Business transformation is a difficult process, with a mounting pile of research showing the majority of plans fail to deliver their intended value. Now, a new paper from Sullivan & Stanley explores the extent of this ‘value gap’, and how businesses can avoid losing £27 million per £100 million invested in the future.
Organisations face a critical challenge in a rapidly evolving landscape: the traditional transformation approach no longer works. Leaders struggle with the patience required for eventual success, while technology promises solutions but often falls short without proper integration. This has been the case for some time. In 2017, for instance, a study found that 77% of leaders said they had not noticed a demonstrable improvement to operations after a digital transformation.
Amid the last three years of hype around AI, this narrative has played out again – but to the tune of much, much more money. Illustrating what is at stake, if companies fail to learn from past mistakes, Sullivan & Stanley has surveyed 200 UK bosses – and exposed what it calls “a widening gap between leadership confidence and delivery capability”.
Source: S&S
Even though the average transformation has delivered such muted results in the last decade, this has not dented corporate confidence at all. A 90% majority of C-suite leaders said they are confident in their strategy for change, even though only 7% consistently deliver the full value of their transformational business cases.
But simply hoping next time will be better has become an increasingly risky option. Especially with so much now riding on AI implementations to deliver growth – amid a flaccid global economy, wrought with uncertainty. Illustrating that, Sullivan & Stanley’s researchers used those figures to estimate that the average transformation is leaving 27% of promised transformation value unrealised – or £27 million for every £100 million invested.
Covering for this shortfall, leaders most often blame the technology itself for not living up to its promise, but this may be too much of a simplification, according to the researchers. By treating investing in new technology as a panacea, bosses are neglecting the human, organisational and executional factors that will cause those changes to fall flat, whatever the abilities of the technology.
Source: S&S
Breaking down the 27% loss of value, the researchers sought further insight into what held change back. A 41% chunk of leaders said process bureaucracy and governance cadence were the biggest barrier to delivery – with 42.5% of organisations are stuck in ‘AI pilot purgatory’, while just 15.5% have successfully scaled AI. But closing just half of the 27% value gap would unlock an additional £13.5 million in realised value, the study claims to that end.
To help overcome this, Sullivan & Stanley noted that the firms at the forefront of adoption orchestrate four types of intelligence simultaneously. Human Intelligence means they ensure people, culture and leadership have the tools and empowerment to enable adoption; while promoting technology Intelligence – aligning systems and data to business outcomes, not “best practice”. These firms also enable execution intelligence, matching operating models and governance to context and culture; to ultimately underline artificial intelligence, embedding AI where it influences real outcomes, not running endless pilots.
Andy Haley, CEO at Sullivan & Stanley, remarked, “While transformation investment remains strong, there are a couple conditions that have to be true for transformations to work. Leaders must understand the variables involved – the components of change that will determine whether an initiative succeeds or fails, and the part each one plays in the delivery of the outcomes.”
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