The #1 Reason Why Digital Transformations Fail

Harvard Business Review just published why so many high profile digital transformations fail highlighting some of the difficulties several high profile programs. They reviewed digital transformations from GE, P&G, and Nike and suggest several lessons learned:

  1. "No managers should view digital — or any other major technological innovation — as their sure salvation."

  2. "It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems"

  3. "It’s important to calibrate your digital investments to the readiness of your industry — both customers and competitors"

  4. "The allure of digital can become all-consuming, causing executives to pay too much attention to the new and not enough to the old."
While I agree with all these points, I think HBR put too much emphasis in the wrong message to the average small, medium, and large business. Perhaps "high profile" digital transformation programs need to be evaluated differently.


The Real Reasons Why Digital Transformations Fail


IMHO, here's why many digital transformation programs fail - 
  1. Failure to start, either because there's a lack of leadership, leadership can't agree on strategic goals, or there are too many leaders vying for the top spot leading the digital transformation program.

  2. Leaders across the organization don't fully understand or underestimate the investment it requires to drive a digital organization.

  3. Executives don't invest enough attention in the digital transformation programs (in contrast to HBR's #4)

  4. Leaders, CEOs, and Boards still judge digital investments on 1-3 ROIs instead of 3-7 year transformations programs.
Let leave reason #0 aside. but I had to mention it. If you don't get a strategy and transformation program off the ground because of internal apathy on the need to change, or disagreements on strategy, or fighting on who or how the program should run, then you are already marching to failure and potentially business doom. Failure to start is still a failure and according to one study, 60% of organizations lack a transformation strategy.

And the #1 Reason Why Digital Transformations Fail


Assuming you get past the starting gun then ....
The number one reason digital transformations fail is because executives fail to embrace that it's a bottoms up transformation that will require change across the organization over a 3-7+ year period. Tweet: The number one reason digital transformations fail is because executives fail to embrace that it's a bottoms up transformation that will require change across the organization over a 3-7+ year period.
In other words, organizations that just focus on new business models, new technologies that drive competitive advantage, new digitally backed customer experiences, or becoming analytical and data driven are touching the initiatives that digital.
The heart of what makes transformation succeed is focusing on the people and process transformations and giving the organization, customers, and often the industry sufficient time to respond to the organization's digital initiatives.  Tweet: The heart of what makes #DigitalTransformation succeed is focusing on the people and process transformations and giving the organization, customers, and often the industry sufficient time to respond to the respond to the organization's digital initiatives. - @NYIke

Transformation Slowly Happens by Empowering Digitally Driven Leaders and Employees


To "succeed" at digital transformation, organizations need to focus on how they operate and consider how to enable employees to be more digitally driven. Here are some examples:
  1. Are your business teams taking on roles in agile programs or are you still looking for multi-month project plans? Or worse, is agile a technology process?

  2. Are your building digital experiences based on incremental feedback from the markets, customers, and non-customers? Or are your MVPs overloaded with everything everyone wants?

  3. Are you enabling a people first, learning, and experimenting environment or are you still throwing people under the best when something doesn't go as planned?
Successful transformation programs are about inspiring people - prospects, non-customers, customers, and especially employees on what your brand represents, how you deliver value and simplify things for customers, and how you inspire employees to drive the organization to new heights.

Maybe, we should be less concerned about the high profile failures.


1 comment:

  1. BTW, this is why Agile Transformation is chapter 2 of my book Driving Digital. Among many other benefits, agile helps many more people in the organization join teams and participate in the transformation.

    ReplyDelete

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