One of the most challenging—and important—parts of being a leader is making decisions with imperfect information. Like all leaders, I’ve regularly made decisions that came with an inherent amount of risk. Yet not all risks are created equal. On one end of the risk spectrum are “low stakes” decisions that have marginal material impact on the future of the company; on the other end are the complex decisions that—if decided wrong—can put a company out of business. Digital transformation arguably falls in the latter mode.
Digitally transforming your business can feel like a risky proposition—especially if you are building the technology yourself. With so much change and complexity, projects go awry with cost overruns and blown timelines. I’ve seen this happen for a few reasons. The first is what I refer to as “unintentional hoodwinking.” This is a little like the planning fallacy that I talked about in a past interview—which is the notion that most complex tasks take longer than expected. This is certainly true for technology. Why? Because technologists like to build—it’s in their DNA. But building can be hard to manage in a highly disciplined way. And building it yourself often turns out to be far more expensive than expected.
The other reason for cost overruns is trying to do too much on day 1. MVPs (Minimum Viable Products) turn into “Maximum Lovable Projects,” with scope creep and gold plating. Some of that’s due to wanting to please everyone. Another reason is funding realities—meaning “this project has been funded and I probably won’t get added funding next year, so let’s make sure we do everything now.” Or possibly politics—an employee who wants to build out their fiefdom is making this a pet project. Regardless of the reason, falling into any of these traps won’t deliver what you are looking for as a leader: creating value for shareholders and truly delighting your clients.
De-Risking Your Decision
Most execs think about digital transformation as a destination. Sure, it would be great to have a 100% digital, non-legacy technology experience and infrastructure with a flip of a switch—but that’s not going to happen. Changing people, processes, and technology are all part of the journey. It’s hard and takes time. But if you focus on thejourney with the destination in mind, it becomes more predictable and less risky.
So how can you start to de-risk your digital transformation journey?
One of the best ways to make the journey manageable is to use a framework. After all, it’s unclear up front how the pieces will come together. Are you creating a Frankenstein or the Mona Lisa? Use the following questions as a framework to give yourself a better chance at achieving a masterpiece instead of a monster:
What is your glide path toward digital transformation?
Single vendor: There are companies, like Advisor360°, that will partner with you, allowing you to digitally transform either incrementally—a solution at a time—or with a fully unified and integrated platform. The risk with this approach is arguably “putting your eggs into one basket” with a single partner.
Best-in-breed: The other option is selecting niche specialists with single (one point) solutions. The risk with this approach is that you’ll need a solid integration framework to create a truly seamless experience that avoids advisor “swivel chair.” Further, you could end up playing vendor “blame game roulette,” so when something goes bump in the night and you need support…who’s really responsible?
Does your organization have a high success rate at executing complex projects on time and under budget?
If so, are you in a position to build elements that are materially differentiated and not commercially available “commoditized” services (e.g., distinct from the existing CRM, document management, performance reporting, account opening, etc.)?
If not, consider outsourcing to a trusted partner who does.
Do you have people around you who can drive shareholder value?
There is a link in all industries between success/value-creation and strong execution. Are those around you action-oriented?
Do you have the leadership and internal capabilities to manage change across the organization?
Do you have development talent and staff on hand for ongoing upgrades and system support?
When it comes to digital transformation, are the risks of inaction to your organization greater than the risks of action?
If so, how will you partner with someone to mitigate this risk as you move forward toward digital transformation?
Wherever you are on your path to digitally transforming your company, it’s clear that inaction and time are your two worst enemies. The best leaders either create or leverage frameworks to ensure that their actions—not inactions—will create shareholder value.
Darren Tedesco is President of Advisor360° and has been part of our software development since its inception, bringing together the thinkers, creators, and visionaries that help power our clients’ productivity, profitability, and growth.
Darren Tedesco
