Why Your Digital Transformation Is Failing

Sylvia FronczakMon, 03/11/2019 - 14:24

Companies have been announcing digital transformation initiatives for over two decades, but they don’t always know how to successfully execute one. And the media doesn’t take too kindly to failed transformations. Search for information on initiatives from companies like GE, Sears, and Ford, and you’ll find dozens of articles decrying every misstep in the process.

So why are digital transformations still difficult to achieve after all this time? And how can you improve your chances for success? Let’s take a look at why some digital transformations fail to live up to their potential.

Hazy Vision

The first critical issue involves the lack of a shared concrete vision. Without a shared vision, teamwork breaks down and initiatives fall apart. But how do we end up with a vision that lacks clarity?

One issue could be a lack of communication. Although we may believe we’ve clearly communicated our vision and goals for the transformation, the rest of the organization might disagree. It’s critical that we request feedback from all areas affected by the transformation and at all levels.

Additionally, there may be misconceptions regarding the stated vision and goals, which could cause issues with the execution. I personally witnessed this when a company I worked for setting up a separate department to focus on new products that harness innovation. However, the shared vision didn’t clearly specify whether the department was supposed to just prototype ideas or carry them out to the market. As a result, various departments fought over ownership of the products coming out of that newly formed department.

Furthermore, we might lack the necessary understanding of what a digital transformation even is. Some consider it an efficiency initiative, while others focus on creating new technologies. However, it can encompass many things. Simply put, a digital transformation solves problems in non-traditional ways using technology.

In the end, a vision should be simple and easy to understand, and it needs to paint a solid picture of what the future could hold for the company.

Ambiguous Goals

Another issue that could stifle a company’s digital transformation pertains to goals. If your organization tries to attain ambiguous goals that pull people in different directions, the results may be mixed. For example, if the main goals are improving operational efficiency while also boosting customer engagement, then teams may feel conflicted as to which goal should take preference.

Additional issues may arise if teams unknowingly share the same goal. When multiple teams are working on the same project, or close to it, with no clear directions or guidelines—confusion sets in. For example, at one organization I worked with a few years ago, three or more teams were engaged in solving the same problem, but they were unaware of each other until other teams pointed it out. More confusion then set in as the boundaries between these teams seemed to blur.

To prevent this, make sure the sponsors of an initiative have a clear understanding of what their particular goals are and where the divisions in responsibility lie.

Neglected Stakeholders

Whether it’s employees, customers, executives, or shareholders, a digital transformation involves everyone. So forgetting or neglecting one or more of these groups will end up stalling your efforts.

Let’s look at each one separately.

Employees

Employees can make or break your digital transformation. Therefore, you need to make sure they share the vision you’ve created. You may get some initial resistance but that’s OK. Bring any resistance or doubts to the forefront, share them, make them visible, and then work to solve the problem together.

Additionally, once your transformation is in flight, you must empower your employees to make decisions and get the tools they need. Make sure they don’t have to wait for approval for every little thing they want to do. Give them permission to talk to customers. Help them help you.

I have one final note about employees: There’s a lot of talk about companies not having employees with sufficient digital skills to bring a transformation to life. Why? Because our organizations have made them this way. So what can we do? Instead of neglecting your employees or finding consultants to replace or supplement them, embolden your employees to learn new skills. Provide them with opportunities to explore. Send them to training not as a punishment, but as an opportunity or reward.

Remember, without employees helping drive your digital transformation, you’ll go nowhere fast.

Customers

Now let’s take a look at how we might be neglecting our customers. As we all know, digital transformation means nothing without customers. That may seem obvious, but many companies forget this basic principle.

For example, several years ago former JCPenney CEO Ron Johnson decided the struggling retailer would no longer offer “doorbuster” sales on merchandise. He clearly forgot the store’s customer. Because had he truly known the typical JCPenney shopper, he would have realized they love to hunt for bargains. They enjoy finding clothes and housewares on sale and feeling like they made a great buy.

In this case, there was a clear vision of what JCPenney should become. However, by not focusing on the customer, the company was driven toward a future that didn’t match the customers’ desired reality.

The lesson is you should always validate your vision with solid customer research and experimentation. Use tools like interviews, surveys, and behavior analytics to understand your customer before deciding which initiative will work and which won’t.

Executives

You may think all of your executives are on the same page, share the same vision, and are willing and able to share that vision with their teams through their reports. However, that’s not always the case. Many executives have been through the transformation dance before, and some have lost faith in it.

Instead of ignoring or denying possible dissent among the executives, you must shine a light on it. Encourage your leadership team to share their doubts. Reward those who are willing to ask the questions that no one else is. And work through the doubts so everyone believes they have ownership of the transformation.

Shareholders

Pressure from this last group of neglected stakeholders can sink your digital transformation before it’s begun. For example, when GE underwent a large transformation in 2011, Wall Street didn’t buy into the plan or projected outcomes. So the pressure to follow one of the more traditional routes to adding value continued to climb. Until GE eventually turned to a more commonly used method of improving share price—they cut costs.

It’s important that the company’s shareholders and board members are on board with your plans. And they need to be given realistic expectations of what outcomes can be attained within what time frames.

Next, let’s take a look at something that affects all of the stakeholders in digital transformation: fear of failure.

Fear of Failure

We often declare that we want to fail fast, learn from failure, embrace failure, and whatever else; but we don’t act that way.

Instead, we reinforce old paradigms where success must happen at any cost. And if there’s even a hint of failure, we strive to cover it up.

Just look at transformations that have resulted in executives and whole departments being tossed out. If a failed experiment can potentially crush your livelihood, how much risk-taking and initiative will take place within your organization?

Embracing failure should be more than a bumper sticker slogan. Make sure your digital transformation policies are shaped by things you’ve learned from previous failures and freely share them with the other teams.

Underestimating Complexity

The complexity associated with a digital transformation can be startling. Sometimes starting from scratch introduces too much change into the organization all at once. So in addition to addressing the difficult task of coordinating these new efforts, resources end up spread too thin to make a significant difference.

The complexity of a project increases due to new technologies, new business rules, and the increasing amount of integration required between disparate systems. The main takeaway here involves being realistic. Realize and admit to the real complexity that’s involved, and don’t take for granted the integrations between systems.

Focusing on Technology Over Outcome

We tend to get excited about new technologies. Whether it’s cloud-native platforms and solutions, or the latest IoT possibility, new stuff makes the front page and can be seen as a silver bullet to fix your transformation woes. However, adding technology for the sake of itself won’t advance your digital initiatives. There needs to be more to it. Consider the following whenever you’re tempted to chase that shiny new toy instead of revolutionary changes.

In a report from Sloan, researchers found that employees at Humanyze who sat in larger groups during lunch collaborated more with their peers. They also outperformed their counterparts. So what was Humanyze’s transformative initiative? Setting up larger tables in the cafeteria. In this example, a company used wearable technology to harvest and mine data. And then they found a non-tech solution to bring their employees together more often. Although data and other technology exposed this opportunity, the solution didn’t require much technology at all.

Trying to Do It All on Your Own

Part of a successful digital transformation involves reworking relationships with your suppliers and even competitors. The digital ecosystem will require changes in borders and dividing lines. So instead of doing everything in-house, search for ways to outsource certain tasks or work with partners who can make something available to you.

For example, Amazon’s purchase of Whole Foods gained them access to a larger food-distribution chain. Alternatively, consider the recent talks between Volkswagen and Ford as they partner together to build vehicles. Now that’s transformation.

There Is No Finish Line

Digital transformation doesn’t come with a static finish line. Yes, initiatives may wrap up or fizzle out. But over time, you’ll see more and more opportunities for change; and you must be ready for it. Take advantage of your digital transformation process to rework your organization from top to bottom. And make it nimble, flexible, and risk-tolerant while you’re at it.

Remember, initiatives must fit the company’s overall strategy and have verifiable value. Be clear about what you want to accomplish and what it will take to get there. Don’t just throw money at buzzwords. Successful digital transformations require teamwork and a committed staff to focus on reaching those clearly defined goals and outcomes.

And finally, never forget that your people will be the ones to make any transformation a success. They are your partners in the journey—make sure they know it.