CHAPTER

27

SCALING DIGITAL INITIATIVES

Organizations focus significant attention on building and testing promising digital innovations and technologies. Often, this leads to successful pilots or proofs-of-concept. Yet these organizations struggle when it comes to generating real business value from digital initiatives at scale. This “startup to scale-up” challenge is one of the toughest elements of any digital transformation. The solution starts at the beginning: initiatives that scale successfully tend to be designed and developed with scaling in mind. However, planning for scale, by itself, is not enough to overcome the odds stacked against most digital initiatives. They need to be carefully and purposefully shepherded through different stages of growth using the approaches and strategies outlined below. Because business value is typically created only after a digital initiative is rolled out at scale, it’s important to get it right.

WHY IT MATTERS

Digital projects often start as promising experiments. They are well funded, strongly supported by management, and staffed with smart and dedicated people. Under these conditions, they show great potential. However, most digital projects struggle, and ultimately fail, as they are expanded and replicated.¹ Those that survive often do so as pale shadows of their former selves, after being subjected to a multitude of cuts and compromises.

Scaling a digital initiative is about moving beyond the pilot stage to operationalize solutions that are sustainable and growth-creating.² A 2018 survey from analyst firm Gartner found that 83 percent of companies were in the planning, design, or tinkering stages of digital transformation, while only 17 percent had scaled their digital initiatives.³ Another study, by Accenture, found that the largest contributor to digital transformation failure was an inability to effectively scale promising digital initiatives.⁴

BEST PRACTICES AND KEY INSIGHTS

Scaling digital initiatives is a task fraught with difficulty. And there is no one-size-fits-all approach. A number of factors need to be considered.

Align Scale with Ambition

The level of attention and activity should be in direct proportion to the ambition of the project. Digital projects that are small, discrete, or of limited duration often do not need to be scaled. For these types of initiatives—e.g., the development of a custom application for a small market—the focus can be tilted toward usability, functionality, and compliance.

More ambitious projects, however, must focus on scaling challenges from the get-go. Alignment with the prevailing IT landscape is often a necessary consideration, but it does not end there. Many digital projects fail to scale, not because of IT incompatibility, but because of organizational or cultural resistance.

Planning to Scale

There is a truism around scaling that states, “The longer a project goes without scaling, the harder it is to scale.” Thus, scalability should be considered from the very beginning of a digital project. The following questions should form part of the planning process:

•   How difficult will it be to integrate this initiative into existing processes and structures?

•   What are the likely sources of resistance to this initiative?

•   Will this initiative be compliant with existing rules and norms?

•   Are there natural limits to the growth of this initiative?

Diego de Coen, former CDO of JTI, stressed the importance of regular scaling reviews for digital initiatives. He explained that as soon as it is clear that “there is value coming out of an idea, from that moment on we already start the IT processes. So we start already in parallel, with a different team looking at cybersecurity, another team looking if it is legally possible to roll that specific solution out in certain markets, and so on.”⁵

Relying on scaling reviews of this kind can help leaders anticipate and avoid any challenges or bottlenecks along the critical path. Digital projects that are more radical need a “reality check” against the expected future payoffs.⁶

Another way that organizations can plan for scale is to proactively anticipate the skill gaps that exist when moving from a pilot to full rollout. Very often, global companies will create country and regional pilots staffed with local development teams. When it comes to scaling, all the competencies (and budgets) are local. Hence, it becomes very difficult to shift the people with the right skills to extend the pilot further. The solution is to (1) create champions from the pilots, who can steward the project through a wider rollout, and (2) include people from other parts of the business in the pilot, so they can use their experience and newly acquired knowledge to help mitigate this problem.

Don’t Fall into the Cut-and-Paste Trap

A common scaling mistake is to think that if a digital initiative works in one context, it will work well in other contexts. This assumption is almost universally false. Even very successful digital pilots need to be adapted to work at scale. Everything from apps to e-commerce sites to agile ways of working will invariably need to be adjusted to meet the needs of different parts of a business.

Rather than “cut and paste,” we suggest “cut, adapt, paste, adjust.” The first stage, “cut,” consists of isolating a successful digital initiative. This initiative may be developed from scratch in a kind of greenfield environment, or it may be identified as working well in one part of an organization. The second stage, “adapt,” consists of modifying the initiative to improve its portability across different parts of the organization. Activities at this stage might consist of feature standardization, IT compatibility checks, branding consistency, and legal and regulatory compliance. Once this stage is complete, the initiative is ready to be “pasted” (stage three).

However, although the initiative may be standardized and compliant, it will almost certainly not work effectively in all contexts. This brings us to the final stage, “adjust.” Here, small changes are made to optimize the initiative to local conditions. These adjustments may include the addition of relevant local features, tweaks to the user experience, insertion of culture and language adjustments, and so on.

An example of “cut, adapt, paste, adjust” can be found in transactional websites. It makes little sense for large global retailers to develop unique transactional websites across countries or product lines. Thus, they tend to develop a standardized approach. However, there are major differences that need to be considered, including local languages, compliance rules, cultural norms, local application compatibility, etc. Therefore, global standards may be developed for transaction processing, product information and image libraries, customer databases, and so on. From there, adjustments are made regarding the look and feel, branding, language, and so on.

Make the Shift from Push to Pull

A main source of failure to scale is lack of buy-in from key stakeholders, such as executives, internal users, or customers. Digital initiatives may receive executive permission and funding to scale (they have push), but they typically fail unless they are sought after by relevant stakeholders (they do not have pull). Transitioning a digital initiative from the “push” to the “pull” stage is critical to successful scaling.

Often a push is necessary at the outset to encourage users to try the new initiative, but unless that push is translated into a pull, it will almost certainly fail. “If you scale an initiative by pushing it out actively, you will always need to continuously push it, and it will never grow organically by itself,” explained Chetan Tolia of Swiss bank UBS.⁸

To create a pull effect, Sven Meier of German energy giant EnBW describes how he worked closely with a small number of business units, which focused on generating first results and demonstrating the value of the initiative. “Real results were generated. From that moment on, word spread quickly, and we had a hard time responding to the pull from the rest of the firm.”⁹

Some companies have successfully created a “pull” effect by staffing the digital initiative from across the business units most likely to be impacted. In that way, specific business units’ requirements are built in early, and the transfer of competence is made easier by redeploying the development team to its original business units to facilitate scaling.

Research has shown that there is no single way to generate pull: sometimes it’s driven by rational, outcome-based factors. At other times, emotional factors are the key drivers.¹⁰ In some cases, units are specifically built to create pull and facilitate the scaling of digital initiatives.

Randstad North America’s CDO Alan Stukalsky noted that his company built a digital factory that is “responsible for taking great ideas, great concepts and products that have been built in a single location, like the U.S. or Mexico, or Japan—a product or technology or a process improvement that can ‘travel’—and then packaging it up and putting it in such a way that other countries can easily implement it so they don’t have to build it from scratch.”¹¹

For Large Initiatives, Find the Tipping Point

During large initiatives, there is often a tipping point at which it makes sense to transition a phased scaling approach to a big-bang implementation. This can occur in cases where there are strong network effects.

For example, during the early stages of the COVID-19 pandemic, many organizations were suddenly faced with the task of organizing remote working arrangements at scale. For many of these organizations, work-from-home arrangements had been dealt with on an ad hoc basis through a variety of different applications. The reality of moving from a small percentage of the workforce working from home to a majority required consolidation around a single technology.

At IMD Business School, we were using a variety of collaboration tools, including Cisco Webex, Adobe Connect, Skype, Facetime, and WhatsApp. After the pandemic arrived and more than 90 percent of staff started to work from home, and program delivery moved to virtual platforms, an institutional decision was made to adopt a single application: Zoom. After the decision was made, all other solutions were phased out.

Another tipping point can occur if attempts to scale meet cultural roadblocks. Dutch bank Rabobank built a Digital Hub in its head office for developing innovative new digital solutions for customer journeys, such as loan applications and the management of lost or stolen cards. The process Rabobank used to develop these solutions was based on agile ways of working, a methodology that was new to the bank. Although the Digital Hub was very successful, the bank encountered difficulties when it tried to scale the hub to other parts of the bank. There was a clash between the new agile approach and the traditional processes, culture, and incentives within the rest of the bank. It became difficult to maintain two distinct systems at the same time. For Rabobank, scaling the agile approach to digital innovation had hit a cultural wall.

The bank’s leadership considered the benefits of the agile approach, along with the cultural challenges of scaling, and decided to make a wholesale, big-bang shift to agile methods across the entire retail bank. The agile methodology that was developed within its Digital Hub was modified for a widespread rollout, and within six months, it became the dominant approach for all product and service development and improvement activities.

Leverage a Common Challenge or Opportunity

As a rule, people are more willing to cooperate if they have something to gain. The same is true for scaling—e.g., responding to a shared problem or challenge, such as developing a common approach to attacking a key competitor. In other cases, cooperation can be fostered by finding new ways to capture opportunities, such as using the customer acquisition tools built into a CRM solution.

We have found that it can be extremely helpful to build scaling around an enterprisewide strategy or platform initiative. If different business units know that they need to align to an organizational strategy or platform, they tend to be more open to exploring options for scaling the relevant digital solutions.

Swiss industrial giant ABB has been operating for more than 100 years, and over that time, its four major business units developed a great deal of autonomy. This autonomy made scaling digital initiatives across business units extremely challenging. A key breakthrough came with the establishment of a companywide digital platform called “ABB Ability.” This platform consisted of a suite of compatible protocols and technologies that was designed to work across the whole portfolio of connected products and services.

ABB’s former CDO Guido Jouret explained how ABB Ability works: “This is essentially software that allows our business units to build connected robots more quickly or connected motors more quickly or offer new digital services to our customers. My team basically scouts the technology landscape, looking for promising companies and their technology. We then procure them and make them available to our business units.”¹²

After ABB’s business units were required to use the Ability platform, Jouret found it much easier to build and scale compatible digital initiatives.

• • •

The startup to scale-up challenge is one of the largest contributors to the high failure rate of digital transformation projects. Scaling challenges should be considered from the very beginning of a digital project. Technical obstacles to scaling are often significant, particularly with respect to IT compatibility and compliance, but they pale in comparison to organizational and cultural barriers.

Hacker’s Toolbox

Plan to scale from the very beginning. Ask yourself if the systems that underpin the digital transformation, such as applications, programming resources, and systems hardware, can accommodate the growth required to scale. If the systems can’t be scaled, redesign them or drop them. It may be helpful to involve as many potential blockers as possible early in an initiative’s development, including IT, cybersecurity, legal, HR, and compliance. These people will help you to anticipate the potential scaling challenges in advance.

Do whatever you can to accelerate the transition of a digital initiative from push to pull. People will often resist a new digital initiative. An exception to this general rule was the move to working from home in response to the COVID-19 pandemic. People didn’t resist very much for a simple reason—they had no choice. The push was external. If you can orchestrate a similar pressure for other digital initiatives, that can help. If not, then you need to create your own reasons to adopt (your own push), which often comes as a mandate from senior management. The pull typically occurs when other parts of the organization see the benefits of the initiative. Therefore, the more you can do to measure and then communicate the success of a digital project, the more likely it becomes that the push converts to a pull.

Scaling doesn’t mean cut-and-paste. For each digital initiative, make a clear distinction between elements that are core and those that are modifiable. Core elements must be accepted as is—there is no negotiation.¹³ Elements that fit into the core category may include cybersecurity and privacy policies, compatibility with existing data formats, connectivity with widely used systems and processes including cloud solutions, corporate branding, and so forth. Then there are elements that can, and often should, be adapted to local conditions. These elements may include local language support, cultural adaptations, general look and feel, and linkages to locally used applications, via APIs or other connective tools. Finding the right balance between core and modifiable elements for each digital initiative is critical.

RELATED CHAPTERS

Building Organizational Momentum and Engagement (Chapter 4)

Choosing the Right Digital Governance Model (Chapter 8)

Building and Managing Technology Infrastructure (Chapter 11)

Setting Up a Pipeline of Digital Initiatives (Chapter 26)

How to Leverage Digital for Organizational Resilience (Chapter 30)