There aren’t many businesses who haven’t yet attempted a digital transformation in one form or another. For many, their digital transformation efforts have been accelerated by the pandemic. But how do you really know if you’re headed for success or for failure?
At Digitopia, we live and breathe digital transformation. Having undertaken hundreds of digital maturity reviews, we know a thing or two about what leads to success and what can lead to failure.
In this article, you will find the 5 most common factors that can lead to success, and the 5 most common factors that can lead to failure.
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Let’s start with failures, as they’re a little trickier to identify.
1. Missing the Big Picture
What does digital transformation mean to you?
How would you define it?
What does it include or exclude?
Where and when does it start?
Where and when does it end?
Many questions, and probably as many potential answers swirling around in your mind. It might be that you’re not so sure how best to describe your unique situation. Don’t worry, you are not alone in this!
So, why is it so difficult to define the big picture? Well, everyone in any given organisation is demanding something from someone else! Everyone wants the opportunity to shine; to make their processes more digital; to change the culture; to implement a new system; to run more analytics; and to delight the customer with personalised experiences and cool new channels. In short, everybody wants their own unique digital transformation tailored to better their results in their own department.
Yet, someone must be mindful of the bigger picture. Too many organisations lose sight of what’s going on inside their company – how many projects are running concurrently? What value are they aiming to deliver? How much will it all cost? How many people will they need to deliver?
Taking on too many projects without central coordination and, potentially, with overlapping functionality creates a complex cacophony of sound. This is not good. This is a clear indicator of looming failure!
What to do about it? Hit the brakes. Stop everything, even just for a few days, and take inventory of all activities. Have an open discussion with all relevant stakeholders about what’s going on, what’s going well, what’s necessary and what’s not. Get agreement on the vision and the priorities. Develop a “master plan” or “roadmap” to guide you through.
Now you can apply project and programme management techniques to work on the most important initiatives first. To deliver tangible results, to delight customers, to advance your digital transformation and get order in the organisation. You should also keep a keen eye on the cultural change since this may be harder than you think.
2. Acting as a lone wolf
Digital transformation is a team sport. The team wins as a whole, or loses as a whole. If everybody performs at their best, the chances of success are higher. Conversely, if you have weak links in your chain, the chances for failure grow, too. This is true in sports and in corporate environments, alike.
Empowerment, accountability, taking initiative, and responsibility are words easily spoken but harder to achieve and sustain. Those organisations that don’t enable their staff to take initiative will not be able to achieve superior performance. Not for their regular operations, let alone a digital transformation!
Cumbersome by nature, digital transformations take a long time, require a lot of extra effort, and create change in different areas within an organisation. People need to adopt new ways of working, new business models, new capabilities, and new requirements. This is easier said than done. You must factor in delays, resistance, losing key people, failing projects, departing executives, and much more.
What to do about it? Accountability can only be triggered from above. The executive leadership team must behave as role models for the rest to follow. Taking initiative, even if it results in failure, must be celebrated. Slowly but surely the corporate culture will adopt to new ways of working so that over time the “new” becomes habit.
Trust is a key requirement. If employees can trust each other and their superiors, then a collegiate culture of support and taking initiative will evolve. If you miss out on this by blaming or averting your gaze, a culture of unresponsiveness will spread and poison the environment. It’s your choice. Our recommendation is quite straight forward.
3. Calling What You Have Always Done “Digital”
The most common misconception in digital transformation is labelling legacy technology projects as “digital transformation.” ERP transformations are important. If you do them in the spirit of an overall “digital transformation programme,” then fine. However, if you just upgrade to a newer version, without changing anything in the organisation, then the result will be of limited value.
The IT project pipeline of a regular company is always packed full of stuff. But this is by far not a digital transformation. If you call these initiatives “digital,” your people will not understand what digital is all about, and they won’t get excited about the organisation changing for the better.
What to do about it? Digital is about connectivity, intelligence, new ways of working, and new business models. It’s about serving customers in a better way; integrating value chains end-to-end. Ultimately, it’s about precision and speed.
Raise the awareness about digital within the organisation. Create discussion forums. Enable them to generate ideas. Identify pain points. Collect them all, then categorise and prioritise them. Now you know what the company and its various business units are expecting from digital. This is what you must focus on.
4. Eating the Whole Elephant
There are two sides to the elephant analogy. First, there is the story about letting blindfolded people touch an elephant, and each of them recognising the leg as a column, the trunk as a pipe, the tail as tuft, and so on. This means digital is something else for everybody in your organisation, depending on from where they are looking at it or touching it; perception affects perspective.
The second elephant analogy relates to “big bang” project approaches. That era is over. The whole world has learned phased approaches and these days even agile and iterative methods, for shorter project cycles and quicker feedback loops. And if you haven’t tried it, working agile is way more fun!
Overwhelming yourself and your team with endless big projects can quickly turn into a catastrophic cost trap. To ensure continuous progress and growth, incumbent leaders should realize the importance of prioritisation and scaling principles within the digital transformation agenda.
What to do about it? Put simply, slice and dice the elephant in front of you. First, reach an agreement on what your “elephant” actually is, so that you can properly segment it. Otherwise, you may just cut the wrong pieces.
Definition is always important. It clarifies communication, avoids confusion, and enables alignment. Once you have clear structures in place, the second step is defining priorities. The rest shall be easier. Step-by-step and slice-by-slice, you end up eating the elephant – or more appropriately, you successfully execute your digital transformation.
5. Being Too Poor to Buy Cheap
In all walks of life, buying a cheap product or service usually results in disappointment and, ultimately, the need to replace it much sooner than planned. For the most part, you needed to buy a ‘proper’ product or solution in the first place. So why not do just that?
Well, it’s difficult. The desire to capture a bargain is always tempting. In that moment emotions often win over rationale. You’re just as susceptible to this in the corporate world as you are outside of work. We must remember that it is the job of expert salespeople to convince you of the need to buy something, often regardless of the actual benefits in front of you.
And then, there’s the overlooked concept of total cost ownership. A system is never simply a one-off investment. It has maintenance costs to it. You need a team to support it. There might be hidden costs – it will occupy space, and consume electricity. It also needs to be integrated into other systems, upgraded over time, and users need to be trained. This list goes on and on.
What to do about? Focus on the economy, not just the initial investment. A digital transformation is a long-term investment with substantial costs but potentially exponential benefits never seen before. Therefore, it’s also difficult to envision and put into numbers.
Vendors and solution providers should be considered partners, not enemies. The analogy of a marriage is not an exact fit, but still gives a good understanding of the scope and significance of engaging in large deals. Digital transformation programmes are often a quite large undertaking. But don’t forget to slice and dice it…
We have prepared a brief survey for you to understand how you are progressing on your digital transformation journey. Take 5 minutes to answer 10 questions and get an independent evaluation of your situation.
Now Let’s Look at the Brighter Side of Digital Transformation.
So what are the most important success factors while running a successful digital transformation programme? Distilled from dozens of transformations and decades of experience, here’s our list of the top 5 digital transformation success factors…
1. Building a Guiding Coalition
This term is borrowed from Harvard Business School professor John Kotter, the leading authority on corporate change management. A coalition is a temporary agreement of multiple stakeholders to achieve common goals. Sounds rational, right?
In any organisation the senior leadership team may not always agree, but they must collaborate and cooperate if they want to succeed. When it comes to digital transformation, a certain degree of agreement is essential. Mainly because most of the efforts and outcomes are cross-functional.
Think of customer analytics and the underlying data infrastructure.
Think of a new digital business model and the expectations of the organisation to support it.
Think of new ways of working and the cultural change associated with it.
So much change. Without leadership it may turn into a serious disaster!
What to do about it? Make sure that the leaders of the organisation truly understand and believe in digital transformation. Then, make sure the leadership team agrees on a shared vision and common objectives. Finally, make sure the leadership team has established a coalition among them, and is keen to lead the organisation through the transformation programme.
Of course, this is easier said than done. Companies who have a strong leader and have established this kind of a guiding coalition are far more likely to succeed and harvest the expected yield from their digital transformation efforts. Others may miss their targets or even succumb to digital transformation failure!
2. Knowing Every Nook and Cranny.
A business is a complex organism. The devil is in the details. Having very capable people aboard always makes a difference. But who will tell them what to work on and what not to work on? This is what we call strategy.
Corporations with a well-crafted digital transformation strategy in place know what they need to do. Assuming they have the required resources and skills, and are empowered to take action, then the strategy will be executed. If it’s well designed and working properly together, then it will turn copper into gold! If not, it may just ruin what you already have. This is especially true for digital transformation.
What to do about it? The strategy must be relevant to your organisation and the current circumstances. Digital transformation is a journey. The strategy must factor in changing business dynamics, competition, emerging trends, and eventualities along the way.
A digital transformation strategy must be very precise and granular, but at the same time very flexible and able to embrace change. And don’t forget to include the cultural change aspect, since “culture eats strategy for breakfast” as renowned management consultant, Peter Drucker once said.
3. Hiring smart people, then getting out of their way
So you have a guiding coalition in place. You have your digital transformation strategy in place. Now it’s all about execution. Make no mistake, you will be busy. And if you don’t plan for it, it won’t happen. If you don’t reserve capacity for that extra workload coming due to the transformation, people will struggle. And they’ll burn out. You don’t want that!
Yet most organisations are already very busy, so how on earth can you possibly carry the extra load? The answer is to make way – to allow your skilled people to take action. Or, as famous automotive sector CEO, Lee Lacocca, once said, “I hire people smarter than me, then I get out of their way.”
What to do about it? Empower your people and let them work their magic. Trust in your people. Let them shine. Train them and motivate them to perform beyond their own beliefs. It’s possible and it’s truly engaging. In successful companies you will find this kind of climate.
Remember the conversation between the CEO and the CFO. “We must make them sign a contract for that expensive training they receive. Otherwise, they will leave right after the training.” The CEO replies: “What do we do if we don’t train them, and they stay anyway?”
4. Staying Hungry, Staying Foolish.
Do you recognise this phrase? It’s in all Apple stores – the mantra put forward by the late Steve Jobs. It’s all about curiosity. Acting like a toddler. They’re naturally curious about everything. And that is a good thing. Unfortunately, we lose this sentiment as we grow older.
Digital is unchartered territory for most organisations. You can’t win with yesterday’s approaches in today’s world. Innovation requires creativity and courage. Those organisations that you hear about are the ones who’ve done something substantially different and succeeded with it. You don’t want to be amongst the losers.
What to do about it? Don’t be a loser! Be a winner. Believe in the power of innovation. Believe in your people and your ecosystem. Believe that you can change your business and even the world for the better.
If you’ve done nothing until now, start with baby steps. Ask for ideas from your organisation on a specific issue you would like to solve. You’ll be amazed by the potential!
If you have an innovation programme already in-flight, step it up a level. Make a call for open innovation to a relevant audience. You might also consider working with start-ups in a more targeted manner.
5. Taking a Customer First Approach
After all, it’s all about the customer, right? All you are doing is providing your customers and clients with the best service and products possible. To make your business successful and sustainable. But do you have this on your mind all of the time? Even when doing maintenance or very low-level tasks?
A customer-first approach is taking this truly to heart and applying it to every activity. This is especially true when it comes to digital transformation. Since the dawn of smartphones and social media, the customer (even within the B2B context) expects everything to be online via an app; to be traceable, interactive, transparent, and engaging. The genie is out of the bottle…
Competition is stiffer than ever before. Your competitor is not down the road, it is just one click away. Prices, service levels, user experiences, reviews on comparison sites, and the overall emotions you allow or destroy, makes all the difference.
What to do about it? Make your customer the first priority in your digital transformation, no matter which industry you are in. You won’t regret it. It will drive quality, agility, and precision in all your processes. It will change the thinking and behaviour in your organisation and advance the corporate culture.
Step into your customers’ shoes. Empathise with them. Understand how they feel about your services, your products, and their experiences. This will drive a lot of improvements across your organisation. With digital, analytics, and good design, you will improve many aspects of your corporation. This is the essence of digital transformation.
So there you have it! The 5 factors that lead to digital transformation, and the 5 factors that may be an indicator of failure. To recap, they are:
5 Reasons for Failure
- 1. Missing the Big Picture
- 2. Acting as a Lone Wolf
- 3. Calling What You Have Always Done “Digital”
- 4. Eating the Whole Elephant
- 5. Being Too Poor to Buy Cheap
5 Reasons for Success
- 1. Building a Guiding Coalition
- 2. Knowing Every Nook and Cranny
- 3. Hiring Smart People, Then Getting Out of Their Way
- 4. Staying Hungry, Staying Foolish
- 5. Taking a Customer First Approach
Digital transformation is not an easy journey to navigate. Hopefully the factors highlighted in this article have given you thoughtful pause during your transformation efforts. If you’d like a snapshot view of where your transformation is headed, then take our short 10-question survey here…
If, however, you’d like to talk with one of our digital transformation experts, schedule a call. We would love to talk with you.
Digitopia is the leading digital maturity consultancy. We are independent experts on digital transformation. We are improving the chances of digital transformation success across multiple industries through our Digital Maturity Index Platform.
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