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Failure is an option

Being willing to take risks and embrace uncertainty is vital for the success of digital transformations.

About seven years ago, I was leading a major digital transformation project. I had a savvy team running the program, a good plan, and the latest technology solutions to implement. We thought we were doing everything right. But a few months in, the project went sideways — so completely that when the dust settled, the client’s board brought in a third party to investigate what went wrong.

The project failed, we realized, for two key reasons. First, although the project’s goals were well defined, they were not communicated across the client’s departments. And second, we were thinking about how the company would work in the present, not how it would work in the future.

I learned a lot from this experience. I was too focused on the outcomes and on the shiny technology that — by itself — would transform my client’s business. I wasn’t thinking enough about the big picture and about how our work could benefit our client’s business long into the future. Most important, I was intent on having all the answers at the start, rather than being open to learning throughout the process.

The biggest, hardest lesson I learned: No consultant should bring preconceived ideas or best practices to the table. You must tailor your services for each client’s unique needs.

In the last seven years, I’ve come to embrace this style of working, leveraging various perspectives and bringing in all end-users on the journey of transformation. Today, it is clear that digital transformation is not about launching a single new tech product or forming a new customer experience. It’s not about simple process automation. It must be about creating an entirely new, holistic, innovative way for teams to work, and for companies to operate.

Why Digital Transformations Fail

My experience taught me why most digital transformations fail: Companies get scared of true change because of the inevitable chaos it brings. Because uncertainty triggers our natural risk-aversion, we stop short of undertaking true transformation, even as technology accelerates the changes around us. Instead, leaders fake change, or make tentative steps in an effort to stay relevant. They look to implement new technologies to make it seem as if they’re transforming.

My experience taught me why most digital transformations fail: Companies get scared of true change because of the inevitable chaos it brings.

The point of transformation is not to adopt new technologies faster, but to change our behavior and ensure our workforce and their skills stay relevant. Many times, the kind of behavior change that’s required leads to disorder and dysfunction. But that chaos is temporary — and essential to the process. Believe it or not, discomfort is a sign that your workforce is being challenged and is truly learning to work in new ways.

Creating and accepting some uncertainty is the first step to empowering true change. Even coming up short of your goals provides valuable data and the opportunity to reengineer your business model for future growth. In any organization, large or small, a fear of failure leads us to put off the hard decisions. We avoid admitting what we don’t know; we cling to old processes. And we allow organizations to become stagnant as a result.

In the midst of transformation, managers can easily become blinded by processes. If we want to create more agile, adaptive businesses, we need to get better at subverting our more risk-averse instincts.

Taking Risks to Enact Real Change

Leaders must accept that failing to adapt means losing out to the companies that achieve change. Instead of assuming all the answers are already known, focus on asking the right questions. And don’t be afraid of the answers.

Consider the Washington Post. Before Amazon CEO Jeff Bezos bought the newspaper in 2012, the Post seemed to have no path to success. Revenue was on the decline, as print advertising dollars were drying up and not being replaced fast enough by online ad sales.

But Bezos was willing to take risks and fail. “You study, you debate, you brainstorm, and the answers start to emerge,” he said in 2013. “You develop theories and hypotheses, but you don’t know if readers will respond. You do as many experiments as rapidly as possible.”

Under Bezos, the Post quickly invested in both people and technologies — and in changing the mind-set surrounding technology. One successful experiment involved developing an operating system that is so advanced it is now being sold to other newspapers. The company had almost no IT department — and few ways to attract the talent it needed to change. Now it has a staff of more than 250, and easily adds new hires excited by the prospect of working for a transformed company. Nearly every tool the newsroom and sales teams now use was created in-house.

Other experiments included instituting a more aggressive paywall (the better to encourage digital subscriptions), expanding international coverage, and doubling down on investigative efforts. Many of these experiments have borne fruit, and contributed to a substantial digital transformation. Digital ad revenue now exceeds US$100 million, having grown by double digits each year for the last three years. By late 2017, the Post reached more than 1 million paying digital subscribers, triple what it had been a year prior. Last year marked the company’s second profitable year in a row. More than 50 websites are running on the software the Post created. And the company is adding staff throughout its operations. In January 2018, publisher Fred Ryan addressed the success, concluding a celebratory memo to staff by saying, “In 2018, The Washington Post can be the world’s only ‘140-year-old start-up’.”

Of course, it helps to have deep pockets. But true digital transformation cannot be achieved overnight or with money alone. Digital solutions need to be tailored to each company; teams need time to work through the dysfunction and learn to work differently.

Embracing the uncertainty that comes with digital transformation won’t be easy at the start. The threat of failure may tempt you to turn back. But by embracing the unknown and admitting you don’t have all the answers, and experimenting aggressively, you’re sowing the seeds of the future.

Tom Puthiyamadam

Tom Puthiyamadam is the U.S. digital products and U.S. advisory consumer markets leader. A principal with PwC US, he is based in New York.


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