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We're Only Human: Cognitive Factors that Lead to the Failure of Digital Transformation Initiatives

By  Bernard Williams  ·  6 minute read
 

Introduction

In our last blog article Kristine discussed why Digital Transformations Fail. Digital transformation is the integration of digital technology into all areas of a business, resulting in fundamental changes to how organizations operate and deliver value to customers. It is a sea change in how organizations compete in today's global business economy. While digital transformation initiatives have become an operational imperative in recent years, many organizations struggle to successfully implement them. Our "cognitive flaws" are one of the main reasons we are challenged to successfully execute on digital transformation initiatives.

In this article we will discuss what we often see happening in today's digital transformation initiatives. Additionally, we will delve a bit deeper into some of the harder issues to resolve. Lastly, we will review some of the mitigation strategies that can help improve your organization's chances of success.

 

What's happening now 

There is a myriad of reasons why individual organizations struggle to be effective in their digital transformation efforts — and all of those reasons have a common factor: People. For example, how we think, learn, process information, and treat each other all play an important role in the success of any initiative requiring the cooperation of others.

Digital Transformation efforts are huge initiatives that require the cooperation of the entire organization. We have tools and techniques, like the use of business analytics for decision making, that help us to mitigate our cognitive flaws. We also have processes and methodologies that help define how we interact with each other. These also serve to lessen the negative impact of our cognitive challenges.

Cognitive challenges refer to the mental barriers that individuals and organizations face when trying to change their behavior and adopt new technologies and new ways of working. Some of the most common ways these issues manifest themselves is by individuals exhibiting basic negative behavior, such as resistance to change, fear of the unknown, and a lack of understanding of the new technology.

Resistance to change is a common cognitive challenge that arises during digital transformation initiatives. Employees may feel comfortable with the current way of doing things and resist any changes that disrupt their routine. Organizations can also enact so much change, so often that team members develop change fatigue and are simply tired of the constant shift and churn in the ways they get their work done. This can lead to a lack of buy-in from employees and a failure to fully adopt the new technology.

Fear of the unknown is another cognitive challenge that can hinder digital transformation initiatives. Employees may be hesitant to adopt new technologies as part of a whole-scale transformation because they are unfamiliar with them and fear they may not be able to use them effectively. This can lead to a lack of confidence in the new technology and a reluctance to fully embrace it.

A lack of understanding of the new technology is also a cognitive challenge that can lead to the failure of digital transformation initiatives. Employees may not fully understand how the new technology works or how it can benefit them. This can lead to a lack of motivation to use the new technology and a failure to fully integrate it into the organization, creating a state of inertia.

 

Digging Deeper 

If we delve deeper into these initial failure modes, we find that there are more insidious cognitive flaws, that we all have, that negatively impact digital transformation initiatives. Here we will talk about three that I have seen the most in 25 years of delivering IT solutions:

  • Escalation Commitment Theory

  • Delusional Optimism

  • Linear Thinking

 

Escalation Commitment Theory

 
Business person pushing the word crisis up a hill.
 Escalation commitment theory is the tendency for people to make an escalating commitment to a failing course of action, even when it is irrational to do so, because of the commitment they have already made to that course of action. If a project manager is asked how their project is going and if it will be completed on time, they may want to minimize negative information. This is commitment 1. The next time the project manager is asked they are under even more cognitive pressure to say a project is going fine, even though it isn't because they will have to answer what has changed between their first commitment and today. So, they succumb to the pressure and make an escalated commitment saying the project is going fine. Each commitment limits the ability of management to intervene and help resolve the project's issues. This can result in increased investment of time, money, or other resources, even in the face of mounting losses or diminishing returns. This happens often in both our personal and professional lives.
  
 

Delusional Optimism

Two hands holding up the letters spelling the word Miracle with the blue sky behind them.
 Delusional optimism is a psychological state in which an individual has an excessively positive outlook on a situation, despite evidence to the contrary. It involves ignoring or minimizing potential risks and overestimating the likelihood of positive outcomes. People that manage initiatives with this mindset either believe in miracles or do not have enough experience to recognize the indicators of looming failure. This can lead to poor decision-making and unrealistic expectations. Hope is Not a Method is the title of the 1996 book by Gordon Sullivan discussing how the US Army transitioned from a force in decline to one prepared to fight terrorist insurgencies around the globe. They did it through planning and execution rather than hope. Take the following two examples.
 

  • Leader A says: "We hope to achieve 2x growth over the next two quarters."

  • Leader B says: "We are planning to achieve 2x growth of the next two quarters. Here is the plan we are going to execute to make this goal achievable."

 

Which one would you bet on?

 
 

Linear Thinking

Cookies being manufactured on a production line.
 Linear thinking is a problem-solving approach that follows a step-by-step process to reach a solution. We were all taught from a young age to think in these terms. "If Sally has 2 apples and she sells 1 apple per hour, how long will it take before she is out of apples?" Linear thinking is what you use to solve that problem, however it doesn't work well in software development because software development is a complex and creative process that requires flexibility and adaptability. Perhaps you have heard the old adage that "it takes 9 months for 1 woman to make a baby. Nine women cannot make a baby in one month." Linear thinking often causes more problems than it solves when well-meaning managers throw bodies at an agile team to "help them bring in the date." That action alone will often have the opposite effect and delay your delivery as the team struggles to absorb the new people and establish a new normal. Software design and development is not an assembly line. In software development, problems are often interconnected and require a non-linear approach to define effective solutions that do not simply make the existing problem worse.
 
 
 

How to Avoid the Failure of your Digital Transformation Initiatives

 

To successfully overcome the cognitive challenges that arise during digital transformation initiatives, organizations must take a proactive approach to change management. This includes providing employees with the necessary training and resources to fully understand and embrace the new technology, processes, and way of working. It also involves creating a culture of innovation and continuous learning, where employees are encouraged to experiment with new technologies and share their experiences with others. 

However, mitigation efforts can't stop there. We recommend the following actions to help ensure initiative success.

  • Lead from the front - Executive leadership must be fully engaged to maximize the overall impact of the transformation. Without executive leadership engagement, the initiative will not succeed. That means owning the outcome. It means demonstrating that you are personally invested by regularly monitoring progress, removing roadblocks, and providing strategic oversight to ensure organizational alignment. People do not respect what you expect… People respect what you inspect.

  • Focus on business agility - Teams need to be disciplined and adhere to proven "lean-agile at scale" methodologies while driving the business towards end-to-end alignment. The methodology you choose is less important than the organization's commitment to it and willingness to see it become a part of the team's DNA. Additionally, the entire organization must be focused on creating products and services that customers want and can pivot without remorse or guilt when appropriate.

  • Empower your people - Decisions must be made as close to the problem as possible. Countless examples exist of employees being able to create amazing customer experiences due to being empowered. Zappos, Ritz-Carltonand a few other companies come to mind. Executive leadership that dictates the solution the team should create is an anti-pattern for employee empowerment. Instead, executive leadership should focus on articulating the business outcome they need to achieve and empowering their team to innovate in creative ways to achieve those outcomes.

  • Train your team - Teach your team to Beware of Cognitive Blind Spots. If everyone in your organization understands how easy it is to fall into these and other cognitive traps while trying to deliver on large initiatives, they will be more likely to address problems proactively. Waiting to educate people until the problem presents itself wastes time and emotional energy, and is a drain on organizational velocity.

 

Every large-scale initiative is fraught with people problems. However, understanding what they are and dealing with those challenges proactively will work to improve your team's ability to work together and will greatly increase your overall chances of Digital Transformation success. In our next installment, we will be talking about the evolution of the PMO and how they are migrating away from strictly focusing on governance to being a key catalyst for value delivery in the organization. If you find this content helpful, please sign up for our mailing list to get weekly nuggets in your email inbox to help you improve your team's operational velocity.