Overcoming noisy KPIs, and other obstacles to digital transformation - practitioners speak out

Profile picture for user jreed By Jon Reed December 15, 2017
Summary:
Digital transformation remains an obstacle course. At Connected Enterprise '17, the BT-150 executive panel shared how they faced these obstacles, moving beyond noisy KPIs and stifling performance reviews.

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Connected Enterprise BT-150 panel in action

Hearing from practitioners has a way of cutting through the tech fog. This is especially true for "digital transformation," one of the most elusive/nebulous - yet important - concepts for the enterprise to grapple with.

At Constellation Research's Connected Enterprise 2017, three practitioners familiar with the ups and downs of digital change spoke out. The panelists also had strong words on the problems of KPI overdose, the chilling effect of performance reviews - and what to push for instead.

The biggest obstacles to digital transformation

The panel, "Executive Exchange: Lessons Learned from the BT-150 Leaders," was moderated by Constellation's Dion Hinchcliffe. After some intros, Hinchcliffe took things up a notch with the million dollar question:

What was the biggest obstacle you encountered on your journey and how did you overcome it?

Ben Haines, SVP and CIO of Oath, jumped in:

The real lesson for me is most people don't want to change, and it's really tough at this time especially.

He advises getting a smaller chunk of a company on board first, but even that isn't easy

If you've got 10 percent of that it's a great start, but even that's tough. You've got to do a lot of work in getting a critical mass to help push and get things moving - and then you've got to measure what you're changing.

Haines learned you can't allow a "digital change group" to be isolated from the mainstream of the organization. Change must be a broader mandate than one group charged with disrupting the rest of the organization:

The second biggest thing I learned was: you can't make transformation one group's responsibility... You've got to get transformation in every part of your organization to get longevity and decent steps going.

Ganesh Bell, CEO, Digital Solutions and Corporate Officer at GE shared his three keys to overcoming obstacles to digital change:

  1. Belief system (you have to believe in the plan for change, and that belief must not waver).
  2. Metrics
  3. Empathy

In Bell's experience, unwavering belief is always job one:

Any day that I feel that they don't have the belief... then get your religion back. That's the only job #1 you've got to have. Because they've got to believe that there's critical components of algorithms or applications of data that we have to own in the business to be successful in the market. That's always number 1 for me.

Paul Daugherty, Chief Technology and Innovation Officer at Accenture, agreed that a company-wide push is the key. Yes, the human side is the hardest part, especially when it comes to getting people to move from the core business into new areas. Sometimes those new areas aren't as immediately lucrative, which salespeople won't be thrilled about:

You can't kill a core too fast, and you've got to invest in something new.

If you don't get your salespeople to buy in, the change won't stick:

It comes down to somebody that's on the front line selling to a customer - what do they do? Do they go for a small, new, digital project, or do they go for a big traditional on-premise hodgepodge, because they know how to sell it? It might be more important to go for that small new project, even though their metrics would tell them to go sell the bigger revenue to their clients.

Metrics matter, but beware of KPI overload

Daugherty told us that Accenture built in new metrics:

We established clear metrics around what you might call the rotation of the new. We found a way to measure every person, every client team, every geography, every part of the business based on how fast they were moving to the new - in addition to all the traditional metrics we have around the new business.

Those new metrics showed which teams were pushing into the new, and which weren't:

If you're not ahead of the market in the world of digital, you're not preparing business for the future, and you're not doing your job. That ability to measure it at that current layer down to a person, a client team, a project team, a country level, whatever it might be, [made a difference].

Bell said metrics have been instrumental at GE:

GE is a ridiculously metrics driven company, so coming up with a new set of metrics was very important... It's about how fast are you acquiring customers? How fast are you growing? What's the engaging, what's the adoption, what's the usage? And you can actually measure customer value in a very different way than just your values. Setting up those metrics was important.

But there is a metric danger too. If you measure the wrong things, or if you get bogged down in too many dashboards, you're going to wind up with inaction and confusion. Milind Kamkolkar, CDO at Sanofi, had some very strong words on KPI noise:

The one thing that pissed me off to no end was just the KPI puke I was seeing all over the place. The dashboards were rubbish; there was no narrative... And you're looking at these things going, "What am I supposed to get out of this? What is the story behind this?"

So Kamkolkar built new, simplified KPIs:

All we need is maybe one or two key KPIs you actually give a sh!t about. The rest is just noise.

Out with performance reviews, in with continuous feedback

Measuring the right things is key to change, but there' s more. The panel emphasized that continuous feedback was crucial. Kamkolkar said cultivating an open environment is the difference between a manager, and a true leader. If people can't air their issues, the chances of change are minimal. Give them a voice:

Give even the most junior person in your team the opportunity to speak their voice, and I think that's where you can start facilitating some change.

Interestingly, two panelists singled out performance reviews as an impediment. Abolishing them pointed the way forward, and created an environment where feedback to the company was provided more openly. Bell spoke about GE's decision to can annual performance reviews in 2015, instead replacing them with a "simple app," that allows people up and down the ranks to give two types of feedback, "continue doing this behavior," or "consider changing this."

The feedback we got was amazing. You get it every day, in every meeting... We call it intellectual honesty inside my team.

Bell says that a culture of candor pays off - letting people call B.S. in open meetings is even better. That resonated with Daugherty:

We did the same thing that Ganesh was talking about. [Accenture] eliminated performance ratings and performance management... Putting people into fixed categories based on a discussion once a year is at least a century out of date. If you want people to develop quickly, if you want leaders to develop, if you want to have radical candor and capabilities like that, they have to be on the front lines managing their people every day. Performance management gives an excuse to administer compensation once a year, rather than a way to develop employees.

Accenture put in a new approach:

We created a program called Truly Human, which was focused on developing the human capability you have in the organization. We got rid of the performance management, and put in place a whole new set of learning platforms to provide a lot of learning resources to people, so they can continue to advance with real- time coaching. That eliminated that whole static performance management process. I don't think we would have made it through the transformation without this.

My take

It's good to see the digital transformation lessons piling up. I liked how the panel spent little time on technology, except for the data/dashboarding aspects. The hard part remains the culture. We know that many digital projects involve new interactions with either customers, suppliers, or employees.

Breaking down company walls is powerful, but it exposes flaws. All it takes is one weak link to take the entire "experience" of dealing with a company down. Change is never easy, but as this panel showed, radically questioning long-held processes like performance reviews can shake things up.

Of course, that also means better hiring and talent infusions. I was glad the panel brought up workplace diversity. You're not going to stir the digital pot without such efforts. Bell added:

For us at GE, one of the things I'm really proud of is we established a goal of 20,000 women coming through our science/technology/engineering/math (STEM) program, and growing into the company. That's been doubling innovation fast. So we've got to do that.

During the Q/A, the audience asked tough questions. One asked how you deal with the persistent "permafrost layer" of middle management that tends to block change. Then there is the problem of "lock in" with legacy tools and practices, like budgeting and, for some, performance management. I liked the hard questions - there's plenty of work still ahead.