Top 4 Reasons for Digital Transformation Failure
Digital transformation is no longer a buzzword; businesses have realized that it is imperative for success. Here are four reasons that this process might fail.
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A recent Flexera survey of CIOs and other senior IT leaders reveals that more than half of the respondents rank digital transformation as their number one focus, closely followed by cybersecurity, cloud-first/cloud migration, and improving the customer experience, which are all closely dependent on digital transformation.
Digital transformation is no longer a buzzword; businesses have realized that it is imperative for success. Even though more than $1 trillion is invested in transformation efforts, there are still chances of failure.
A study from Boston Consulting Group shows that about 70% of digital transformation projects fail to meet their targets. The reason may not be far from the fact that some people still believe that digital transformation is all about infrastructure and IT, while sidelining the company’s culture, DNA, and business model.
Is your organization facing any digital transformation failure? According to Kristin Moyer, a distinguished vice president analyst in Gartner's CEO and digital business leader practice, the three categories of digital transformation failures are: regression, underperformance, and failing at new digital initiatives.
- Regression, or "transformation-washing," is where brands are working on initiatives that should have been implemented some while back.
- Underperformance occurs when a business is non-complacent about the project, though there may still be some small gains, the real intent of the project is not wholly realized.
- Failure of a new digital product or service is when you have failed abysmally, and all the resources you deployed for the project are wasted. The only option available to the brand is to terminate the project.
To ensure you stay on course and do not fail with your digital transformation initiatives, you need to know the potent reasons that can cause the failure of your initiatives and how to avoid them from the onset.
1. Quality Digital Transformation Strategy
In a report by Constellation Research & WalkMe surveying 100 Fortune 500 CIOs, 77% of the respondents named digital transformation as their most important priority for 2021. With quality digital transformation initiatives, you don’t need to think about regression, underperformance, or outright failure.
What action plan do you have regarding how you reposition your organization in the digital economy?
Digital transformation is not just a case of looking for one new technology to adopt; it’s about integrating innovations, leveraging emerging technologies, and seeking new operations and business models. For digital transformation to succeed, you need to go all the way to find means of reshaping your business completely, and while embarking on this, your ultimate goal should be how it will improve productivity and customer experience.
If your transformation strategy is good, it should take care of the nature of the challenge you want to resolve and identify the aspect of the challenge that is critical. You must have the guiding policy to tackle the challenge.
How you want to overcome the problems you have identified should be clearly stated. Your team must know what actions are important and when to take such actions.
If this is not clearly stated, they may have to resort to gut feelings, and that can easily lead to regression. You must refrain from a situation where the team embarks on fragmented projects and aimless tech infusions that will not add any business value.
2. Aversion to Changes
Quite often, you discover that a lot of people are averse to any form of change in their culture and way of doing things. This is the first reason for regression, underperformance, or outright failure occuring. Is the transformation seen as a necessary evil? Why must we go out of the norm?
The mindset of all the people involved in the initiative must be positive. While the CEO’s role is pivotal in creating the right frame of mind, leadership commitment must run from the CEO through middle management.
When the CEO is enthusiastic about the transformation and the body language shows that all the time, the spirit will flow down to other employees. The CEO’s support for the initiative greatly impacts funding for the project.
As the bulk of the digital transformation initiatives fall on CIOs, they must not be ordinary execution partners. They must act as the fulcrum of the change and be willing to educate others.
3. Not Hiring High-Caliber Talent
When you fail to have the right mix of skills necessary for your transformation project, then you are working towards failure. The wrong assumption you may make is to believe that you have everybody needed to execute a successful digital transformation; it borders on expertise.
There is a need to pay serious attention to transformation leadership positions. You need the infusion of digital expertise as well as broader skills. You can take for granted the positive impact of attributes such as resolve, pragmatism, flexibility, collaboration, critical thinking, creativity, emotional intelligence, adaptability, and learning agility.
Knowing which fields you have a dearth of talent in can enable you to source for the right caliber of people. Where you can’t outrightly employ such talents, you can fill the vacuum by outsourcing.
Fields like artificial intelligence and cybersecurity are areas you must endeavor not to treat fundamentally. You need to bring in people who have adequate digital understanding and are experienced in implementing such transformations.
4. Lacking the Requisite Culture
The culture of your organization can constitute a stumbling block to your organization's transformation initiatives. To succeed in your effort at digital transformation, there must be a willingness among everybody in the organization to adopt the culture of collaboration.
The initiatives transcend departments, hence everybody needs to work as a unit for effectiveness. Whatever your goal is, right from increasing productivity to enhancing better customer experience, all hands must be on the deck.
It’s only by having a culture of collaboration among the employees, across different functions, and different sections that you can succeed with your digital transformation initiatives.
Your change management must be in top gear to quickly identify those who are resistant to culture change. By educating and training them, they can key into the initiatives and even probably become influencers of transformation.
While what we have may not be everything that can lead to digital transformation failures, they will go a long way to ensure that you succeed with your initiatives. Nobody wants to “sink money down the drain,” but digital transformation requires a painstaking effort.
It’s not something you can dash in and dash out. There is an absolute need for persistence, it requires careful analysis, and you need all the data you can lay your hands on for a comprehensive understanding of what you’ve set out to achieve.
You may also need to study the competition to know what they are doing right and what organizations that failed did wrong.
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