Does product theater indicate a failed digital transformation?
A couple of weeks ago, I noticed a couple of interesting posts from some of my connections on LinkedIn.
A large grocery store chain had suddenly laid off over 100 people in their communications and IT staff. While those types of layoffs are not unusual, some details in this story made me take a second look, which made the story relevant to this newsletter.
In 2017, the company created a tech center apart from its corporate headquarters to promote creativity and collaboration amongst the information technology, digital development, and brand marketing people who would work there.
The goal was to make this grocery chain seem like trendy tech companies like Facebook, Pinterest, and Twitter. It was part of an attempt to attract tech workers to this company to work on its efforts to expand its digital capabilities.
It also might be an example of product theater.
What is Product Theater?
Product theater is where an organization makes changes correlated with a move to a product-based way of working, but that doesn't cause that change.
Product theater happens when a company builds a facility for the people working on their digital efforts that match the vibe of silicon valley tech companies but doesn’t alter the approach it uses for prioritization and making decisions.
You can’t expect to get the benefits promised from transformations - be they agile, digital, or product if you don’t make the fundamental changes that such transformations require in all parts of the organization. An environment that promotes creativity and collaboration will only take you so far when your digital talent is getting whipsawed from one shiny new thing to the next.
How Product Theater can be a sign of a failed digital transformation
Organizations often unintentionally practice product theater when there isn’t solid support in the executive ranks for the change required.
I suspected that this set of layoffs may have been a sign of that when reports came out about why the company gave did the layoffs. Specifically, the company said:
In the midst of COVID-19, we had to significantly increase our projects across our business. With those projects launched, we have to make sure we remain focused on our stores and providing the best value and quality to our customers.
One of the major projects in that statement is the company’s online ordering service, a key part of its digital efforts dating back to creating the new facility in 2017.
That the company takes a project view of that service makes me wonder if they wanted to treat their digital efforts like products. They viewed the online ordering service as something they only needed to build and release and didn’t need to maintain it. It’s also worth noting that when these layoffs occurred, the company is also reducing the availability of the online shopping service.
Shortly after the layoffs, comments from the CEO made me wonder how much the company’s executive ranks support this company’s digital efforts. You have to wonder when an executive comes out and says, “Nothing was done in this office.” When referring to the areas of the company where the layoffs occurred. Although the employees who were let go were led to believe it wasn’t because of performance concerns.
Those data points, combined with an observation of other in-store offerings (do you think of going to a grocery store to buy makeup, shoes, or clothes?), make me wonder if there is a focused, actionable vision and strategy guiding decisions at the company.
Lack of executive support and lack of a clear vision and strategy are two factors that often point to a failure in digital transformations.
What we can learn from this story
I’ll admit - there’s a lot of conjecture on my part in the above discussion. I wanted to share this story as an example of what might happen when a digital transformation doesn’t meet expectations - whether or not those expectations were realistic.
It also seemed like an excellent opportunity to talk about how crucial executive support and changes in how an organization works are to a successful digital transformation.
To further those lessons learned, here are some looks at the factors that play into digital transformations that don’t go as well as planned.
More on why digital transformations fail
The Risk of Leaving People Out of Your Digital Transformation
“We bought Jira. Why aren’t we going faster?”
“I got on the Cloud. Why don’t we see cost savings?”
“I bought Aha! Why are we not meeting product release deadlines?”
Have you ever tried to fit a square peg into a round hole? The folks from CPrime explain if you are trying to transform your business with tooling-driven processes, deficient of a people change strategy, that is exactly what you are doing.
The Least Talked About Reason Why Digital and Agile Transformations Fail
If we’re being honest with ourselves, transformation success is an anomaly. Up to 84% of companies fail at digital transformation, according to Forbes. According to an Everest Group study, 73% of digital transformation efforts provided no value.
Jimmie Butler wonders if your transformation is struggling. Could it be that you’re trying to buy and implement transformation rather than cultivate it?
Transformations cannot be bought and installed. Transformations take time. They need to be cultivated. Transformation requires changes in ways many aren’t willing to endure.
8 Reasons That Lead To Failed Digital Transformations
According to a Forbes report, merely 7% of digital transformations achieve successful implementation, and yet over 40% of all technology expenses today are targeted towards digital transformations.
This means businesses find digital transformations exceptionally desirable, even if it is purely for cosmetic reasons. But as mentioned earlier, the dismal success rate of digital transformations might cause enterprises to miss out on the opportunities — digital transformations bring forth.
Based on his work helping companies achieve their digital transformation goals, Pratik Mistry explores eight significant reasons that lead to failed digital transformation.
13 Industry Experts Share Reasons Companies Fail At Digital Transformation
Seeking to boost productivity, efficiency and profit, many companies are seeking to implement digital transformation projects. Some projects involve sweeping changes that include automation of previously manual tasks, while others seek to replace older technology with newer, updated systems.
While the goal of digital transformation may be to simplify and streamline a company’s workflow, the process itself can be far from easy. A 2020 study by Boston Consulting Group found that a staggering 70% of digital transformation projects fall short of their goals — even when leadership is aligned.
If your business is struggling with digital transformation, you are certainly not alone. 13 members of Forbes Technology Council share common reasons companies fail at digital transformation and advice for improving outcomes.
Why Digital Transformation Fails
Despite an estimated $3.3 trillion investment in digital transformation efforts by 2025, many digital transformation initiatives will fail — up to 84% according to Forbes. While measuring failure varies from organization to organization, according to an Everest Group study, 73% of companies failed at providing any business value from their digital transformation process. That is trillions wasted with no return. So why do digital transformation initiatives fail?
Many reasons negatively affect digital transformation, yet 20 years of experience in the space have shown Ali Alkhafaji the top five factors are rooted in cost, understanding the business problem, company culture, establishing the proper success measures and bad leadership decisions.
Thanks for reading
Thanks again for subscribing to InsideProduct.
If you have any comments or questions about the newsletter, or there’s anything you’d like me to cover, just reply to this email.
Talk to you next week,
Kent J. McDonald Founder | KBP.Media