Digital Transformation

The #1 Reason Digital Transformation Fails

In my last blog of 2017, I wrote about the #1 reason corporate digital IQ is decreasing. To start 2018 on the same theme, let’s expand that perspective a little and look at the #1 reason digital transformation fails.

Digital transformation’ has become an overhyped term to represent the natural evolution required by businesses, and organisations, to meet the needs of their market. Just as mechanisation and industrialisation enhanced productivity and profitability, digital transformation is just the next wave of ‘how things are done’. So why are so many companies getting stuck with this ‘challenge’.

Well, there are a number of reasons, so let’s cover off four of the biggest ones before we get to the #1 reason digital transformation efforts fail.

5. Treating digital transformation as a project. Digital transformation is NOT a project, or even a program. It is an ongoing evolution of innovation that is a natural part of life. Just as our cars have updated in look, performance and features since the 1960’s, so too have the materials and styles of buildings, furnishing, clothes, hairstyles….pretty much everything! The big difference is that each of the categories mentioned have ‘updated’ each year. Our computers, software and phones update each year. However, we fail to update the way we structure, organise and run our businesses each year. Instead we embark on a series of ‘big bang’ projects that totally disrupt the way things are done – either by introducing new technology, restructuring to downsize, or simply based on the preference of a new leader. The lack of annual updating causes stress at the customer interfaces: marketing, sales and support, where customers have updated their product and communication preferences, but these are not being met by the company. Transformation should be treated as natural evolution and updating, and not as a disruptive

4. Adopting a piecemeal approach – this is not to suggest that implementation cannot occur as local ‘point solutions’; but digital is not just about technology and online channels. It includes an enterprise-wide approach to strategic performance management, operational and process design, business intelligence [BI], analytics and AI. Without an enterprise wide approach, there will be no structural integrity to the transformation. A complete framework includes enterprise data architecture strategy and framework, BI framework, BI governance, reporting certification, visual design standards, data governance, data quality management, and master data management.

3. IT: Business Gap – always the elephant in the room. IT is a critical part of any organisation, but has struggled to gain a voice in the C-suite. This is partly through a divergence of communication style and language. Let’s face it – the business is the business and IT is IT. There is a very good reason that they possess diverse skill sets, use discrete lingo, and view the world from different perspectives. The biggest mistake over the past decade has been in having BI led from IT. BI, analytics and AI are business functions; they don’t belong in IT. They each require a totally different approach to standards and protocols to development cycles and communication formats. Until the business takes the responsibility to educate themselves more about technology, and by default, infuse technology speak, the divide cannot be closed. It might sound like a big ask, but it is a critical absolute for any digital transformation.

2. Lack of confidence in senior management – just as the operational design may not be updated annual, nor are many of the executive and leadership cultures. Most of the current management and leadership practices and frameworks were developed for the industrial age, most in the 1960’s. It has only been in the last few years that Universities are finally starting to update their curriculum to better fit our diverse, dynamic, globally connected, and technology enhanced world. However, the majority of senior executives remain stuck in the old ways of thinking and behaving. They act as a glass ceiling to the innovation and growth of the organisation. It will likely take another 10 years before there are sufficient C-level executives conversant with technology and data to have the confidence to adopt more suited methods to making decisions in less stable, faster changing environments.

And finally, #1.

1.Insufficient understanding of the big ‘Why’ – the business imperative that they wish to achieve.  This is an outside in driven process starting from a customer perspective. For example: to create or enter new markets, provide new products or services, enhance the customer experience, improve organisational efficiency to increase speed of delivery and support, or to protect from competition.

The ‘Why’ drives the future vision for the transformation, providing alignment and cohesion of resources and effort. Without the ‘Why’ we cannot develop meaningful measures of success, or provide a compelling front to the organisation in gaining support from internal stakeholders.

Once you have the ‘Why’ it also needs to be reviewed annually as an integral part of the strategic planning process. Our raison d’etre may change based on new opportunities that technology opens up; changing the way we view the world and live within it. Unless our why is not interrogated and validated on a regular basis, then we are likely not asking the right questions, to get the right information, and in turn, make the right decisions.

After all, the decisions of today determine the outcomes of tomorrow.

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