Whether it’s moving to the cloud, implementing AI, or integrating an ERP system, organisations are becoming more technologically saturated than ever before. Trillions of dollars of working capital ride on the ability for organisations to transform. Those who fail to successfully embrace new technologies and ways of working will find themselves left behind.
However, just because digital transformation is the process de jour across every industry, market, and size of organisation, it doesn’t mean success is guaranteed. It certainly doesn’t mean it’s easy. It doesn’t even really mean people have figured out how to do it consistently.
According to Boston Consulting Group, it’s not just a minority of “troubled companies” that struggle with successfully implementing digital transformations. “Top performers, market leaders, and investor favourites,” are not immune from the threat of a failed transformation. Their research points to the fact that, while 80% of companies plan to accelerate their companies’ digital transformations, a mere 30% of transformations actually succeed in delivering on the objectives set out for them.
Why do digital transformations fail?
Every digital transformation is different. A multitude of factors, from the size of the company, its industry, economic climate, company culture, and the technologies being adopted have an effect on both the nature of the transformation and the likelihood of its success.
However, there are common threads we can point to among the 70% of organisations whose digital transformations fall short of the mark.
“One of the biggest mistakes I see companies make is trying to boil the ocean — attempting to do everything, all at once,” Ryan Lee, CEO of B2B commerce platform Nautical Commerce (wielding an appropriately maritime metaphor) writes. “In my experience, companies that find success do so by boiling one small pot of water at a time.”
One of the main reasons digital transformations run aground (if we’re continuing with the nautical imagery, Ryan) is the combination of scope and complexity. The answer? How do you eat a whale, manatee, or other large, elephantine-yet-aquatic creature?
One bite at a time—a phased digital transformation
Digital transformation is not a magic wand and transformation is not instantaneous. Digital transformation teams can manage the complexity of digital transformation projects much more effectively by breaking down the project into discrete phases.
A phased approach allows organisations to break down their end goal into smaller steps, understand the requirements at each stage of the journey, and assess the impact of the transformation on the business model by gathering feedback throughout the process.
First, an accurate assessment of the business’ existing digital capabilities (and pain points) is necessary. Next, leadership conducts an internal assessment to evaluate company’s processes, data, and operational performance. Then, the company identifies the technologies required for its digital shift, determines target customers, and analyses their needs (both during and after the transformation). With this information in hand, the company can outline a digital strategy and set objectives for its digital transition.
These objectives then guide the creation of a comprehensive roadmap alongside the implementation of necessary changes to initiate the digital transformation. Following this, the company focuses on managing these changes within its team, as cultural change is every bit as important as technology adoption. Finally, the business launches its new model. This is accompanied by marketing adjustments aimed at optimising the integration of digital tools within the company.
As argued by Jon Roskill, former head of cloud ERP software maker Acumatica, many decision makers have been “led to believe that digital transformation is a magic trick where they simply wave a digital wand to change a process or two. Poof! Their business is revolutionised.” The reality is that, “In order to ensure a transformation is successful, it’s important to think about it as a continuous process.”
- Digital Strategy
