BBC's Digital Transformation Failure

Digital business transformation presents organisations with enormous potential in terms of growth and development, but that doesn’t come without significant challenges and risk. And as Clayton Christensen once said, “the reason why it is so difficult for existing firms to capitalise on disruptive innovations is that their processes and their business model that make them good at the existing business actually make them bad at competing for the disruption.”

The trouble with transformation is often the act of transformation itself and the organisation’s ability to effectively tackle and manage these challenges and risks. While there are dozens of case studies to look at, I’ve selected one which is backed up by some very detailed documentation that was put into the public domain by PwC. In 2013, the British Broadcasting Corporation known as the BBC, cancelled its Digital Media Initiative (DMI for short) which was meant to ‘fully prepare the BBC for the on-demand digital world’. It was a complex business transformation programme aimed at transforming the way in which the BBC makes content for its audiences. It was cancelled with an asset write-down of a hundred million pounds, and PwC was engaged to review the failed transformation.

The shortcomings of the DMI transformation were far from technical and it’s important that leaders learn from these other lessons from transformations that didn’t go as planned. Many of the pitfalls that companies fall foul of are well-known, but uninitiated transformation leaders and managers still fall victim to them. I’ll run through some of the audit findings of BBC’s digital transformation.

The programme governance structure implemented for DMI was not effective in dealing with the complexity of the initiative. The structure lacked an executive steering board which could effectively challenge the progress of DMI against the agreed quality, time and cost metrics. Corporate Governance bodies weren’t provided with a clear view of the status of DMI through the formal reporting of progress and management of risk. DMI failed to provide transparent and clear reporting on progress against plan, cost to complete, or delivery of benefits, to enable effective decision-making within the corporate governance structure.

While the overall status of DMI was known via the quarterly reporting provided by the BBC PMO, confidence among BBC Executive, that DMI would eventually deliver wasn’t supported by evidence of detailed recovery plans. The focus and priorities of DMI were on technology build and not sufficiently on enabling BBC-wide change. DMI sought to change and standardise working practices across all of the BBC based on implementing leading edge technology that the BBC needed to research and develop with third parties.

Delivery of a single set of processes and the required change in business operations were a pre-requisite of successful delivery of the benefits recognised in the Business Case. But DMI reporting focused on technology risks and issues, rather than the ability of DMI to drive operational change to business practices in the BBC.

The DMI Business Case wasn’t subject to periodic review. This meant the DMI would have had to monitor for changes in the benefits and the cost against the Business Case. Reviewing cost and benefits together would determine whether trigger points in the BBC Investment Policy and Guidelines were met which would have required a re-submission of the Business Case. At the time, the guidelines in place required the Business Case to be resubmitted should there be variation in costs or benefits over the whole life of a project by ten percent.

In June 2011 the DMI steering board reported that almost eleven and a half million pounds of the benefits forecast were at risk, and as this represented an eleven point six percent drop in benefits, a benefits review was undertaken the following month. However the BBC believed at the time that the full functionality outlined in the Business Case, and the benefits, would be delivered over the full life of DMI - which was to be up to March 2017.

Unfortunately, no review was undertaken into the cost of delivering DMI. Had DMI provided an accurate forecast against plan, it would have been clear from delays in delivery, and changes to the risk profile, that the conditions requiring re-approval of the Business Case had been reached. There was also a lack of an integrated assurance plan, which reduced the effectiveness of governance in managing risk.

The key lessons to be learned from this failed transformation were broken down into six areas of transformation management:

• Programme and Corporate Governance. This included Programme governance structure, the Role of the Design Authority, the Role of Corporate Governance, and Programme reporting
• Programme Lifecycle Management. Which included agreeing on a common approach, Programme planning and plan management
• Risk and Issue Management
• Programme Assurance Planning
• Financial Management, addressing Business Case definition and approval and Project financial management
• Benefits Management and Tracking.

This is one of many examples that serve as valuable lessons learned for transformation leaders who prefer to side-step the pitfalls that many others have fallen into before them.

You’ve probably noticed that the reasons for the BBC’s transformation failure were far from technical.