According to McKinsey and Forbes respectively, between 70% and 84% of digital transformation programmes don’t achieve their intended goals. Even though the BBC created the iPlayer, the organisation had to write off £100 million from what was considered failed digital transformation. These are statistics to strike fear into the heart of all in senior management, whether CEO, CTO or CFO. So why is the failure rate so high? Here’s a quick round-up of some of the key reasons.
One: The business or organisation never defined what ‘digital transformation’ means to them
All businesses are unique and ‘Digital transformation’ means different things to different people. Automating processes, easier remote working, new technology, a new website, changes in the business model, digital-first customer experiences, overhauling systems, all staff being replaced by robots…It could be any or all of these things and more. If no one agrees on the definition, it’s impossible to measure success and there will always be people who see it as a failure for their area of the business. A 2017 survey by Wipro Digital suggests that 35% of digital transformations fall down because of the lack of a clear strategy. So, work out exactly what it means and create a robust roadmap for transformation and how it will be measured from the start.
Two: Senior management fail to demonstrate their commitment
It’s essential that change comes from the top. The CEO, the board and senior management need to get behind the process and actively demonstrate their commitment to it. They need to be an example to the rest of the company of how they should think, act and behave as the business transforms and new processes and mindsets come into play. Otherwise no one will take digital transformation seriously and it will become yet another of those workplace ‘initiatives’ that never come to anything.
Three: Internal resistance means the project never got off the ground in the first place
In 1989 Kodak employees Steven Sasson and Robert Hill built the first DLSR camera. But Kodak’s marketing department held it back from the market, fearing it would damage the company’s film sales. fearing it would damage the company’s film sales. It takes courage to make sweeping organisational changes or switch business models, however, Kodak, Blockbuster and others discovered to their cost that those who choose to stay the same while the market changes around them are putting themselves in danger. Traditional businesses need to work out ways to experiment, piloting new products and services while keeping risks to a minimum.
Four: The business didn’t have the right expertise in place to make it happen
In most successful businesses people are run off their feet just dealing with the day-to-day. Asking them to take on something as immense as a transformation project as well as their normal duties is likely to lead to severe delays at least, failure at worst. It’s extremely likely that you’ll need to bring in strategists, innovators, employee experience professionals and technical experts to work alongside an internal team to create successful digital transformation. External partners have other advantages: their objectivity. They can help prioritise initiatives that will have the greatest impact and are there to help, not put up barriers.
Five: The technology changes but the culture doesn't
Bringing in exciting new technology is great, but it’s the people who will be using it who will make the difference between successful adoption and failure. True digital transformation means shifting mindsets, ensuring that staff at all levels feel positive about change, understand that their working lives are going to benefit from it, take ownership of new processes and systems and feel that they have a part to play in future successes. Without a robust programme in place to ensure that all areas of the business are fully engaged and feel ownership of the process, transformation is doomed to failure.
Six: Not enough is done to tailor new technology to the business it’s serving
Off-the-shelf technology has advantages over building bespoke technology in terms of speed and cost but remember it’s likely to need extensive customisation in order to suit the way a particular business operates. If not enough time and effort is put into tailoring it, when it’s implemented staff may find it is difficult to use and can’t achieve everything they hoped for. Worst case scenario: it ends up being an extremely costly mistake – junked prematurely for another shiny new technology option in the near future.
Seven: The business forgot about transforming the customer experience
Digital transformation might include automating processes, bringing in new technology, driving efficiency and cutting costs. But it should also aim to improve things for customers, new experiences that are satisfying and distinctive. If change doesn’t impact positively on the customer as well as on the business and its employees, you may find others stealing your market share. They were the ones who cared about the customers you ignored because you were only thinking about saving money.
Eight: New digital experiences weren’t properly tested on users
Digital technology offers so many new possibilities that it can be very tempting to get carried away. You may have dozens, even hundreds of ideas on the table after a successful ideation workshop, but those ideas need to be tried out on users at every stage of the process to see if they have real value. Agile processes and constant feedback will allow the team to iterate experiences until a product or service is frictionless and pleasing to use. Technology for technology’s sake does not help anyone – it will not push the business or the experience forward.
Nine: Not being able to realise the power of customer data
Digital disruptors and new entrants to the market have a particular advantage over traditional businesses: organisationally they have set themselves up in ways that mean they can make smart use of every bit of customer data. Compare this to siloed companies, where there may be rivalry between departments who aren’t aligned in their objectives, don’t know what’s going on in other areas of the business and can’t join customer data together in meaningful ways. Changing the structure and systems and improving communication flow is an enormous challenge but it’s one that will have to be overcome in order to compete with the new digital upstarts snapping at your ankles.
Ten: There’s no plan for what happens after 3rd party experts leave
So, you got in expert outside help to work with the business, dealt with some huge challenges and have finished your digital transformation project? Wrong! Transformation should be the ‘new normal’; with a mindset of constant change, the business flexing and evolving alongside the needs of its customers and the opportunities offered by new technology. Skills audits and training needs to be ongoing, as do ways to continue to measure transformation. And when 3rd party experts leave, successful transformation means the internal team they’ve been working with should be fully able to carry on making transformation happen, leading the company into an ever-brighter digital future.
These are just some of the reasons that digital transformation can fall down, without even touching on the complex problems that can ensue from restructuring technology and migrating systems and data. But transform businesses and organisations must, or they will find themselves overtaken by bolder rivals and disruptive new players. So make sure you get expert help to move forward successfully. If you’d like to talk to us about your transformation project, email us at firstname.lastname@example.org