6 Potential Reasons Your Digital Transformation Efforts Are Failing
Unless you live under a rock, you will agree how the COVID-19 pandemic has spurred innovation in how we work, with every organization assessing the viability and productivity of remote workforces and rethinking investments in office spaces.
Digital transformation has undoubtedly been instrumental in responding to the disruption of work and business ecosystems. It is the process of refashioning or creating new business activities with the help of digital technologies to meet market and customer expectations.
Typically, the digital transformation includes:
- Cutting down costs
- Automating processes
- Improving user experience
- Implementing new technologies
- Changing the company’s culture
In other words, it changes the way organizations function. Today, there is no dearth of collaborative platforms that enable remote workforces to simplify their project monitoring tasks and deliver efficiency gains.
Organizations have optimized their systems and processes, ensuring they are interoperable and flexible enough to offer reliable business intelligence in real-time and set themselves up for future success. That is why digital transformation has become critical.
But all is not hunky-dory.
Research shows that 80% of businesses fast-tracked their digital transformation programs in 2020, and 76% are now investing in emerging technology. Even though the statistics are impressive, it is essential to remember that 70% of digital transformations fail.
Moreover, only 5% of organizations involved in digital transformation efforts can achieve or exceed expectations they had set for themselves. So, what are the reasons behind the failure? The article dives deeper into that.
Six reasons why your digital transformation efforts are failing
While digitization presents many unique opportunities for organizations to innovate and grow, bureaucracy in organizations often slows decision-making processes. There are too many hoops to jump through for even the smallest of ideas to be accepted. But that is not it— there are six most important challenges businesses face when transforming digitally:
1. Not having clarity about the end-goals
Why do you want to transform your business digitally? Do you want to automate your processes? Do you want your workforce to have a more comfortable remote working environment? Do you want to implement a digital-first customer experience?
Whatever it is, you must have a clear direction before executing any plan of action. Implementing transformation efforts just for its sake without setting a clear goal will not fetch you results. You cannot wing this concept.
Typical objectives include digitizing an organization’s operating model, launching new products or services, or increasing interactions with external partners via digital channels.
Nike, for instance, had a single end goal, i.e., to have a more direct customer focus. This compelled them to dramatically shift how they used data analytics to learn about their customers and ramp up sales conversions.
The refreshed analytical approach helped them open concept stores, drive more membership opportunities, and improve the offline and online shopping experiences. After two years, their stock price grew from $52 to almost $88.
According to Mark Taylor, Director, What Removals, do not be ambiguous in your goal-setting process. Instead, set targets — for instance — the number of campaigns to run each month, the percentage of transactions to migrate from one channel to another, the level of personalization achieved, and so on.
To set your organization’s sights at the right level, having clear targets prevents back-sliding when the going gets tough and helps decide which initiatives to pursue for maximum impact.
2. Not dealing with talent deficit and internal resistance to change
Spencer Farber, Founder at Cliently said that the ability to succeed with your digital transformation initiatives depends on the people of your organization. Not having the necessary experience or expertise leads to basic mistakes such as unrealistic goal-setting and risk underestimation.
Therefore, you must identify and quantify the skills gap and refine and develop your talent base accordingly to achieve the end goal of transformation.
That could come in the guise of product managers who know what customers want in a virtual assistant, software engineers trained in the latest programming languages, or marketers specializing in social media video content.
Digital change requires older employees to learn new skills besides unlearning obsolete practices and old habits. In addition, train and develop new employees with new mindsets.
Research shows that 90% of organizations believe they need at least some new types of talent and 37% believe extensive talent structure changes are required for digitization.
Besides making the right hires, identify and break down any informal organizational hierarchy that either consciously or unknowingly enhances the resistance to change. Here is how you can inspire your employees for digital transformation:
- Ensure employees with risky projects will not lose their jobs if the transformation fails.
- Create a system of incentives using scorecards that leaders use to monitor performance and progress across critical areas.
- Educate them on how their contribution matters to feel optimistic about the change and work towards it rather than against it.
- Let a senior leader pick up a small transformation project to showcase how the rest of the organization should see the changes.
Digital transformations are a success with the right talent — whether you hire from outside or upskill the already-existing workforce.
3. Not prioritizing senior leadership buy-in
“This is how we have always done it” is often the go-to explanation for how specific tasks in a business are performed. Changes to internal policies come from the top, and it is possible the senior management is not on the same page.
That could be due to a lack of shared understanding of the project, different priorities, or poor technological insight. To eliminate these issues, cultivate a culture of over-communicating what you are trying to achieve but the problem you want to solve.
Sure, it may be tempting to fill talent gaps through outside hires. However, nothing would get done unless the change is led from within the existing organization. Leaders must understand that change does not occur in the employee’s free time.
They must set aside sufficient time and attention to promote the desired change and adjust behavior accordingly. Instead of presenting an endless barrage of charts, figures, and boxes, leaders should leverage storytelling as a tool to translate critical objectives into a scenario that resonates with their workforce.
4. Not keeping the customer at the centerfold of transformation
Your customer supports your business. Without them, you would not be where you are in your growth journey. If digitalization does not influence them positively, your competitors may gain an edge over you, which will hamper your bottom line.
A common example of transformation is the use of social media as the new customer service desk. Listening and responding to customers across social platforms have become the norm across all industries and business sizes.
That helps you cater to their needs and queries faster and measure brand sentiment using a tool like Falcon.io on online platforms. Engaging your customers where they already are is a big win for your business. Besides, being active on social media works for the customers.
Instead of making an effort to call you and wait in queue for their turn to talk to a service rep, they can directly drop a message on either of the platforms.
According to Mark Magusara, Whatmanandvan, "digital transformation can propel any business to greater heights if it is done for the good of customers." While planning your digitization efforts, it might be worth surveying your customers about what changes or services they expect from you.
5. Not thinking through the required technology
Even though the technology is at everyone’s fingertips, optimizing its potential to meet a specific goal is challenging. For instance, if your business operates in a highly regulated sector and you want to enable a video-first communication environment, you cannot just deploy a tool like WebEx and Zoom and leave it at that.
You must also consider having new security and compliance infrastructure for the software. Revitalizing a business model based on digital technology without factoring in all its elements is wasted effort.
Organizations with successful transformations employ more technologies than others — from cloud-based services and mobile internet technologies to IoT and design thinking tools.
A robust technological foundation helps facilitate the analysis of complex information, create a network of cross-functional teams with end-to-end accountability, and make data accessible in a workforce, making digitization easier and more successful.
6. Assuming that transformation is a one-off thing
No business will ever be entirely digitally transformed, even if they do not require the same level of transformation as everyone else. Once digital becomes an integral part of the organization, it is necessary to prepare for continuous improvement.
For instance, a business moving their inventory onto an eCommerce site and setting up payment processing and shipping may be acceptable today. However, there will come a time when they need to evolve again based on the market scenario, customer expectations, and technological advancements.
You must, therefore, be agile while staying true to long-term goals and overall vision. You must cultivate a culture that allows your workforce to challenge the existing systems and consistently seek to reinvent how they work.
Over to you
One thing is for sure — digital transformation is complex, and it will bring about some disruption to the workplace. Yet it is possible to go through the motions successfully by making appropriate cultural changes via active communication and implementation.
Create a roadmap that strives for progress through integrated behavioral, technology and procedural change with the required expertise and resources. Promote a mindset where innovation and transformation are continuous.