Digital Transformation Challenges / What Helps, What Doesn’t?
“Digital Transformation” is not a magic stick. You can’t just throw money at a problem and expect everything to work out. Digital Transformation can – and does – sometimes fail. And often, that happens even before technology is even involved.
We’ve spent 25 years helping companies to fully realize their digital potential. We’ve seen how digital transformation helps business time and time again. But we’ve also learnt some of the biggest reasons behind why digital transformation fails.
Often there are internal organization challenges that get in the way. We didn’t spend 25 years simply installing new software and leaving. We’ve worked hard on our own culture and we’ve seen similar changes in our partners.
After all, 25 years ago most companies didn’t have a Head of IT, yet alone someone responsible for transformation or digital projects. In fact, there are still many businesses out there that don’t have such roles. And that’s just one challenge still hindering many companies in their quest for digital dominance.
Do You Need An Innovation Leader?
Who is responsible for digital transformation strategies? In some businesses, there’s a C-level person responsible, while in larger enterprise digital transformation projects, each area might have its own head. Others might simply leave it to each team to decide what they need – and some might have nobody at all.
Yet, while transformation might not always need a singular leader, it always needs leadership. We’ve found the most successful businesses are those that encourage digital transformation from the very top. This isn’t to say that it’s the ruling board that makes the decisions, just that they’re the ones removing the barriers and opening the floor for conversation.
Innovation Needs Open Culture
Transformation requires new ideas. A company’s leadership needs to provide an environment where those ideas are brought forward. Leadership is not about control. It’s about enablement.
This is true when it comes to both internal and external ideas. It’s just as easy to dismiss consultants because they “don’t understand us” as it is to dismiss an internal idea because of where it came from in the hierarchy (which is something we don’t recommend).
Let’s put it another way – if you won’t listen to anyone already on your payroll, why would you listen to us?
The Fear of Change
Not everyone likes new things. There’s always the risk that it might fail, but as we said before, risk is often essential. Our own business went through many such decisions, and we’ve helped many others overcome the same fears.
And the biggest reason behind such resistant to change? The fear of failure. When a company is “going steady”, any change is often met with a “if it’s not broke, don’t fix it” response. Company’s often value their current position enough that any potential failure must be avoided. Since there are no guarantees in life, this limits any and all changes.
Internally, companies need to enable ideas to grow, rather than stopping them at the first mention of risk, loss or other words. Instead, do you research, test the ideas and be open to proposals; understand that not every new idea is a winner, but a complete lack of change will always lose in the long run.
It’s Good To Be Challenged
When confronted with an uncomfortable truth, there are typically two key reactions. Many are immediately put off by the idea, as they take it personally. Others are happy to learn something new and relish the improvements that may come.
People often forget that the scientific discovery process is as much about being wrong as it is right. Transformation is no different. To find the best solutions, we must often test things that may fail. This also means accepting that what might have been good 25 years ago isn’t good anymore.
When this attitude isn’t embraced, it leads to negative reactions in such situations. That, in turn, shuts down the desire to speak up from other teams. If the company isn’t willing to leave its comfort zone for the sake of the future, forward-looking individuals will be branded as problem-causers. Those that bring new ideas need to be welcomed. Such challenge is how we identify what current works and find new alternatives for what isn’t.
A Narrow View of The Market
As a counterpart to challenges, the online world also brings with it more competition. This brings both new challenges and new inspirations. Take a look at other markets and their leaders – maybe you can identify trends that you can take timely advantage of? 😉
Many companies still think locally when talking about their competition. In many industries, your competitors could be on the other side of the world. If you’re not open to this wider view, you’re not only missing out on some inspirations, you risk losing out to companies you never saw coming.
Every department has different needs. Logistics, customer service, marketing…the customer. There’s no singular solution that does everything perfectly. If this were true, we’d all be using it and Unity Group would’ve closed its doors a long time ago.
In the past, this lead to the adaption of monolithic systems that now haunt many companies as legacy platforms. Smaller needs don’t get resolved until the entire company is ready.
So, if we accept this fact, then it only makes sense that every department needs enough freedom to make the choices best for its own needs, so long as those needs don’t impact others. Technology has made this easy enough, thanks to composable architecture and system integration – a little API can work wonders 😉
Yet the internal mentality often still needs to change. Every possible change needs to be measured, weighed and tested on its own individual merits, rather than the collective whole.
Failing to Recognize New Trends
“We remember telling new clients to bank on the internet, but some didn’t believe us – there was a time when the internet ‘only’ had 50 million users!”Grzegorz Kuczynski
Managing Partner, Unity Group
Some of the biggest companies can easily fall by the wayside because they failed to recognize a growing trend. While hindsight is a wonderful thing, the ability to recognize potential disrupters is essential.
Blockbuster failed to adapt to the internet for example, and Toys R Us no longer exists in its core markets for similar reasons. But they’re far from the only example. Even technology companies can go wrong. Nokia used to own the majority of the mobile phone market, and even made the first “smartphone” in 1996*. In all these cases, new trends were either dismissed or ignored.
*Yes, really. We don’t feel so old anymore!
Pride in the Past
The previous point – failing to accept the potential of new developments – is often linked to an idea that everything is currently perfect and will continue to be so.
Yet, companies that address and accept their own downsides are the first to overcome hurdles. That’s how digital transformation disrupts legacy leaders. While we haven’t done the scientific research, it can be said that nearly every company dominating their markets today did so because, at various points, they took steps the others weren’t able to take.
Copying the Competition is not Enough
Too often, it’s easy for companies to imitate what their leading competitors do. If they go in X direction, so do you, right? Yes… but actually, no.
Simply adapting the trends from your biggest rival will maintain the status quo, but it’ll never help expand your market presence. After all, you’re letting the other company get their first. It also doesn’t address any differences in your customers or segments.
Perhaps, most importantly, it creates a culture or laziness. Without understanding the reasons behind those decisions, your results will vary wildly. You’re not researching your users, considering the reasons or fully exploring the benefits. Without gaining this knowledge for yourself, it’s much more difficult to gain the same amount of success.
Listen To The Customer – And Listen Intently!
On a similar note, it’s essential to listen to customer needs. Modern technology has many ways of doing this, from using analytics and e-commerce data to performing UX reviews… or even speaking directly to the customer, there is a wealth of information available.
Yet many still make decisions in closed boardrooms based on assumptions. There were times when businesses large and small still dismissed mobile commerce as a fad, for example. The recent pandemic was another case – some quickly looked into meeting consumer needs, while others delayed and delayed.
In these situations, customer behavior and adoption increased, while business lagged. This is because many companies still hold on to the idea that they know better. In the retail world, the guys on the shop floor will often tell you that “the customer is always right”, but this motto isn’t being repeated in the higher echelons. When the customer is using new channels, or facing new challenges, your job is to resolve those needs, not argue about their very existence. There is no benefit to be gained in dismissing the customer.
When we move into VR, AR and other new channels, will we also be so dismissive? Let the customer inform that answer.
Perspectives Are Too Long… or Too Short
It might seem all encompassing to say, but companies often lack the right timeframe for planning digital strategies. This is often tied to the fact that they don’t have a dedicated strategy at all, so it’s attached to the perspective of other goals, namely fiscal.
We recommend companies have a digital strategy covering the next 1-5 years. This can cover both the short term objectives of fixing immediate problems and minor benefits, as well as the long term goals of replatforming, opening new channels or otherwise overhauling the digital side of the business.
- If you focus only on short term goals: only cost-effective results that bring immediate ROI will be viewed as viable. Over the years, this leads to a backslide of sorts as other companies make leaps forward – but your organization isn’t open to such discussions.
- If you focus only on long term goals: over enough time, your business ends up jumping from big solution to big solution. Then, it doesn’t deliver on business objectives because time wasn’t spent on the finer details and optimizations.
The answer? Agility. Companies need plans and goals that look to the next few years, while also regularly being able to adapt and change them. New initiatives need to meet urgent needs, and the overall strategy needs to change as the markets and wider world changes.
Why Digital Transformation Efforts Fail
This list of far from exhaustive, but these are some of the biggest barriers that we’ve noticed time and time again. In these situations, digital transformation fails because:
- Nobody is responsible for it
- The culture doesn’t encourage people to speak
- The fear of change – specifically in leading to failure – is too strong
- There isn’t a long term digital strategy
- The customer needs aren’t the core consideration
- Departments lack individual freedom
- Nobody can admit problems
Before the business can transform on the outside, it needs to transform internally. Technology can only solve problems or bring innovation after companies have made the choice to do so. And we still see many situations where that choice isn’t able to be vocalized.
But of course, if you’re reading this, you’re open to new ideas – and that’s good! You’re our kind of person 😉