Most CEOs understand the importance of digital transformation. John Chambers, Executive Chairman, Cisco Systems opines 40% of all businesses will die in the next 10 years if they do not change to accommodate new technologies. Gartner estimates 82% of CEOs having some digital transformation program underway.
But not all efforts bear fruit. Here are the common digital transformation mistakes to avoid.
1. Misreading Change
Many enterprises misread the scope or size of the changes to which they commit. They focus on the operating model while being oblivious to the business model. They embark on the digital transformation exercise without a growth mindset.
An operating model focuses on efficiency and effectiveness. It does not consider the market. The business model focus considers the market. The best example is Kodak, who invented the digital camera, but failed to capitalize on it. The company’s failure to see it as a disruptive technology led to its bankruptcy in a few years. Such companies make the mistake of inward thinking. They focus on what they want to do, their internal processes, and their present sales. They do not analyse customer needs or new opportunities.
Forward-looking enterprises use digital to reinvent what they do. They do not limit their vision to disruption in the existing process and ecosystem. They consider digital disruption from a holistic perspective.
2. Not Having Clarity
Many enterprises follow the hype or get too excited about digital transformation. They jump on the digital transformation bandwagon without clarity.
Mere intent, will, or even money is not enough. When the digital transformation goals are vague, the exercise becomes confused and muddled. Success depends on clear-cut action plans, with specific measurable goals. Yet, the action plans have to be flexible, to accommodate the fluid business environment. Over-planning is as deadly as a lack of coherent plans.
Institutionalize lean startup thinking at every level, favouring experimentation over planning. Innovate a “least viable product,” release it to the stakeholders, and develop it further through feedback. The most effective change is through such an incremental approach.
3. Falling for Technology-centric Transformation
Adopting technology for its sake is not a digital transformation, but falling for hype. While new technology benefits, not all technology are worth the investment. A majority of new technology is hype. The benefits come only from a handful that sustains and become viable in the long run.
Focus on digital reinvention through a basket of technological tools. All digital transformation need not be through new tools either. Focus on the unmet needs of the market than technology. Use the best technology to meet unmet needs.
Effective digital transformation seeks the best way to improve customer experience and efficiency. But limiting the aim to upgrade from Windows 7 to Windows 10, without studying its impact or the benefits, is falling for technology, and a mistake.
4. Ignoring Culture
Digital transformation force big changes. It impacts the way a company engages with customers, and at times, it even alters the product.
A digital ecosystem works best in a culture of transparency, with free sharing of information. The fruits of digital realise best in a flat organization where performance trumps hierarchy. In most instances, the ultimate aim of digital transformation is to seize opportunities, access information faster, and gain deep analytical insights. Unless such a culture shift occurs, these objectives seldom realise.
5. Focus on the Short Term
Digital transformation is an ongoing and continuous change. Customer expectations and the external influences affecting the business are never static. Treating transformation as a box-ticking one-off exercise is a big digital transformation mistake. The true benefits may not be visible, or may not even realise in the short-term.
Many enterprises stick to return-on-investment (ROI) metrics when evaluating digital transformation. Such metrics are misleading. Unconventional metrics such as new registrations or online engagement levels measure impact better.
6. Poor Communication and Collaboration
Poor communication and collaboration can subvert the best-planned digital transformation exercise.
Many CEOs and top management consider digital transformation as a management issue and not part of their role. Many top managers consider digital transformation as the job of the IT team. Such cascading disassociation leads to half-baked digital transformation.
Successful digital transformation requires top management buy-in, and support across-the-board.
The onus is on IT to take up leadership of the digital transformation exercise and lend a method to the madness. They have to make sure the strategy planned at the CEO and board level passes down the rank and file.
7. Doing it Alone
Often enterprises stick to internal talent when driving digital transformation.
It requires competent hands to drive digital transformation. Even if such talent is available in-house, they have routine responsibilities. It requires someone who can objectively make assessments from an outsider’s perspective. A person with no stakes or involvement will better to identify what needs to change. External consultants also bring a whiff of fresh air and ideas from their previous projects.
A good example is Centrica, the parent company of British Gas. In 2016, the company brought in an interim CIO who applied his expertise in open source data technologies to transform the company’s enterprise data management capabilities. His ability to change the culture of the IT team, to make them more go-getting and empowered, made a big difference to the project.
Digital transformation is no longer optional, but a necessity. But it is harder than it seems. Unless the enterprise embarks on the exercise wisely, the gains will not realize. Avoid the above digital transformation mistakes and work methodologically towards the stated goals.
