I recently read an interesting Harvard Business Review article titled “Why So Many High-Profile Digital Transformations Fail” which examines the digital transformations attempted by GE, Nike, Sears, Lego, Walmart, Staples, and Proctor & Gamble. These are some big brands that have run into issues when attempting to go full-force into a digital space.
This part really resonated with me:
“[D]igital is not just a thing that you can you can buy and plug into the organization. It is multi-faceted and diffuse, and doesn’t just involve technology. Digital transformation is an ongoing process of changing the way you do business. It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems. It requires mixing people, machines, and business processes, with all of the messiness that entails. It also requires continuous monitoring and intervention, from the top, to ensure that both digital leaders and non-digital leaders are making good decisions about their transformation efforts.”
If you replaced the word “digital” with “risk management,” it sounds like an organization that is thinking about implementing enterprise risk management.
After all, ERM isn’t just about creating a new program and implementing it. It is infusing ERM into the way the organization conducts business day-to-day. And this includes making decisions on how to prioritize activities and use resources in the best manner.
The reason so many digital transformations fail: the company or the market didn’t know what the transformation would look like at the end of the day. Essentially, without knowing the end result would look like, the journey can be very bumpy and fraught with peril.
Again, sound familiar? Some organizations (or boards for that matter!) really like this idea of ERM, and other organizations are doing it. So they jump on board without understanding what the end result will mean, and what the journey will entail to get to the end result.
So if your management or board is thinking about ERM, assist them in making an informed decision by providing them with a realistic view into:
- what the end result will look like 1 year, 2 years, 3 years, 5 years down the road and how ERM will evolve over time
- the commitment and effort it will take to start and continue ERM for the long-haul
- the benefits that ERM provides and why it is worth it
- current ways of doing things that may (or will) have to change
- current aspects of organizational culture that need to be addressed first for ERM to be successful.
Once they know all of this and still decide to have ERM, then the chances of ERM success are that much higher. Congratulations!
Has your organization run into some major bumps in the road during your ERM journey? How did you overcome them?
Please post your comments below or join the conversation on LinkedIn.
If you need some guidance for taking the first steps in your ERM journey, you can check out my Guide to Developing an ERM Program. And if you are experiencing some major bumps that have you throwing your hands up in frustration, give me a call or send me an email to figure out how you can keep moving successfully on your ERM journey.