Learning From Digital Transformation Failures
According to a McKinsey global survey of executives, the pandemic caused companies to accelerate their digital transformations by three to four years — in a matter of months. Survey respondents also expected most changes to last, and were making the investments required to make sure that changes stick.
Research suggests that 70% of digital transformation projects fail. So, with more organizations than ever embarking — or in the middle of — digital transformation initiatives, how do we make sure our projects survive?
We know the common pitfalls of digital transformation often center on failed change management, a reluctance to shift company culture or a lack of clear communication and vision. Let’s take a look at the experiences of failed digital transformation initiatives to see what lessons we can apply to where we are now — and identify a clear path forward.
Shift from Emergency to Maintenance Mode
Nearly all respondents to the McKinsey survey said their companies had stood up at least temporary solutions to meet new demands, many of them much more quickly than they would have thought possible before the pandemic.
Respondents to the same survey believed the biggest changes — shifting to remote working, migration to the cloud, moving to online purchasing or service delivery, and greater spending on data security — are the ones that are most likely to stick through recovery. If we think these changes will stick, why didn’t we invest in them before? For many of us, it may not have been a priority. Perhaps we couldn’t get the alignment and focus that a global crisis forced on us. Or maybe we were afraid of how our internal and external customers would react to the change.
When the pandemic first hit, companies worked quickly, making snap decisions, fast investments and sweeping changes to ensure the viability of their businesses. But with the immediate crisis over, how do we let go of the adrenaline and go back to normal (whatever that is)?
- Have a clear vision of your digital strategy. During the pandemic, we made snap decisions required to react in a crisis and keep our doors open. Many initiatives sprung up, led by teams trying to work as efficiently as possible. Now it’s time to unite those spot projects into a clear transformation strategy, keeping the ones that worked and investing in the ones with greater potential to efficiently manage energy and resources.
- Avoid reverting to established ways of working. The pandemic made change easier to accept. We were all in different environments, working differently than we normally would, so it made sense to do things differently. As we return to the office, it’s crucial to avoid slipping back into old habits as we return to the comfort of our cubicles. Just because we can fill out paper forms now doesn’t mean we should.
- Continue to invest in IT staff and infrastructure. While the pandemic may have forced us to accelerate our digital transformation, to be successful, transformation must be an ongoing process of changing the way business gets done. Successful digital transformation requires investment in your people, your infrastructure and your technology. Make sure you’re investing in hiring, IT resources and upskilling where it’s required.
Many companies are discovering that COVID forced changes that should have happened years ago. As we shift back into some semblance of normalcy, now is our chance to take stock, stably recover, and recalibrate to ensure that transformation sticks.
Related Article: The Sudden Move to Remote Work Unearthed Years of Bad Tech Decisions
Focus on the C’s: Customers and the C-Suite
Many organizations resisted necessary changes because they were afraid of how customers would react. If customers were used to calling a representative on the phone, how would they deal with online ordering? Especially if an organization has focused competitive advantage around customer relationships built on one-on-one, personalized service, it’s logical to worry that a shift to digital will disrupt relationships built on years of hands-on, analog experiences.
Yet as you look at digital transformation initiatives started during the pandemic and strategize about how to continue them, don’t forget your leadership team. Are your leaders primarily product-focused and profit-driven, or are they driven by delivering value through technology and armed with digital expertise? In today’s digital world — which is becoming even more digital due to the pandemic — leaders stuck in the past won’t see the same success they’re used to.
For many of us, investing in a chief data officer seems key to success. After all, you can’t digitally transform without someone in charge of managing your data as an asset, right? Regardless of how much you invest in a chief data officer, if your leadership team doesn’t align around the value of your data — increasing the value of it and ensuring that your decision-making is data-driven — digital transformation won’t succeed.
Related Article: Why Digital Transformation Fails
Resist the Allure of Change for Change’s Sake
Most of us are by now used to operating in crisis mode, making changes quickly to survive. Yet as we edge back into normalcy, it’s easy to look at the things that aren’t going well and think technology can fix them. It’s like comparing an exciting stranger to your stable married life: the allure of automation and analytics can make it easy to ignore what’s working, while you chase after what’s new and exciting.
Instead of focusing on what’s new, focus on what serves your vision and strategic goals. If you’ve come out of the pandemic with a need to try something new, before you embark on a digital transformation initiative, ask yourself a few questions:
- Do we need to fix our technology, or our business model? It’s easy to think digital transformation is a replacement for fixing what is already there. It’s much more exciting to buy new technology instead of looking at your business model to see the gaps and weaknesses and fix them — mostly because that requires dealing with people who might not like the changes you’re proposing.
- How will digital transformation help us achieve our goals? Whether you’re looking to digitize your customer experience, build a new business model around digital technology or use technology to improve internal operations, digital transformation should help achieve a strategic goal. Otherwise, it’s just wasted effort.
- How will we measure success? Digital transformation requires continuous monitoring and intervention to make sure that your team is making the right decisions about your transformation efforts, but it can often be a challenge to tie those metrics to the bottom line. Make sure that you’re supporting digital initiatives with the necessary resources, and that you’re tracking time to market and overall return on investment.
Transformation for Transformation's Sake Never Works
Amy Cuddy and JillEllyn Riley identified “pandemic flux syndrome” in a recent Washington Post article. They defined it as increased sadness or anxiety accompanied by the urge to dramatically change something in our lives. As the pandemic drags on, many of us are facing pandemic flux syndrome at work, too — the urge to change something, anything, just to feel that fresh start.
But transformation for transformation’s sake has never been successful — just ask Procter & Gamble, GE or Nike. Transformation must fit your vision, strategy and goals — where you are now as well as where you’re headed. Yet if you wait to be disrupted, whether by a competitor or a pandemic, it could end your business. Take the time to transform your business before something else does it for you.
About the Author
Melissa Henley is Senior Director of Customer Experience at KeyShot, the global leader of product design rendering software. Customers are at the heart of all Melissa does, and her passion is around connecting people to content that can have a genuine positive impact on their lives.