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Digital transformation: 5 reasons why it still fails
While COVID-19 is accelerating a great deal of change, these five stumbling blocks can still get in the way of your digital transformation. Here's how to beat them.
In many respects, COVID-19 has brought the future to our doorstep. It is causing a revolution in where we work, with every company examining the viability and productivity of agile, remote workforces, and rethinking office space and investments in commercial real estate.
It’s also spurring innovation when it comes to how we work, with development and funding pouring in for collaborative platforms that enable remote teams to build together and more effectively communicate and share information.
While COVID-19 is definitely accelerating a great deal of change that had been predicted for some time, there is no guarantee that the change will result in greater digital transformation success for companies and organizations. Even though executives understand how important it is to evolve with technology and streamline digital solutions, it’s also important to remember that roughly 70 percent of digital transformations fail, according to McKinsey.
Bottom line, being effective at a digital transformation is hard work. Understanding what often goes wrong, and avoiding similar mistakes, is the key to improving on the success rate.
[ Is your digital transformation lacking support? Read also: Digital transformation: 5 types of leaders who can get in the way. ]
Here are five stumbling blocks impeding the path to digital transformation success, and potential ways to overcome them:
1. Lack of consensus and the rise of silos
Too often companies believe they have to move quicker than they’re comfortable with, perhaps because they’ve set terribly ambitious deadlines. Unfortunately, individuals aren’t properly briefed, and don’t fully realize all the challenges the organization is facing, and as a result there is no consensus at the outset in terms of the "why."
Why are we doing this, not just for me and my team, but the organization? Without the why, people typically retreat to the comfort of their team or group and keep their heads down. They focus on themselves and their deliverables, which creates internal silos.
Silos are the enemy of an agile, collaborative organization. It’s critical to ensure that everyone is on the same page at the beginning, and understands the organizational challenges as well as those facing their respective teams/departments.
[ Get answers to key digital transformation questions and lessons from top CIOs: Download our digital transformation cheat sheet. ]
2. The lone wolf mentality
It’s digital transformation, how hard can it be? We can do it ourselves. Many organizations underestimate their own internal talent, skill sets, and capabilities. They decide to embark on a major transformation alone. Staying ahead of the game without specialized help is too difficult because new technologies, along with faster pace and execution are becoming the norm.
Take a more serious view of your partner ecosystem, pick the right technology partners, and consider them an integral part of your execution strategy. Assess your partnerships for achieving your business outcomes and be serious about sharing upside. Incentivize a healthy, leveled relationship where you recognize, select, and constantly assess the value and culture that you need in order to lead in the market.
3. Transformation starts at the top
Just because you agree to transform the organization doesn’t guarantee that senior managers are aligned with respect to prioritization, budget, KPIs, etc. The CEO’s vision for the outcome may be starkly different than the CFO's or Chief Digital Officer's. Be prepared to address disconnects and competing priorities.
To ensure that top managers are on the same page, over-communicate and articulate not just what you’re trying to achieve, but the problem you’re solving. This will help paint a broader picture of what the new organization will look like and that all stakeholders are on board with the transformation strategy and business goals.
4. No velocity, no scale
It's tough to manage expectations when it comes to ROI for a digital transformation. Typically, the greater the investment, the quicker executives want to see some form of return. To complicate matters even more, companies may try to ramp up to counter an industry disrupter. So while an incumbent starts the second phase of its planned transformation, the more nimble disrupter may have accelerated its business and put more distance between the two organizations.
Companies need to move and scale quickly, and fail fast. Set objectives at the outset and ensure that the organization and stakeholders get smarter every step of the way.
5. You're only as good as your talent
You need talent to win a championship, and the same holds true for successfully reengineering your business in the form of a transformation. You need software engineers who have access to and can interpret data and understand the latest programming languages. You need product and brand managers who can anticipate what customers want and what the future of the organization looks like.
It’s not too late to become a data-driven organization. Technologies such as AI and machine learning will continue to make your data and your talent smarter. Meanwhile, use a digital transformation to evaluate all your talent. Acquiring, training, and retaining the talent that you need to achieve the outcomes your business needs to thrive requires that you put effort in building community.
To be successful today, companies and those responsible for leading the digital transformation charge need to operate in a world and with a mindset where innovation and transformation are continuous.
Forrester surveyed more than 1,500 business and technology decision-makers, and the results revealed a troubling message of reluctance to change: 21 percent of survey respondents thought they were finished with their transformation. We need to understand and, in many respects, embrace the idea that digital transformation is an ongoing process.
The best and most successful companies not only understand this, but also embrace the opportunity it provides them.
[ Culture change is the hardest part of digital transformation. Get the digital transformation eBook: Teaching an elephant to dance. ]