Business transformation is no longer innovative or a nice to have in your strategy, it is an imperative to the success of your business. The challenges of 2020 highlighted the ability of many organisations to adapt and implement digital solutions faster than previously thought. As a result this has put digital transformation front and centre as a strategic imperative in the short term for many organisations.
When you move through the execution of a digital transformation strategy, it should be a new organisation that emerges from the other side. This is a re-invention process, not just for technology and processes, but for the culture of the organisation.
We see a number of strategy, governance, management and implementation mistakes happen when an organisation takes on a digital transformation program. Done wrong, digital transformation could mean millions of dollars in sunk IT costs and the alienation of employees and customers.
At GOYA Consulting we partner with our clients to ensure they avoid the common digital transformation mistakes. Here’s a snapshot of the top 10 mistakes we see regularly in digital transformation programs:
1. Unable to move successfully from strategy to execution
A horrifyingly scary statistic is that over 70% of digital transformation programs fail. Whilst there are many and varied reasons for this, a core component of this is their inability to translate the strategy into a viable execution plan that prioritises initiatives on process, products and areas of the business that will provide incremental value and alignment with the long-term strategic plan.
Instead of trying to do everything at once, create an execution plan that has discrete programs of work that are aligned with the overall strategy. Don’t try and white knuckle this journey – it takes skills and considerable thought to translate a strategy into an executable program of work that is correctly prioritised to not only deliver change, but minimise disruption and add value.
2. Not having a committed Board and Leadership Team
A common failure point is not having a deep enough commitment from the Board and the Leadership team from the inception of the program of work. Understanding and agreeing to the vision and strategy for digital transformation is not the same as committing to the program of work and allocation of budget and resources for the entirety of the program. Without a deep commitment to the process of change it can be very difficult to get all parties to do what is necessary to achieve the vision and strategic intent.
Building commitment takes time. Take the time up front to have all of the stakeholders engaged, aligned and committed to why this is being done and how the process will occur. It can save you from herding cats later on, and it can also de-risk the possibility of broader, cross functional elements of change being derailed later on in the process.
3. Technology Culture Shock
Your people are your most important asset, and your digital transformation is not only changing your technology and processes, it is supporting the ‘why’ and ‘purpose’ of the organisation.
Your people and your customers need to be at the core of your design, and the leadership team need to be committed to the change. If you don’t put people at the centre of all thinking and design, you run the risk of implementing technology and process that will fail to deliver. In some instances, we see this create a chasm between the direction of the technology and your people and how they work.
4. Resistance to Change
Resistance to change rears its ugly head in many different ways, but the common things we hear are:
· “our people aren’t ready for this – it will take too much training and change”
· “the cost is more than we anticipated or put in our budget"
The resistance to change, in whatever form it arises, holds your organisation in a steady state that allows competitors or new entrants in the market to get a leg up.
The reality is, the new organisation that will emerge from the other side of your digital transformation program will in fact cost you your old one. This is a good thing, and never a negative. But when not understood or managed it can hamper or even cause aspects of your digital transformation program to fail.
The adaptability of everyone in 2020 has shown how capable and ready for change most organisations are. Digital transformations are long programs of work encompassing everyone in the organisation and they do require significant change programs, not just from technology implementation but also from an organisational design and culture perspective.
Will it be tough? Absolutely! Will it be easy? Unlikely, but the results will be worth it. In our experience, people are always more ready for these changes than leaders give them credit for. Don’t let this be an issue for decision resistance. Building in a strategic approach to manage change from day one will support an easier implementation and transition process.
5. Disaggregated Approach
Digital transformation is a bit like building a house – you really should build all aspects of your house in the one project. You can break it up and go through an iterative building process, but it is likely to cost you significantly more if you build it slowly and piecemeal over time. Sure, digital transformation is a big-ticket item in terms of price. It’s also a long project that is time consuming and may require other projects to be de-prioritised to ensure adequate resources are available throughout the process.
Think about building a house, you want more than walls, a lockable door and a roof over your head…..you also want that house to be completed with all of the fixtures and fittings that make it liveable and a place you want to be. If you take an incremental approach to digital transformation, you run the risk of running disaggregated smaller projects and trying to fit them into a cohesive strategy. You will find it difficult to leverage the true forecasted benefits of your digital transformation strategy - not only will you fall short on any benefits realisation, you will also fall short on keeping up with your customers and competitors.
Don’t mistake this for taking an iterative approach in the implementation. Commit to an entire solution and program of work, and understand how this can be broken down into an iterative delivery and implementation model.
We recommend to our clients to take on digital transformation in a holistic manner and find the budget and resources to take it on in its entirety. The upfront cost is high, but it will cost you significantly less in the long run to do it this way.
Taking the leap into an all-encompassing digital transformation process is scary, but when strategized, planned and implemented correctly the efficiencies and positive change that you can leverage, and see on your bottom line will make the investment worthwhile.
6. Vision and Definition of Success A Little Fuzzy
As an organisation embarks on a digital transformation process it needs to be understood that the leadership team can either set the process up for success or failure.
When a leadership team hasn’t clearly defined what digital transformation success looks like to their organisation, it makes it very difficult to establish targets and measurements for success. If the definition of success is not clearly defined, and agreed by all members of the leadership, the strategic purpose becomes unclear and harder to align to over long periods of time.
We work with our clients to understand what the newly, transformed organisation will look like. Understanding what we trying to achieve over the long term helps the leaders align the business with long-term program of work. Through this we can support the development of clear defined goals and measurements, which can be translated into KPI’s for the appropriate leaders and staff.
Beginning with the end in mind helps every person of the leadership team visualise the end result, it enables them to better articulate the long-term program of work and areas of priority to maintain the ongoing alignment from the business with the implementation and delivery teams.
7. Blinkered Thinking
We are aiming for a new organisation to emerge from the other side of the digital transformation process, but this cannot occur if we are only examining the problems of the past. Digital transformation is about more than looking for efficiencies in the old IT function. It is about opening up the process to look at a digital model that that considers the organisational value proposition, products, customer interactions and monetisation strategies.
Seeking a new way to position the organisation in the market to compete in a more digital and global environment needs to be done through the understanding how this will elevate the business model, rather than plugging efficiency gaps.
8. Misunderstanding the Impact of Digital Transformation
Whilst digitising your organisation will be required to remain efficient and competitive, it can’t transform a bad business model into a great one. It is imperative that leaders also examine how digital transformation will affect their industry, competitors and customers and then consider their value proposition against this new landscape.
For some organisations, digital transformation may trigger a rethink and reinvention of their business model, because it should be a foundational change to how an organisation delivers value to its customers. A technology solution alone can’t do this.
9. Paralysis by Analysis
Organisations often find it hard to strike the right balance between correct and careful planning and being agile and responsive. Too much information, too many choices and attempting to decide by consensus can create delays, particularly when these decisions require significant investment and a metamorphosis for change.
We encourage execution and iteration on an organisational wide approach to get out of the planning process and into delivery. Being stalled in the paradox of paralysis by analysis, reduces the ability of your organisation to be responsive and delays in time inevitably create greater costs over time.
The challenge is to strike a balance between embracing the process of digital transformation to help the organisation face the challenges of technological change head on and implementing an appropriate strategy.
10. Technology Complexity
A narrow focus on the type of technology to be deployed, generally means the team has lost sight of the outcomes they are aiming to deliver through digital transformation. When the conversation is focused on the names of vendors, instead of the solutions, products and experiences that transformation will allow them to deliver, this is a leading indicator that you need to take a step back and change the focus back to outcomes and deliverables.
The focus needs to remain on the outcomes and not the method or type of technology being deployed. It’s too easy to be distracted by sexy tech like Artificial Intelligence and machine learning, but we need to ensure that we are solving the problems of the organisation, its customers and implementing solutions that will deliver a positive impact.
As you move through the development of your Digital Transformation strategy and roadmap, give some thought to how you can avoid falling into the trap of these common mistakes. If you feel that you are already falling down the rabbit hole of some of these mistakes, all is not lost, but it may be time to take a step back and reconsider your strategy and process. It's worth taking the time to get it right.