Illustration by Sylvia Neuner

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Tackling the Digital Hype –Executing digitally enabled strategies
Implementing change and overcoming execution problems
Greg Smith, Mandeep Dhillon, Laurie Guillodo, Xabier Ormaechea and Carl Bate

Turning strategy into execution is always difficult. Digitaltechnologies can seem to solve many of these problems,
providing more speed, learning opportunities and chances to pivot away from failure, but they can also amplify
weaknesses. In this article, we look at common execution
problems and show how they can be overcome by focusing on some fundamentals that are often neglected in the“new world” of digital.

The challenges of strategy implementation

Picture by mgkaya/iStockphoto

Most executives agree that successfully implementing abusiness strategy is usually a lot more challenging than developing it. Unrealistic or overly academic theories, whilst
persuasive on paper, can be costly in practice and all too
often lead to passive resistance or even “tissue rejection”
by the host organization. In these situations, advances intechnology, increasingly software-related, are frequently
perceived as a “silver bullet” that can ensure effective
delivery of the anticipated change.
This perception has often been at the core of large-scale“legacy” Enterprise IT implementations – “Once we have
implemented the single ERP1 in three years’ time, we willsave X% costs and transform the company”. For example,
one FMCG2 firm has been implementing its single global
1

ERP: Enterprise Resource Planning

2

FMCG: Fast-Moving Consumer Good

Successfully implementing a businessstrategy is usually a lot
more challenging thandeveloping it. Advancesin digital technology are
frequently perceived asa “silver bullet” that canensure effective deliveryof anticipated change.
However, digital can also
expose a company’s innercontradictions, reveal
hidden pockets of poor
performance and evenlead to perceived corecapabilities becoming
seen as critical weaknesses. What are themost common execution
problems when it comesto digital, and how canthey be overcome?

ERP program for nearly 20 years and still believes everything will
be solved when they are finished in another five years’ time. Unfortunately, each local implementation needs to be slightly different,
as the world keeps changing, and consequently the only predictionthat can be realized with any certainty is the ever-rising cost of theongoing investment. Whilst this is an extreme example and not alllarge-scale systems fail, multiple analyses over the last 20 years suggest very few major IT programs deliver expected outcomes, andthe bigger the program, the higher the chance of failure.
In today’s world, “digital” rather than Enterprise IT is increasingly seen as the key enabler to transform the business operating
model, with opportunities extending well beyond what Enterprise
IT has been able to deliver. Undoubtedly, digital has huge potential: to fundamentally transform the business operating model; tounlock the “impossible challenge”; to greatly accelerate change;
and to intimately connect a company to its customers in real time.
For example, Netflix’s reinvention of the video-delivery model fromphysical post to online streaming disrupted an entire industry,including video-rental stores, movie studios and TV networks.
However, digital can also expose a company’s inner contradictions,reveal hidden pockets of poor performance and even lead to perceived core capabilities becoming seen as critical weaknesses. For
example, a global publishing company is currently wrestling withthe transition from supply of physical products to digital consumption and interactive customer participation, with a declining shareprice that suggests their transition is not keeping pace with market
demands. Digital also adds more uncertainties, particularly aroundcustomer expectations, which are increasingly defined by the technologies they use in their day-to-day lives. For example, customers
expect digital products always to work: issues with downtime,or being unable to use products on any device or browser, are nolonger acceptable in a digitalized environment.
So whilst digital has the potential to bring huge value, it also brings
more chances to fail. In our work with clients we see a number ofcommonly recurring pitfalls that all too often lead to failure in digital
implementation:

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•

Specious certainty: Placing too much certainty on the capacityof new technology to deliver operating-model change; setting
unrealistic expectations and outcomes and creating long-termplans that aim to deliver in the future what is actually required
today; and having blind faith in immutable, up-front specifications and then failing to re-assess regularly enough whether tofurther invest, pivot or stop.

•

Neglecting organizational alignment: Believing that a newtechnology system will fundamentally transform the organizational culture, behaviors and human interactions; expecting that
employees will simply adapt to the system and willingly participate in the transformational journey.

•

The language we use: Creating a constrained environment byusing language that closes down commitment and participation(for example, saying no or shooting down ideas); generating
false certainty through over-simplistic or over-deterministic metaphors; limiting ambition by adopting a narrow Weltanschauung(or world view)3 incapable of tolerating other’s perspectives.

•

Underestimating behavioral issues: Customers and users
interact with products and features in a variety of ways, often
different to that anticipated by the designer; failing to adequately consider employees before embarking on change; misapplying or failing to appreciate behavioral levers; mismanaging
employee resistance; and failing to communicate adequately, bethat frequency, tone or authenticity.

Companies that are most successful in overcoming these pitfalls
tend to be those which don’t allow themselves to become distracted by the “digital hype” – in fact, they often find answers to these“new-world-”challenges in approaches that predate the digital revolution by many years, or even decades.

Source: B.Wilson et al, Soft Systems Thinking, Methodology and the Management of Changes

3[2015]

How to make digitally-enabled change successful
We see five concepts as being important to ensure successful
digitally-enabled strategic change, as shown below:
1.
Invest, pivot or stop?
“Only two timeframes matter,90 days and 5-10 years”

5.
Use an adaptive
implementation approach“Next Practice notbest practice”

How to execute
digitally-enabled
strategies

2.
Design first, technology
second“The technology is not
the solution”

4.
Engage your mostimportant asset

3.
Communicate for
uncertainty“Bring your people
on the journey”“Ask the right question,embraceideas and uncertainty”

Table 1 The five concepts of digitally-enabled change

Source: Arthur D. Little

1. Invest, pivot or stop?
The US oil baron and philanthropist, John D. Rockefeller [18391937], revolutionized the petroleum industry a century ago and still
inspires some of today’s widely used management ideas. Mastering the Rockefeller Habits [2002], among the most acclaimed
management books of all times, uncovers the leadership and management principles Rockefeller applied at Standard Oil Company tomaster the US oil industry.4
One of the Habits urges us to “Plan and Prepare” and warns us“not to fall in love with our 1 to 3 year plans”. Only two time frames
actually matter: a 10-year plan to align on a common vision, and a90-day data-driven plan focused on overcoming bottlenecks. Within
90 days, firms should be able to make a key strategic decision –invest, pivot or stop.

Source: Forbes, Mastering The Rockefeller Habits - How To Scale a Hyper-Growth Business4[August 2012]; Victor Chen, Rockefeller Habits Book review; Denver Business Journal, The
Rockefeller Habits: What, why and how for Denver businesses [November 2008]

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Companies can all too easily become focused on delivering largescale three-year plans (e.g. major enterprise IT projects). Invariably,
this involves detailed up-front program specification and extensive“left-to-right” planning, leading to outcomes that directly undermine the ability to turn strategy into successful execution. Somecommon pitfalls include:•

Costly, lengthy, monolithic projects with an inverse relationshipbetween budget and chance of success•

Creation of a path of no return (e.g. “we’ve already invested somuch money”, “I have so much at stake”)•

Promising to deliver what is required today, in the future•

No appreciation for an ever-changing landscape, and use ofexcessive complexity to justify failure to adapt•

Danger of irrelevance by the time the “solution” is delivered

These factors in combination can lead to a mentality of “we knowwhat we need to do, if only you can let us get on with it”. However,this confidence is all too often an illusion.
The most successful companies use data analysis and insightsfrom adjacent industries to continually assess and regularly revisit the decision whether to invest further, pivot or stop. Once a
trajectory has been agreed, they adopt a “right-to-left’5 planningapproach with agile delivery. At ADL, our own internal manifestation of this approach is a short Phase 0 (rapid analysis focused ona clearly bounded “exam question”); Phase 1 (to prove the “art ofthe possible”); and a Minimum Viable Solution (MVS) (to answer
the exam question and build momentum through rapid iterative
enhancements to the solution). This approach provides leaders witha constant stream of evidence to help bring people on the journey5

An approach to planning that fixes a challenging delivery deadline and then critically reviews

project activities to ensure they can be ‘pushed back’ into the available timebox. Subsequent
project governance ensures that this right to left push is maintained and the delivery deadline isprioritisedand creates a multiplicity of learning opportunities that allow regular course-correction.
2. Design first, technology second
Back in 1968, Melvyn Conway anticipated some of the organizational and cultural challenges we now see in IT and digital projects.
Conway’s Law states: “Any organization that designs a system[…] will produce a design whose structure is a copy of the organization’s communication structure”6. Whilst this law predates thedigital age, its effects are observable every day in technology-related business transformations. A large, complex, matrixed company
implementing a company-wide technology (e.g. a single CRM7
platform) will end up implementing a system that reflects the complex, matrixed model, as its design is ultimately a representation ofunderlying organizational factors. All too frequently, we still experience very large corporate technology projects where a primaryobjective is to create a new, standardized organizational structure
through the implementation of a single standardized technology
platform.
Putting technology before design, which is effectively setting the“how” before the “why”, and failing to address underlying organizational and communication structures will simply widen the gap between strategy and execution, and between anticipated outcomes
and reality. Without purpose or design in mind, and an understanding of how to bring the organization on the journey, Conway’s Law
takes effect.
A “design first technology second” approach is much more effective: consider the underlying purpose of the strategy; carefully
design, with the employee or customer in mind, to understandthe functional (i.e. technically required) and non-functional requirements (i.e. how people actually will use the technology); before
defining how best to implement the solution.

6

Source: M. Conway, How Do Committees Invent?, Datamation [1968]

CRM: Customer Relationship Management

7

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A further way to mitigate Conway’s Law is to adopt a “microservices” technology pattern and its associated operating model.
Microservices bring together discrete, loosely-coupled applications
within a single ecosystem, and allow seamless communication
without creating direct dependencies upon each other. An operating model that aligns with this approach empowers individual
technology teams to be responsible for both “build and maintain”(or as Amazon says, “If you build it, you run it”8). Another example
is Netflix, with its “context, not control” principle. This gives teams
enough freedom to adapt their microservices to meet changes
required in product design, constantly informed and evidenced by
the Data, Analytics and Algorithms function9.
3. Communicate for uncertainty
Soft Systems Thinking10 reflects how language can alter one’s Weltanschauung (or world view). This can be illustrated through the various perspectives that a prison governor can adopt on the purposeof their prison (e.g. punishment of criminals, protection of society
through incarceration, or prisoner rehabilitation). An individual’s perception of the core purpose will influence all dimensions relating
to the prison: every aspect of operation, measure of success andculture will be influenced by whether the governor’s primary world
view is punishment, incarceration or rehabilitation.
In business, programs and projects are typically defined by language and nomenclature that aims to set goals and targets, define
activities, and identify and manage risks. The shared language
used is an important factor in determining how the team perceives
values and priorities, and how it behaves in relation to risks andoutcomes. The language we use can all too often leave little room
to move sideways, or explore new ideas, which in turn can lead topromising opportunities being discarded too early and failing ideas
persisting for too long.

Source: F. Paganelli, Programming Amazon EC2 [2011]8

Source: Netflix, Netflix Culture: Freedom and Responsibility

910Source: ‘Systems Thinking, Systems Practice‘, Peter Checkland [1981]

The deterministic world-view and language of traditional Enterprise IT
can often conflict with the experimental aspect of digital - where an
input solution is probably not known. Imagine two scenarios: A) ask
your team to deliver a tightly prescribed set of functionality by a fixeddeadline; or B) provide your team with a specific input question anddesired outcomes, allowing for exploration and experimentation indelivery. Which scenario is more likely to lead to the optimal answer,
and deliver a breakthrough? Language can be used to either open or
close creativity, and can therefore lead to widely differing results.
For example, we recently worked with an organization to explore
how they should communicate to customers during technicalincidents. They were initially focused on an SMS (text message)
solution for a minority of customers. We challenged conventional
wisdom to allow other options, by redefining the key input question to “How should the company communicate with relevant
customers when things go wrong?”. By resetting the language
and focusing on the purpose (i.e. communicating with relevant
customers), we identified a design that would target customers
only if they were directly impacted by an issue. We were then able
to quickly prototype a potential solution to inform an investment
decision, before delivering a Minimum Viable Solution which targeted relevant customers on key products. The solution decreased
support-call volumes related to these types of incidents by threequarters, whilst greatly improving the customer experience.
4. Engage your most important asset
Implementing change is hard because organizations are composedof people, who have different perspectives, incentives and motivations. Often referred to as the “soft” side of delivery, it is invariably
the hardest. In our experience, companies that do not obsessively
consider employees before and during each stage of strategy execution are likely to fail.
There are countless tools and approaches for managing the people side of change, including many of our own11. However, one
11

For example, “The Change Side of Transformation - A Wolf in Sheep’s Clothing?”[Prism S2 2015, Advancing transformation]

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especially valuable contribution is provided by MINDSPACE – Influencing behavior through public policy12, commissioned by the UK
government in 2010, which examines how behavioral change canbe harnessed to deliver breakthrough results. Some key recommendations which are highly relevant for digitally-enabled strategy
implementation include (not exhaustive):• Identify and leverage the individuals who will be most respected in delivering the message, be listened to and inspire (which
will vary by audience). A great example of this is the 1997 internal launch of “Think Different“ by Steve Jobs13• Spread the message with key influencers or early adopters who
have the network to influence peers• Understand underlying motivations and ego, and then incentivize accordingly (not necessarily in money terms)• Consider the path of least resistance for employees, makechange easy and relevant. Aim to change the defaults to makethe new easier to do than the old• Acknowledge that public commitment engenders a communitythat buys in together to deliver shared outcomes
5. Use an adaptive implementation approach
Traditional “best practice” approaches assume we can precisely
predict the outcomes of strategies and projects through detailed“left-to-right” execution plans. Yet this rarely goes to plan, as “bestpractices” are almost exclusively designed for closed systems,
where all the inputs can be controlled and managed. In reality,
digitally enabled strategy implementation, especially in large companies, takes place in complex open systems. These open systems
comprise interactions from a diverse range of individuals, actingwith a degree of autonomy and unpredictability. Trying to oversimplify such a system, in order to implement a rigid, deterministic
strategy, is destined for failure.
12

Source: Institute for Government & UK Cabinet Office [2010]13https://www.youtube.com/watch?v=9GMQhOm-Dqo&feature=youtu.bePicture by mgkaya/iStockphoto

Instead, companies need to identify and acknowledge when asystem is open, with strategic plans assuming the emergence of
uncertainties. Management should maintain a clear view of thedesired outcome and goals, but focus on delivering the next partof the plan rather than adhering to the longer-term program, whilst
providing “invest, pivot or stop” decision points if new evidence
challenges the initial strategy. This evidence should include internal
data analysis combined with an external and forward-looking focus
on similar and adjacent industries. This type of adaptive approach,which we refer to as “next practice”,14 has been shown to be far
more successful than the traditional best practice approach.

Insight for the Executive
Successful implementation of digitally enabled strategies is challenging. Companies that blindly follow the latest “digital hype”
often pay inadequate attention to important and long-standing
fundamentals that are critical to get right. We can summarize thesefundamentals in terms of five key concepts:
1 Invest, pivot or stop
2 Design first, technology second
3 Communicate for uncertainty
4 Engage your most important asset
5 Use an adaptive implementation approach
14

Source: Becoming a Next Practice Business [Prism S1 2015]

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In the 1860s Helmuth von Moltke – the head of the Prussian army
– postulated that, “No plan survives contact with the enemy”. Thisobservation has proven immutable over the last 150 years, andsuccessful leaders, more than ever, need to constantly adapt inorder to improve the chances of successfully realizing their strategy, whilst staying aligned to the core mission and vision. In today’s
digital age this fundamental truth still holds, because at its heart,strategy is a human construct that transcends individual technologies or structures.

Greg Smith
Is a Partner in the London office of Arthur D Little, specializing in Digital
Transformation.

Mandeep Dhillon
is a Manager in the London Digital Transformation Practice of Arthur D. Little.

Laurie Guillodo
is a Consultant in the London Digital Transformation Practice of
Arthur D. Little.

Xabier Ormaechea
is a Business Analyst in the London Digital Transformation Practice of
Arthur D. Little.

Carl Bate
Is a Partner in the London office of Arthur D Little, specializing in Digital
Transformation.