilities.

Sometimes failure can follow even when the team gets the basics right. For example, the Danish University and Property Agency, known as Bygningsstyrelsen, designed a system that precisely met the specifications, met every deadline, and successfully delivered the requested product but failed to bring about the desired change within the organization.

After Bygningsstyrelsen went live with the new system, employees abandoned agreed-on work processes and instructions in favor of old, Excel-based methods during day-to-day operations. This failure to make changes caused all benefits of the digital transformation to disappear.

The problem in such situations typically is not technical; there is nothing wrong with the technology or system. The challenge lies with the people, politics, and cultures that must change to bring about the benefits.

Unfortunately, it does not matter how good new systems and processes are if nobody is willing to use them. Any technology endeavor that involves significant changes in people, power, and politics requires work to make those changes happen - not only in high-level strategies and ambitions but in manifested behavioral change at all levels of the organization.

Without investing effort into effective change management, the transformation risks failure - and most certainly will fail.

However, if change is managed successfully, it can help you secure the project's benefits on the first attempt.2 By ensuring that the project meets the needs of both the organization and the people who will be using and be affected by the new systems, you can minimize the risk of wasting valuable resources on a failure.

The challenge here, however, is that managing organizational change requires a different skill set than managing a technical change. In this case, success requires people skills. Unfortunately, there is no technical solution to people skills; we have checked.

Another unfortunate fact is that there is very little scientific evidence on what digital transformation leaders do to make change management effective. A plethora of case studies and anecdotes exist, many of which suffer from survivor bias. Fortunately, we have been working hard to try to fix that problem.

How?

We know much about what digital transformations should do but little about what successful transformations really do. To build a systematic body of scientific data, we started a collaboration between the University of Oxford's Saïd Business School and Implement Consulting Group, based in Copenhagen.

At the University of Oxford, we were interested in better understanding the dynamics of organizational change and investments in information technology. Our previous research3 shows that ineffective change management significantly contributes to cost overruns, schedule delays, and benefit shortfalls in digital transformations.

At Implement, we focus on ensuring that your efforts develop meaningful change within your organization by supporting you with implementing tools and techniques that have a meaningful impact. We help companies worldwide understand the human perspective and dynamics behind change.

Together, we desire to improve the success of digital transformations. We are basing this book on our combined 50+ years of experience working as consultants for businesses looking to implement change and our in-depth academic research into how to make sociotechnical change work.

We realized there was a lot of noise, confusion, and competing advice. So, we decided to systematically study existing research, to test, and to gather data on what worked and what did not.

We started by systematically reviewing the existing research and information on organizational and technological change, studying nearly 2,000 publications in the field. Based on this information and our combined knowledge, expertise, and insight, we identified the fundamental beliefs, opinions, and theories we wanted to examine and test in more detail.

We further validated and refined our approach and hypotheses through workshops with change experts. As a result, we identified seven "levers," or features, of digital transformations that might influence success.

Here are the seven levers of successful digital transformations:

1. A clear reason to change is the cornerstone of any successful transformation. It provides a vision, framework, and approach for digital transformations and sets the direction and purpose for the change.
2. A defined approach to managing change is the framework and precise plan for the digital transformation down to the last detail.
3. Early involvement of users in designing and testing processes and systems is necessary.
4. Management ownership of the change is the work of top, middle, and frontline management, not the project, to support, promote, and demonstrate ownership of the digital transformation.
5. Effective communication is not just a tool; it's a necessity for securing the commitment of stakeholders to the changes, and it is the transformation's active, deliberate dialogue that ensures everyone is on board with the digital transformation.
6. Effective training must equip users with the knowledge and practice of new working methods to ensure that users adopt new systems and processes.
7. Establishing trust-based relationships is not just a goal but a necessity. Digital transformations must create and maintain productive, trust-based relationships with end users and senior stakeholders.

We then carried out our research by analyzing 155 separate digital transformations. To be considered in our research, each transformation had to:

• Implement a technological component.
• Introduce organizational change, such as how employees use a system or their processes of work.
• Have completed the digital transformation for more than three months so we could evaluate its impact.

To gather our data, we interviewed those involved and analyzed data and statistics regarding how the transformation was managed and its long-term impact and effectiveness.

We then tested the seven levers to determine which ones are truly important.

We found that all seven levers contribute, directly or indirectly, to the long-term success of the transformation, though they have varying degrees of impact. These levers can be applied independently or jointly to calibrate your approach and ensure its success.

We discuss each of these levers separately throughout this book - their importance, examples of their applications in action, and common beliefs about them.

Chapters 1 and 2 the nature of change, how we carried out our research, and the value of effectively coordinating the change management aspect of a project implementation. Chapters 3 to 10 analyze the seven levers in more detail using case studies from our research to illustrate our findings.

The Purpose of This Book

In this book, we do not provide the perfect how-to recipe for digital transformation success. As you will soon discover, while our data show particular elements to be more effective than others, making a one-size-fits-all approach is a fool's errand.

Digital transformations align people's needs and wants with the organization's culture, needs, and wants. Because you will never find two situations in which these things neatly agree - and, most often, they are unknown at the outset - no easy recipe exists to resolve the people, power, and politics of change.

Instead, we analyzed the data we gathered and used case studies from our research, public information, and previous clients to explain how these levers impact and influence the success or failure of digital transformations.

This is not a should-do book but a what-works-and-why book. By reading it, you will learn the logic behind what digital transformations do, what works, and why. We hope you will discover new answers and inspirations that fit your needs.

Change Jargon Demystified

• Digital - We use the term "digital" to mean information technology (IT) and information systems (IS), the backbone of products, business processes, sales channels, and supply chains.4...