Most organizations know that an effective digital transformation strategy is vital to their future success. A recent survey by Harvard Business Review Analytic Services and Genpact found seven out of ten businesses place an extremely high emphasis on using digital technologies to improve processes. Yet around half of organizations are failing to realize the expected returns on their digital investments. While many talk the talk, not enough seem able to walk the walk. But why? Below, we outline the seven most common mistakes firms make with a digital transformation strategy.
Lack Of Vision
Too many organizations fail to formulate a holistic vision of how they plan to transform. They might invest piecemeal in digital technologies hoping to improve processes or user experience, but this is often done without any overarching strategy. Businesses often fail to recognize successful transformation is less about individual technologies and more about changing culture and processes to boost agility. Technology enables these changes, but they won’t succeed without a clear idea of direction.
Insufficient Management Support
Some managers think talking about digital transformation and signing off ad hoc investments is enough to set them on the right path. It isn’t. They need to make a real commitment to changing the organization from top to bottom, ensuring everyone buys into that vision. This means evangelizing the benefits of digital transformation, making sure that everyone understands what needs to be done, and why it will improve not only the business’s bottom line and customers’ experience, but also employee productivity and job satisfaction. Then they need to ensure teams have sufficient resources to make the strategy work.
Inadequate Up-Front Investment
A digital transformation strategy should deliver big savings and efficiencies, but penny-pinching at the early stages is a false economy. Putting in new systems won’t work unless you simultaneously invest in training and support, for instance. Similarly, if you build front-facing systems like websites and apps for customers and partners, you need to allocate resources to make sure people are aware of the changes, that systems are convenient to use, and features and benefits are properly communicated and marketed. And if existing processes and systems are likely to cause bottlenecks that degrade the performance of newly transformed areas, it’s important to allocate sufficient resources to tackle these at the same time.
Neglecting Back-Office Transformation
The potential to introduce compelling new technologies to help attract and retain customers means many organizations focus on customer-facing systems. They figure that since the front office is what’s seen by the outside world, transforming this area first makes sense. Again, this is a grave error. The real gains from digital transformation come when you successfully transform your back-end processes and business culture, flatten the structure of your organization to strip out silos and top-down hierarchies, streamline workflow and boost agility. Yes, the front-facing stuff is important, but without transforming the back end first, you won’t have the capacity to take advantage of the continual stream of emerging technologies and services that could further boost your business.
Failure To Tackle A Risk-Averse Culture
More than half of organizations striving to make their digital transformation strategy work say one major obstacle blocking their way is a risk-averse culture. It’s a problem they need to tackle head-on. As we’ve already highlighted, having a coherent, well-communicated vision and allocating sufficient resources to transformation is vital, and this will go some way to countering risk aversion. However, the most vocal blockers are often the very managers you need to bring on board to make the strategy work. Advocates need to focus on getting buy-in from these blockers, and one of the best ways to achieve this is to turn their concerns about risk back on them. Emphasize that being over-cautious and not committing fully to digital transformation and falling behind the competition is in reality a far greater risk.
Lack Of Change Management Skills
Even where an organization has the will to transform, it may not have the skills to make the necessary cultural changes stick. Unfortunately, there’s no getting round the need to invest in those skills. This either means training key people (in techniques like influencing, communication and negotiation, as well as strategic management and planning), or bringing in external change consultants to help.
Poor Communication Between IT And The Business
Another major cause of failure is poor communication between IT departments and the rest of the organization. Again, this is about the lack of a shared vision across the organization. The more you can get the different areas talking to one another openly and honestly, the easier it will be to overcome any problems. This can be done both formally – through regular scheduled meetings, ongoing feedback processes, etc – and informally, e.g. inter-departmental events and jollies that get people talking on a human level to promote better relationships and mutual understanding.
Know The Territory, Avoid The Traps
By understanding the common errors outlined above, and acting to mitigate them – ideally before they happen – you can develop and implement a digital transformation strategy that really works.