Nike has slashed its digital department in half and discontinued the very fitness tracker that’s been credited with popularizing the wearable industry.
Procter & Gamble was making moves to become “the most digital company on the planet” before hitting a major growth wall in a changing economy.
Ford invested millions in DX while turning a blind eye to growing costs, quality concerns, and shareholder dissent.
Dare we say—triple ouch.
And the worst part of it all? In most of these companies, the leadership teams have been “rearranged” to remove or reappoint those who went out on a limb to boldly pursued DX.
If it wasn’t already clear, 2017 survey by Wipro Digital found that there is a crisis happening in organizations undergoing digital transformation.
Half of respondents, made up of senior execs in the U.S., believed their companies weren’t successfully executing a whopping 50 percent of their DX strategies.
Why is this happening? Because DX is not a plug-and-play solution. In order to be implemented with a successful outcome, it must be transfused and run through the very veins of your entire organization.
"Digital transformation efforts are coming up short on intended ROI, in part because digital transformation is as much a leadership issue as it is a strategy, technology, culture and talent issue,” says Rajan Kohli, senior vice president and global head of Wipro Digital.
To avoid DX failure, you must be brave enough to look it in the face and understand how it can happen in organizations just like yours.
Here are six reasons why digital transformation fails in the business world—and a few tips to help you steer clear.
1. No one actually knows what digital transformation means.
Ok, so that’s a little harsh. I’m sure everyone in your organization has an idea of what digital transformation means. But if it’s showing signs of failing, chances are that’s because each and every definition is a little different than the last.
In a Wipro Digital study, over 90 percent of executives reported that their company was aligned on the definition of DX while 25 percent of the same respondents named lack of alignment on DX as a key obstacle in their transformation.
If your alignment on DX is as out of whack as those stats, you’re not aligned whatsoever.
You can’t have your CIO thinking that your DX strategies are laser focused on unbounding the IT department to improve internal company-wide workflows while your head of customer service is gung-ho about using DX to implement AI to shorten complaint response rates.
Both are fine goals. Amazing goals, even. The company-sinking issue is they’re both completely different goals.
The executive team is the first line of defense in achieving alignment from the top down. And their alignment must be, as Janice Miller so eloquently puts it, relentless.
"You need to relentlessly communicate the vision, stick with it and get people to buy into it," says Miller, director of leadership programs at Harvard Business Publishing.
2. Your leadership team is scared.
Disruption. Transformation. They’re scary things to hear are happening to your company—especially if you’ve been there long enough to shepherd it through decades of shifts in the business landscape.
The problem is, DX is blowing all those shifts out of the water. It’s a total 180. Leaders who aren’t responding first or fast will be taking noticeable hits to revenue growth. Hits their companies might not ever have the chance to bounce back from.
New research from McKinsey shows that digital revenue growth is turning sharply negative for the bottom three quartiles of companies while continuing to increase for the top quartile. Unless you’re already a standout leader in your market who’s responding boldly to DX, chances are your growth is or will soon be trending downward.
Do you or others on your leadership team assume market share will remain stable? Is your plan to continue to focus on the niches in which you’re already profitable? Would you rather maintain your competitive edge by outgrowing traditional rivals rather than taking on new digital models?
If you answered “yes” to any of the above, it’s not looking good. Read this and call us in the morning.
3. Your mindset is all wrong.
We’ve already touched on fear, but there are some other fun emotions that can play into failed DX strategies. Resistance to change. Doubt. Overwhelm. Again, all completely valid feelings— yet still utterly disastrous when it comes to steering a business through 21st Century obstacles.
Wipro Digital found that one in five senior executives have serious doubts in their own DX efforts; going as far as calling them a waste of time.
That same group also named resistance to change and overwhelm at digital complexity as their top two obstacles when it came to digitally transforming their companies.
"People built their careers and power on what they know and it's hard for them to let go," says Kohli.
In order to overcome these crippling doubts and fears, it takes a major mindset shift that must start with your leadership team before trickling downward.
4. You get “why,” but can’t quite work out “what” or “how.”
So, the scary metrics all over the internet, and in your real-life business, finally got to you. You’re totally onboard with DX, but you’ve stalled out because you don’t know where to start.
What needs to change? In what order? And how exactly do we go about changing processes and policies that have been around so long they feel like part of our actual culture by now?
Indecision can lead to one of two outcomes: Inertial or action. Unfortunately, if you’re already suffering from any of the aforementioned ailments such as poorly-aligned DX goals or fear, its likely the action you take will be misguided or ineffective.
A hallmark reason why digital transformation fails is that leadership teams crack under pressure and move forward with half-formed strategies that don’t align with both short- and long-term company goals.
5. You just don’t have the human capital to make it happen.
If you really want to see why digital transformation fails first hand—go ahead and throw a ton of new roles and responsibilities at your existing staff.
You know you’re lucky to have great talent on your team. They’ve helped you build the foundation upon which your company stands, but they don’t have the tools or training to turn it into a skyscraper.
When it comes to transforming to a digital-first strategy and business model, you’ll need software engineers with the latest programming knowledge, product managers, user experience pros, data scientists, AI experts, and more. Do you have what it takes to lure them away from the lucrative salaries and arcades (seriously) at big, established tech companies?
And while we’re on the talent topic, who among your incumbent staff has the knowledge or bandwidth to lead this crack new team? You might even be looking at adding a chief digital officer (CDO) to your C-Suite to to help build your digital team and coordinate DX among departments.
“It is no longer enough just to have the best applications and devices.” says Duncan Tait, Head of Americas and EMEIA at Fujitsu. “Without talented and capable people to use them, they are meaningless.”
6. Your IT department is still taking orders
Having some of the most digital-first employees in your organization trapped on a hamster wheel of responding to one-off requests day in and day out is neither efficient nor effective.
In fact, if your IT department’s main function is still answering one-off requests from other departments, you’re leaving an enormous competitive advantage on the table—extracting patterns from IT practices to guide and strengthen your overall business strategy.
DX isn’t updating a few processes across siloed departments or adding a shiny new chatbot to your company website; it’s harnessing emerging tech and a digital-first mindset to reinvent your offering and value for consumers.
Wipro found that one in for executives say a major obstacle to successful DX is that their company structure hasn’t changed to adapt to new digital imperatives.
Your IT department is not simply a team of taskmasters. It’s time to start appreciating and empowering them as technological strategists who will lead you through the minefield of failed DX efforts.
The road to digital transformation is fast, winding, and fraught with obstacles; but that doesn’t mean you should hit the brakes or just accept coming up short on intended ROI.
Steer into even the tightest turns with full confidence in your strong leadership, business-objective-focused goals, strong talent, empowered IT department, and relentlessly-aligned DX vision.
Take it from race-car driver Mario Andretti: “If everything seems under control, you’re not going fast enough.”