Digital transformation has been around for many years now and yet there are organisations where the spirit that underpins digital is (still) lacking. Some companies (still) treat digital as something to do with infrastructure and IT or they are merely digitising their old paper-based processes. Others focus on a small number of lighthouse projects which make great content in annual reports but are far away from bringing a digital DNA into their organisations. All too often we (still) forget that digital transformation is about people and it is certainly changing the way we do business, highlighting the (desperate) need to bring in the customer perspective and rethink underlying business models.

Key reasons for digital transformation failures

The Covid-19 pandemic has hit us almost 2 years ago and great progress has been made on many levels. For some organisations what was previously unthinkable when it comes to digital has become a reality (most notably in form of work-from-home policies) and yet, there is still a lot to be learned especially when we look across borders to what’s “best in class” on a global level.

Here are some of the most common reasons for digital transformation failure and how to avoid them.

  1. Lacking the right mindset
    Putting digital transformation on the agenda just because it’s what you do nowadays is simply not good enough. This is called “transformation-washing” and it’s doing more harm than good in the long-run. CEOs really need to get behind the transformation, model the right behaviours and help to operationalise them.
  2. Not having the right culture
    Culture eats strategy for breakfast, yes, we know that but culture change really is at the heart of digital transformation. Those organisations that embrace change, promote collaboration and enable continuous learning (amongst other things) do much better than others.
  3. Not hiring the right talent
    It’s great to have loyal and long-serving employees but they are probably not going to drive fundamental transformation. Hiring has become more challenging in the pandemic (it’s called the “Great Resignation”) but it’s also a chance to be more creative, look beyond industry boundaries and think about the employee experience as well.
  4. Moving at snail’s pace
    In many old economy industries (but others too), the concept of a two-speed IT (still) hasn’t gained a foothold. The idea is that customer-facing digital capabilities should be developed at a high(er) speed than changes to legacy systems. This and other factors play an important role in achieving the necessary organisational agility.
  5. Lack of clear goals
    That’s a classic. In the early days, digital was often used synonymously with cutting costs and while that’s a legitimate reason (and certainly a clear goal), digital is also a big differentiator or enabler in terms of the customer experience. And a lack of vision and clear goals in that regard can be very problematic: people will start to work in a lot of different directions and budgets will likely be spread to thinly across projects to lead to real outcomes. Being strategic also means saying “no” to things.
  6. Focusing on the technology
    Many organisations implement systems just to then realise, they are either not used at all, or not in the intended way. Similarly, many companies decide at some stage during their digital transformation that they need a “customer portal” – mainly because it’s what they want, not what their customers want (not that anyone bothered asking them). So, it’s key to take the people (both customers AND employees) on this journey and to step up the change management game.

The above lessons are critical but should not come as a surprise to anyone who works in this field. Far more important is to put digital transformation into a much bigger context. And this is where some of our latest research comes in.

It’s time to move beyond digital

 

Winning in today’s world requires more than digitising existing processes. It requires understanding that the nature of competitive advantage has shifted—and that even being digital is not enough.

In their latest book “Beyond Digital” PwC and Strategy& authors Paul Leiwand and Mahadeva Matt Mani are revealing their research into what enables companies to successfully master transformation and shape the future.

These are their 7 imperatives for successful transformation beyond digital:

  1. Reimagine your company’s place in the world
    Many organisations struggle to look beyond their current business(es) and products to determine what value they are creating and for whom. In other words, they lack a clear purpose. Looking at trends and asking customers what they want isn’t enough. Companies need to develop their own one-of-a-kind point of view on what problems they are here to solve and what differentiating capabilities are required for that.
  2. Embrace and create value via ecosystems
    Many of today’s problems are massive and span multiple industries so that no single organisations can solve them on its own. Think about the revolution in the energy and mobility sectors. The only way for companies to thrive in this disruptive age is to work within ecosystems and benefit from the capabilities that others have built in order to deliver their own value propositions—and do so at speed, at scale, and flexibly.
  3. Build a system of privileged insights with your customers
    Customers have always been demanding. But as markets have become more diverse, dynamic, and complex, the expectations for service, consistency, and trust have changed completely. At the same time, opportunities for data collection, storage, and analysis have exploded. And the one tool that companies have used to get to know their customers, market research, is not equipped for this new world. Staying relevant with customers today requires building trusted relationships to gain unique insights on their true wants and needs in order to increase the value for them.
  4. Make your organisation outcome-oriented
    Creating value through new differentiating capabilities requires a new model of working and teaming. Temporary cross-functional teams aren’t enough anymore, let alone working in siloes. Instead, organisations have to build more durable, outcome-oriented teams that bring together the needed expertise, knowledge, technology, data, processes, and behaviours from across the organisation.
  5. Invert the focus of your leadership team
    Just as companies need a strategic effort to build the right differentiating capabilities, leadership teams need new skills and mechanisms to shift to this new form of value creation. It’s best to step back and start thinking from a clean sheet: Do you have the right roles? Do you have the right people? Are you focusing on the right things? Leaders need to rethink the composition of their team to drive collaborative performance and shift the team’s focus to propelling the transformation.

     

  6. Reinvent the social contract with your people
    As already mentioned above, transformation of this kind requires a big mindset and culture shift. Employees need to understand their role, connect with the company’s purpose, feel a sense of community and be able to develop the skills and experiences they need. Organisations on the other hand need to reinvent their relationship with employees, putting them at the centre of the value creation model and giving them the means to lead and drive the transformation.

     

  7. Disrupt your own leadership approach
    Modern leaders need to proactively invest in their own leadership capability development, building a new type of leadership that balances across a range of leadership paradoxes: being both strategists and executors, both tech-savvy and deeply human, adept at both forming coalitions and making compromises while being guided by their integrity. At the same time, they need to be humble and understanding of their limitations. They also need to constantly push for innovation while being grounded in what they are as a company. And they must be globally minded as well as deeply rooted in their local communities.

Hear from the authors and find out more about “Beyond Digital” here or order your book on Amazon.

 Autorin: Margot Huber

Sources:

PwC and Strategy&, Beyond Digital, 
https://www.strategyand.pwc.com/gx/en/insights/books/beyond-digital-transformation.html

Harvard Business Review, 26 March 2021, Digitizing Isn’t the Same as Digital Transformation, https://hbr.org/2021/03/digitizing-isnt-the-same-as-digital-transformation

TechTarget, 22 March 2021, Why Digital Transformations Fail: Top 6 Reasons,
https://www.techtarget.com/searchcio/tip/Top-6-reasons-why-digital-transformation-failures-happen