Practically Project Management

It seems like the word "transformation" crops up about everywhere these days so here’s some friendly advice. Since we haven’t reached maximum hype, just insert the word transformation into any new project request and it will significantly increase the odds that it will be sponsored or funded. Case in point. If you're a contractor bidding on a project to replace some broken toilets, just position it as a “bathroom transformation” and I guarantee you can charge double. I digress.

Anyway, at one point in my career I dealt with transformation related topics daily.  My job was focused on identifying emerging technologies, start-ups, or business models that might help us evolve our business. I would spend my days meeting with venture capitalists, startup founders, angel investors, academics, and a whole assortment of other interesting characters. I was primarily looking for innovative ways to solve problems we had, and to capture insights about problems that we didn’t even know existed.

One of my meetings inevitably led me to the offices of the venture capital firm Andreessen Horowitz. Here’s a shortlist of companies they’ve funded; Facebook, Github, Box, Dollar Shave Club, Instagram, Oculus, Lyft, Slack, Zenefits, etc… It’s also worth noting that their tagline was “software is eating the world.”

Oddly, the thing I recall most from my meeting was their lobby. Tucked within tiny alcoves were photographs of hydrogen bomb tests from the 1950’s. After closer inspection I discovered they were all originals. I asked myself, “what kind of organization hangs original photos of hydrogen bomb tests in their lobby?” and filed the question in the back of my mind for reflection.

Fast forward to today. Everywhere you look “transformation offices” are cropping up in corporate headquarters.  My news feeds overflow with the latest cavalcade of articles zinging around buzzwords such as artificial intelligence, machine learning, big data, block chain, and my all-time favorite… the cloud.

Here’s the thing. I have yet to see a “transformation” occur at a company that is worthy of the hype.  Most transformation programs are incremental. They typically involve process automation, replacement of old technology, or response to a competitive threat. This is valuable work but it rarely results in a company being truly transformed.

This takes me back to the question of “why the hydrogen bomb test photos?”  An answer has slowly emerged. Transformative organizations have no anchor to the past way of doing things. They embrace the destructive, disruptive, AND creative energies inherent in all new technologies -- with the intent of creating a different, and hopefully better, future. 

Because venture capitalists like Andreessen Horowitz manage large portfolios of different types of companies, they don’t have the same constraints as existing businesses. They can place multiple “bets on the future” by spreading their risk over numerous individual companies. One successful investment can offset the losses of countless failed ones. Even with savvy portfolio management, existing businesses and mature project management organizations typically can’t approach things this way.

While there are plenty of books on the topic, I believe the main challenge for existing businesses seeking transformation is best summed up in the Zen saying, “the sword cannot cut itself.”

This is why you’ve never read an article about Sears transforming retail by taking their catalog online, or Kodak transforming photography by digitizing how photos are taken, processed, and shared. To embrace true transformation often requires one to also embrace the destructive side of the equation. This often means wrecking an existing business, i.e. the sword cutting itself.  This is indicative of why Jeff Bezos was recently quoted as saying “I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.”

This takes us to the primary trouble with transformations. If you’re in an existing business, and you know your industry will be disrupted, it's really difficult to figure out what to do.  Maybe you should setup a new PMO team and call it a “Transformation Office”? Or possibly you should invest in cutting edge buzz word technology or acquire a start-up? 

Well, unfortunately the challenge really isn’t about creating a new organization or pursuing some new technology projects. It is primarily about vision, culture, and leadership. This is a much harder problem to navigate – but it’s not insurmountable. From my experience I’ve observed at least four general paths. The trick is to walk the paths simultaneously, without losing sight of your day to day business.

1. Technology Led Improvements – In the not too distant past, technology was viewed as an enabler. The “business” would define a need and the “information technology” function would initiate a project to address it. This approach needs to be flipped. It requires market savvy technology oriented leaders to demonstrate what’s possible and then work with the business to implement it. I believe this reorientation best captures what most organizations are doing with digital transformation. Culture and outdated organizational models are the biggest barriers here, not to mention that market savvy IT leaders are very hard to find!
2. Rapid Competitive Response – Today’s competitors can quickly emerge from anywhere. Even historically “stable” industries like razor blades or mattresses are seeing small disruptive competitors that present real threats to long standing businesses. Addressing this requires adding agility to the organization. A variety of companies have invested in cross-functional project teams, light-weight infrastructure, and externally focused leaders to mobilize rapid responses to competitive threats. For example, Best Buy was able to respond to Amazon’s next day shipping by offering ship from store capabilities. This was a cross functional effort spanning retail operations, logistics, e-commerce, accounting, etc… They started small by testing the capability in a handful of stores. Once proven it was quickly expanded across the entire business.
3. Diversified Partnerships – Joy’s law sums it up best; “no matter who you are, most of the smartest people work for someone else.” This means that in order to succeed, businesses need to develop diverse external partner networks. The goal here is to gain insights about new threats or opportunities while tapping into external talent to experiment with emerging capabilities. It often requires establishing a dedicated group within the organization to cultivate these partnerships. To be clear, these are not transactional vendor relationships and are typically not something that might be delegated to purchasing organizations. Some examples include Unilever Ventures, P&G Connect and Develop, Johnson and Johnson Innovation, etc…
4. Research and Disruption (the new R&D) –  This is the hardest one to explain and pursue. It’s really about taking a lead role shaping the future of an industry. While it's probably over-used, a good example of this is Elon Musk (and associated investors) being on the forefront of disrupting transportation. While Tesla gets most of the headlines, Musk plays a leadership role in the areas of space travel via Space-X with reusable launch systems, self-driving automobiles, ride-sharing services, hyper-loop, and the aptly named Boring Company. If you’re leading disruption in so many facets of the transportation industry, then it’s difficult to completely get left behind -- even if several ventures ultimately fail. This implies an approach where existing businesses pursue concepts that may undermine their current operations (i.e. the sword cutting itself).

In order to survive, practically every business needs to embrace elements of transformation. Ironically most of the challenges are internal.  They come from overcoming the forces within the business that are resistant to embracing all aspects of transformation – including the potentially destructive ones.  Understanding this is one of the first steps on the path to success.  As project managers, it's up to us to help our sponsors and leaders navigate these difficult challenges.  And, if all else fails, go ahead and hang up a few photos of atomic bombs going off, at minimum it’s sure to spark some lively conversation.

Speaking of conversation.  I welcome your thoughts and reactions to this article.  I want to hear more about your own experience with transformation projects.  What's worked, what hasn't, and what do you think we can we do as project professionals to successfully advance transformation for the benefit of our organizations?

** This article was originally published by Jon Hanley on his blog at practically project management