Why Do Digital Transformations Fail? We Ask The Former Executive Who Wrote All About it

May 24, 2019 12:49:46 PM / by Pivot Factory

In this special bonus episode of Pivot Factory Podcast, CEO and Founder of Pivot Factory Michael Leadbetter speaks with Tony Saldanha, who recently retired after 27 years with Procter & Gamble. Saldanha this summer is releasing his first book, “Why Digital Transformations Fail,” which you can pre-order now.

Saldanha spent much of his career creating meaningful and demonstrable innovation around digital transformation, with the ultimate goal of either generating millions of dollars in new revenue or achieving millions in cost savings.

“I've actually field tested this with large organizations, with CEOs of Fortune 500 companies, and the methodologies that Tony has laid out really do work,” Leadbetter says on the podcast. “So not only are they extremely effective, but they actually have a lot of credibility with these large organizations, which is why I've based a lot of the way that we work here at Pivot Factory around Tony's frameworks.”

The following conversation between Pivot Factory CEO and Founder Michael Leadbetter and author Tony Saldanha has been edited for clarity.

Michael Leadbetter, Pivot Factory  CEO & Founder [PF]

So this podcast is going to be a short one, and it's really about one thing, it's about about Tony's book. Since retiring from Procter & Gamble, Tony has been busier than ever. He's been traveling all over the world. Every time I talk to Tony, he's in a different country, literally, and Tony this summer we'll be publishing his book "Why Digital Transformations Fail." Because of the relationship we have, Tony's an advisor to Pivot Factory, not only am I very interested in his book, I also wanted to point out to listeners that I've seen how very senior executives from across industries—so the medical device industry, the financial services industry, the packaged consumer goods industry, I've seen how they reacted to Tony and to Tony's methodologies and to Tony's experience. And it's really powerful. I spend a lot of time in Silicon Valley and a lot of time talking about innovation and digital transformation, literally all over the world. But what I've not seen elsewhere is how positively and enthusiastically people respond to the frameworks that Tony talks about.

So, Tony, why did you write the book? You're sailing into retirement, why go through the stress of writing a book?

Tony Saldanha, author of "Why Digital Transformations Fail" [TS]

Good question, Michael. I always I had this vision, what I call a two-career system: one a corporate career and then the other one a more entrepreneurial career. So I really don't think of myself as having retired other than having retired from Procter & Gamble. Right now I'm in the stage of life where I want to do all of the things I always wanted to do. I've started a couple of companies, as you know, one in blockchain, one in exponential technology development, and then there's the book and speaking and advising. So this is always been something I've wanted to do. But I think the other reason is in the last three years at Procter & Gamble, I led this Next Generation Services organization, which your listeners may recall is a little bit like the Google X or internal shared service or internal operations in large enterprises. So how do you create 10X disruptive solutions, meant specifically for enterprises? As I did that, obviously I ended up talking to many, many companies, about 100 different companies, and gathered a lot of information on how to do digital transformation. And that's really what the book is about.

PF:  I want to make sure that people buy the book and read it, so I don't want to spoil this for people. But why do digital transformations fail?

TS:  So the good thing about writing a nonfiction book as opposed to a fiction book, is that you can give away the ending without spoiling the whole story. So I'm happy to share why the digital transformations fail. Firstly, the reason why most digital transformations fail, and we call it the surprising disciplines of why digital transformation fail, is actually a lack of discipline. Here's what happens in most organizations: Most organizations approach digital transformation as if it were a technology implementation project, right? So, you know, doing email or implementing SAP. Actually digital transformation is no different than any other big enterprise strategy implementation, right? Except that it employs digital technology. And so the whole approach, the whole methodology to how you do digital transformation should more closely mimic a large enterprise change management or a strategy implementation than actually any IT implementation projects. And so even at  Procter & Gamble, as I ended up talking to, as I said, 100 different external companies and entities, we developed the insight that it is possible to improve the 70% failure rate on digital transformation by applying the same rigor that the airline industry and the medical industry have used to improve the reliability of their operations. And that's what the book outlines in great detail.

The reason why most digital transformations fail, and we call it the surprising disciplines of why digital transformation fail, is actually a lack of discipline.
PF:  Again, I don't want to give too much away, Tony, but give us a bit of a sneak peek. As you and I have spent time together in the last couple of years, and as we've talked to clients, I've certainly seen you giving a lot of presentations and keynotes. I find that terminology is a big problem, right? So people say different things to mean the same thing or they say the same thing to mean different things. So in your book, one of the first things you talk about is the definition of digital disruption and the definition of digital transformation. So perhaps a bit of a sneak peek for our listeners and your readers could be, how do you define those two: digital disruption and digital transformation?

TS:  Yeah, so what I try to do is put digital disruption and transformation in the context of real life—real life, for us as citizens of the world and real life for us as employees of either private or public sector companies. We're seeing entire industries get disrupted and it's not just the media or entertainment or newspaper or other industries. Quite literally every industry is being disrupted by digital technologies. So the context here is that when in the midst of the Fourth Industrial Revolution. You know, the first three being mechanical engineering and then steam, electric digital capabilities, the Fourth Industrial Revolution really brings together digital technologies and the physical and biological and social worlds, right? And so that is real disruption. And when most people talk about digital transformation, what it should be is how do you go from being a winner in the Third Industrial Revolution to be a winner in the Fourth Industrial Revolution. That is the real digital transformation.

TS:  However, as you were saying earlier, most people talk about digital transformation in the context of any IT or digital projects. So you've got vendors pedaling email systems saying that's digital transformation, or cloud capabilities or you know, other pieces of enterprise software. And so what I tried to do was bring in a little bit of sanity here. I mean, the fact of the matter is we're not going to change how people refer to digital transformation. What we can do is we can show people that there is a spectrum of different stages of digital transformation. And so I've come up with a way to essentially show that spectrum in the context of five stages.

Stage 1, which is the foundation, is essentially, converting physical processes to digital, right? So this is really what most of your automation, ERP and other projects are all about, right? Whereas stage five is systematically changing, not just your business model, but your culture, to think and act like a start up. And I call that living DNA. In between there are three other stages.

Stage 2 is what do you see in most organization, which is siloed efforts in parts of the organization to digitally transform themselves.

Stage 3 is what we call partial synchronization, which is where you start to see a corporate effort to bring all of that together, but it's not finished.

Stage 4 is fully synchronized transformation, where maybe the technology has been transformed completely, but not the culture. And then Stage 5 is the ultimate.

So hopefully most people can use this frame of reference, to essentially target the appropriate end goals. And then, you know, as I said earlier, use the right kind of discipline and rigor, to get there.

PF:  Tony, you've been kind enough to provide [our readers] with Chapter 1 of your book. Tell us more about Chapter 1. If our listeners download chapter one of your book, what are they going to be reading?

TS: Chapter 1 essentially introduces the whole concept by using some real life stories, both from my own experience as well as from history. I wanted to share with your readers a somewhat funny incident that I myself went through about three years ago. My wife and I, we were celebrating our wedding anniversary, and I was planning to buy her a particular gift that she and I had seen at Macy's in downtown Cincinnati, which is where I live. And so on the day of the anniversary after work, I stopped by the Macy's store only to find out that the store actually had closed, as in closed forever because Macy's had declared that they were going to close about 100 stores in the U.S. That is essentially what average consumers like you and I see of what is being called the retail apocalypse, where online models are disrupting physical models. And in Chapter 1, what I do is I put that into context. Yes, it may seem like digital disruption is changing industries, but in different technologies, whether it was the internal combustion engine or electricity in previous industrial revolutions had similar impact on their industries at that time. And so in Chapter 1, I essentially use stories, connect the dots to introduce the fact that we're in the midst of a digital disruption and then introduce the five stages of digital transformation that I talked about earlier.

To pre-order "Why Digital Transformations Fail," visit any online bookseller, including Amazon. The book will be released worldwide on July 23.