Digitalisation as a challenge for project management
Traditional project management is trained to approach and implement change in a methodical and systematic way. At the start of a project, agreement is reached on when a goal is to be achieved and what it should look like. Actions are then taken to achieve the goal.
However, digitalisation has fundamentally changed the framework for this activity. Increasing connectivity, rapid changes in technical capabilities, and ever-improving technical solutions are upsetting the logical progression of a traditional project.
Of the many pitfalls on the road to effective digitalisation, a proper understanding of the technological possibilities is crucial to implementation and project management control. In this article, we outline the key rules for successful digitalisation project management and how they can ensure reliable results even in uncertain times.
However, digitalisation has fundamentally changed the framework for this activity. Increasing connectivity, rapid changes in technical capabilities, and ever-improving technical solutions are upsetting the logical progression of a traditional project.
Of the many pitfalls on the road to effective digitalisation, a proper understanding of the technological possibilities is crucial to implementation and project management control. In this article, we outline the key rules for successful digitalisation project management and how they can ensure reliable results even in uncertain times.
Content
Exponential growth
To manage a digitalisation project properly, we first need to understand the speed at which digital trends are developing. Especially in complex and long-term projects or investments, this development can make the difference between success and failure.
In this area, a radical paradigm shift often needs to take place in order to realise how rapidly the rules of the game can change. In the field of digital technology, we are not dealing with linear growth curves, but with exponential growth. The difficulty for a project manager is that we have been trained to think linearly since childhood and exponential growth is often beyond our imagination. To illustrate this development in figures and better understand its impact, let's take a look at the development of digital photography:
Example: development of digital photography
In 1995, 710 million rolls of film were developed in thousands of cost-intensive processing centres worldwide.
In 2005, almost 200 billion digital photos were processed, stored and collected. This equates to around 8 billion rolls of film - an exponential development in 10 years that was considered completely impossible just a short time before.
In 2014, users of platforms such as Facebook, Snapchat and Instagram uploaded around one billion images per dayto these platforms alone, from their smartphones and at no cost. These developments no longer follow a predictable pattern and, in retrospect, are happening much faster than anyone would have expected. Another example also illustrates this development:
Example: Human Genome Project
In 1990, the Human Genome Project was founded to fully sequence a human gene. The cost of the project was estimated at 6 billion dollars and a period of 15 years was set for the project. In 1997, after about half of the time available, the project was able to sequence just 1% of the human gene. At this point, many investors and stakeholders began to doubt the usefulness of the research and declared the project a failure.
How would you have assessed the project's chances of success at this point? If you shared the opinion of almost all experts, analysts and investors at the time, you would have considered the project a guaranteed failure at this point. This is only logical, because after seven years of work and research for just 1%, the project would have taken 700 years to complete the sequencing of a human gene, assuming linear progress. So, it had to be an obvious failure - didn't it? Craig Venter, one of the lead researchers on the project, was given well-intentioned advice such as:
"Give the rest of the money back to the investors."
"Save your career."
"Don't make it worse."
However, his view of this apparent disaster was different: With 1%, you'd already be halfway there. What only Craig Venter and a few other scientists on the project seemed to have understood was that the sequenced data would double every year due to the increasingly powerful computing capacity. If 1 % doubles just seven times, you have reached 100 %.
The exponential calculation worked out - the project reached its goal in 2001, four years earlier and with less budget than planned. The supposed experts from the business community and the investors missed their forecast by a whopping 696 years (Ismail, 2014).
There have been plenty of examples like this in recent decades. Time and again, seemingly impossible projects have been realised, but projects that were supposed to run by themselves have also been brought to a halt. This is precisely what presents today's project managers with a huge challenge: how can you realise something that is inherently impossible to plan?
In this area, a radical paradigm shift often needs to take place in order to realise how rapidly the rules of the game can change. In the field of digital technology, we are not dealing with linear growth curves, but with exponential growth. The difficulty for a project manager is that we have been trained to think linearly since childhood and exponential growth is often beyond our imagination. To illustrate this development in figures and better understand its impact, let's take a look at the development of digital photography:
Example: development of digital photography
In 1995, 710 million rolls of film were developed in thousands of cost-intensive processing centres worldwide.
In 2005, almost 200 billion digital photos were processed, stored and collected. This equates to around 8 billion rolls of film - an exponential development in 10 years that was considered completely impossible just a short time before.
In 2014, users of platforms such as Facebook, Snapchat and Instagram uploaded around one billion images per dayto these platforms alone, from their smartphones and at no cost. These developments no longer follow a predictable pattern and, in retrospect, are happening much faster than anyone would have expected. Another example also illustrates this development:
Example: Human Genome Project
In 1990, the Human Genome Project was founded to fully sequence a human gene. The cost of the project was estimated at 6 billion dollars and a period of 15 years was set for the project. In 1997, after about half of the time available, the project was able to sequence just 1% of the human gene. At this point, many investors and stakeholders began to doubt the usefulness of the research and declared the project a failure.
How would you have assessed the project's chances of success at this point? If you shared the opinion of almost all experts, analysts and investors at the time, you would have considered the project a guaranteed failure at this point. This is only logical, because after seven years of work and research for just 1%, the project would have taken 700 years to complete the sequencing of a human gene, assuming linear progress. So, it had to be an obvious failure - didn't it? Craig Venter, one of the lead researchers on the project, was given well-intentioned advice such as:
"Give the rest of the money back to the investors."
"Save your career."
"Don't make it worse."
However, his view of this apparent disaster was different: With 1%, you'd already be halfway there. What only Craig Venter and a few other scientists on the project seemed to have understood was that the sequenced data would double every year due to the increasingly powerful computing capacity. If 1 % doubles just seven times, you have reached 100 %.
The exponential calculation worked out - the project reached its goal in 2001, four years earlier and with less budget than planned. The supposed experts from the business community and the investors missed their forecast by a whopping 696 years (Ismail, 2014).
There have been plenty of examples like this in recent decades. Time and again, seemingly impossible projects have been realised, but projects that were supposed to run by themselves have also been brought to a halt. This is precisely what presents today's project managers with a huge challenge: how can you realise something that is inherently impossible to plan?
Increased complexity & permanent change
Exponential growth is not the only change that project managers have to adapt to. Permanent networking through digitalisation, the linking of individual work steps and the interaction of individual processes in the digital world are creating unprecedented complexity for companies. This dynamic also makes it necessary to scrutinise existing processes at many points during a project. Even a process that works reliably and flawlessly today may be technically obsolete and useless in a few years' time. Therefore, analysing the technical possibilities surrounding the project should be a prerequisite. But even with rigorous planning, the end result remains uncertain.
In this transformation, it is quite possible that A is no longer followed by B, but that you have suddenly ended up at W and have no idea how you got there in the first place. In addition, many technical possibilities and their developments in the coming years are neither predictable nor foreseeable. However, a digitalisation project also needs to be implemented when it is not entirely clear at the start of the project where a new technology will develop. This is because by the time we know the end result of technological development, the profitable opportunities for a company are already over in most cases.
In this transformation, it is quite possible that A is no longer followed by B, but that you have suddenly ended up at W and have no idea how you got there in the first place. In addition, many technical possibilities and their developments in the coming years are neither predictable nor foreseeable. However, a digitalisation project also needs to be implemented when it is not entirely clear at the start of the project where a new technology will develop. This is because by the time we know the end result of technological development, the profitable opportunities for a company are already over in most cases.
Project management solutions for digitalisation
To ensure that satisfactory results are still achieved despite all these changes, project management must also adapt to the new circumstances. These four steps will help you to implement projects efficiently, even in a dynamic and short-lived environment:
1. Teams of experts instead of a strict hierarchy
A key step in this direction is the project structure and the way in which decisions are made in the project team. Due to the enormous complexity and constant changes, it can be assumed that it is impossible for a manager alone to foresee all developments. Therefore, it is particularly important in digitalisation projects that decisions are not made by the project manager alone, but that a team of experts in the respective subject areas makes the decisions together.
When implementing projects, you should be prepared for the fact that they do not always have to follow strict hierarchical rules. Many employees have practical day-to-day experience that remains hidden from the management. Therefore, create an environment in which ideas and suggestions for improvement can be contributed from allpositions. Utilise all the resources you have available and involve them in the process.
It is important to have a lean organisation of decision-makers in which effective communication and delegation take place. Everyone involved in the transformation must really understand their role and its importance and take it seriously (Biesel, 2018). Due to the high level of complexity involved in the transformation to a digital sales organisation, there are some special features to consider during implementation compared to traditional project management. As the end result will not always be known from the outset, the goal should not be defined precisely, but rather serve as an approximate target area that should be achieved as far as possible.
2. Flexibility in goal setting
In the past, it was possible to work with a rigid definition of objectives because the environment was relatively stable and controllable from the outset. However, in a time of constant change and dynamically developing technology, this is no longer the case for successful project management.
If the outcome of a project is not yet completely clear, clear objectives cannot be formulated at this stage. There is a risk of pursuing a completely wrong objective if strict rules are laid down that must be followed or precise criteria that must be met. You would focus too much on the goal and pay too little attention to the current situation, as this could have already changed again, and you could be working in the wrong direction.
It is therefore essential to keep your goals flexible and only look for "target regions" or certain target directions. An example of how this can work comes from space travel:
When a rocket flies from the earth to the moon, the destination you are heading for is known, but the path to get there is by no means. The earth rotates at the equator at 1600 km/h, the moon moves through space at around 1000 km/s, the earth itself moves through space again at around 220 km/s and the rocket moves at over 7.8 km/s.
To send a rocket from the earth to the moon and have it arrive there is a highly complex endeavour. At such distances and speeds, it is impossible to draw up a clear line to follow from the outset. The distances are too great, and the individual targets move too quickly. Even a deviation of milliseconds can send you flying to a completely different place than planned. So how do you go about it? How does a rocket finally reach the moon under these conditions?
The path of a rocket to the moon is impossible to predict from the outset and is instead constantly redefined along the way.
This is precisely why mid-course corrections have been built into the rocket. The rocket constantly measures its own position and that of the target is determined. This correction is carried out regularly at certain intervals. It is known that with such fast-moving objects, the rocket will inevitably deviate from its course. For this reason, constant corrections are made en route to ensure that the rocket remains on course for the long-term goal, but that its course and speed are adjusted to the current conditions.
A similar approach is required for digitalisation project management. During the course of the project, circumstances in the market may have already turned completely upside down - we remember the Human Genome Project. In such cases, a correction of the objective and implementation is necessary as quickly as possible, even if it happens during the ongoing work phases. The technological changes may have already rendered the current approach useless, which would doom a project to failure - even before it is finalised. Therefore, set the desired direction for a digitalisation project, but be flexible enough to incorporate your current results and data from the practical implementation into the further course.
3. Include data in the decisions
However, digital technology does not only offer disadvantages for project management. On the contrary. Project teams have access to a huge wealth of data from various digital platforms and systems. This ranges from user data on the company's website to complex analyses from CRM, ERP or CPQ systems. Simple user behaviour often conceals meaningful data that digital tools can now make visible to us. In most cases, these contain interesting details that can provide us with information about actual customer behaviour, their opinions or even the working methods of employees. If this data is analysed over a longer period of time, it is almost always possible to derive calculated decisions that would otherwise not have been visible.
This is why flexibility is so important in order to steer the project in the necessary direction and redefine the goal if necessary - depending on how the data develops along the way. It is not uncommon to gain completely new insights into the behaviour of customers or employees. With tangible data as a basis for decision-making, you should no longer let the egos of the people involved determine the decision-making process, but instead focus on the demonstrably best solution.
4. Optimise communication
It is not uncommon for digitalisation projects to affect more than one department. Suddenly, production, assembly, marketing, technicians and sales have to pull together to actually optimise the existing process. You can only count on their support if the employees affected within these departments are involved accordingly and the importance of the project is clearly communicated.
Therefore, do your best to communicate the benefits of a digitalisation project and the exact changes it will bring outside the project team. It is not uncommon for a project to fail due to internal resistance from employees in the affected departments. Only in the rarest of cases, for example, should a new robot or automation system replace workers, but rather improve processes. However, if this is not clearly communicated, misunderstandings can quickly arise. The result can be fierce resistance or, in the worst case, acts of sabotage by the workforce. Examples such as the case of FoxMeyer Health show that this can even pose a threat to the existence of a company.
It is therefore important to create effective communication structures for all stakeholders and affected customers or employees of a digital project.
1. Teams of experts instead of a strict hierarchy
A key step in this direction is the project structure and the way in which decisions are made in the project team. Due to the enormous complexity and constant changes, it can be assumed that it is impossible for a manager alone to foresee all developments. Therefore, it is particularly important in digitalisation projects that decisions are not made by the project manager alone, but that a team of experts in the respective subject areas makes the decisions together.
When implementing projects, you should be prepared for the fact that they do not always have to follow strict hierarchical rules. Many employees have practical day-to-day experience that remains hidden from the management. Therefore, create an environment in which ideas and suggestions for improvement can be contributed from allpositions. Utilise all the resources you have available and involve them in the process.
It is important to have a lean organisation of decision-makers in which effective communication and delegation take place. Everyone involved in the transformation must really understand their role and its importance and take it seriously (Biesel, 2018). Due to the high level of complexity involved in the transformation to a digital sales organisation, there are some special features to consider during implementation compared to traditional project management. As the end result will not always be known from the outset, the goal should not be defined precisely, but rather serve as an approximate target area that should be achieved as far as possible.
2. Flexibility in goal setting
In the past, it was possible to work with a rigid definition of objectives because the environment was relatively stable and controllable from the outset. However, in a time of constant change and dynamically developing technology, this is no longer the case for successful project management.
If the outcome of a project is not yet completely clear, clear objectives cannot be formulated at this stage. There is a risk of pursuing a completely wrong objective if strict rules are laid down that must be followed or precise criteria that must be met. You would focus too much on the goal and pay too little attention to the current situation, as this could have already changed again, and you could be working in the wrong direction.
It is therefore essential to keep your goals flexible and only look for "target regions" or certain target directions. An example of how this can work comes from space travel:
When a rocket flies from the earth to the moon, the destination you are heading for is known, but the path to get there is by no means. The earth rotates at the equator at 1600 km/h, the moon moves through space at around 1000 km/s, the earth itself moves through space again at around 220 km/s and the rocket moves at over 7.8 km/s.
To send a rocket from the earth to the moon and have it arrive there is a highly complex endeavour. At such distances and speeds, it is impossible to draw up a clear line to follow from the outset. The distances are too great, and the individual targets move too quickly. Even a deviation of milliseconds can send you flying to a completely different place than planned. So how do you go about it? How does a rocket finally reach the moon under these conditions?
The path of a rocket to the moon is impossible to predict from the outset and is instead constantly redefined along the way.
This is precisely why mid-course corrections have been built into the rocket. The rocket constantly measures its own position and that of the target is determined. This correction is carried out regularly at certain intervals. It is known that with such fast-moving objects, the rocket will inevitably deviate from its course. For this reason, constant corrections are made en route to ensure that the rocket remains on course for the long-term goal, but that its course and speed are adjusted to the current conditions.
A similar approach is required for digitalisation project management. During the course of the project, circumstances in the market may have already turned completely upside down - we remember the Human Genome Project. In such cases, a correction of the objective and implementation is necessary as quickly as possible, even if it happens during the ongoing work phases. The technological changes may have already rendered the current approach useless, which would doom a project to failure - even before it is finalised. Therefore, set the desired direction for a digitalisation project, but be flexible enough to incorporate your current results and data from the practical implementation into the further course.
3. Include data in the decisions
However, digital technology does not only offer disadvantages for project management. On the contrary. Project teams have access to a huge wealth of data from various digital platforms and systems. This ranges from user data on the company's website to complex analyses from CRM, ERP or CPQ systems. Simple user behaviour often conceals meaningful data that digital tools can now make visible to us. In most cases, these contain interesting details that can provide us with information about actual customer behaviour, their opinions or even the working methods of employees. If this data is analysed over a longer period of time, it is almost always possible to derive calculated decisions that would otherwise not have been visible.
This is why flexibility is so important in order to steer the project in the necessary direction and redefine the goal if necessary - depending on how the data develops along the way. It is not uncommon to gain completely new insights into the behaviour of customers or employees. With tangible data as a basis for decision-making, you should no longer let the egos of the people involved determine the decision-making process, but instead focus on the demonstrably best solution.
4. Optimise communication
It is not uncommon for digitalisation projects to affect more than one department. Suddenly, production, assembly, marketing, technicians and sales have to pull together to actually optimise the existing process. You can only count on their support if the employees affected within these departments are involved accordingly and the importance of the project is clearly communicated.
Therefore, do your best to communicate the benefits of a digitalisation project and the exact changes it will bring outside the project team. It is not uncommon for a project to fail due to internal resistance from employees in the affected departments. Only in the rarest of cases, for example, should a new robot or automation system replace workers, but rather improve processes. However, if this is not clearly communicated, misunderstandings can quickly arise. The result can be fierce resistance or, in the worst case, acts of sabotage by the workforce. Examples such as the case of FoxMeyer Health show that this can even pose a threat to the existence of a company.
It is therefore important to create effective communication structures for all stakeholders and affected customers or employees of a digital project.
Conclusion
Digitalisation can either become a nightmare for project managers or one of the greatest opportunities for greater efficiency. Data-based decisions, transparency in communication and the involvement of experts outside the hierarchy can help to implement even dynamic projects profitably and effectively. The diverse perspectives on the project process may also give you new ideas and views that you would never have received otherwise. In addition, you are prepared if a disruptive innovation changes your own industry or the market during the project and can be one of the first to adapt in order to benefit from it.
Author: David A. Schneider has spent over 12 years at the forefront of sales and direct marketing. He started his first business at the age of 18 and has been fascinated by the opportunities and impact of entrepreneurship on our society ever since.
He currently holds a senior position in a family business with 150 employees and shares his knowledge with his clients and readers as an author (link to the german book), blogger and business consultant.
He currently holds a senior position in a family business with 150 employees and shares his knowledge with his clients and readers as an author (link to the german book), blogger and business consultant.
Keywords: Project management, digitalisation