What should you consider to avoid failure in digital transformation? Actually, there are many things! Companies are striving to achieve innovation, better profits, business intelligence, efficacy, and sustainability. The shortcut is digital transformation. That’s the answer to pave the way to your business success. Digital transformation is what we will uncover in this article. Here, we will explore the five areas you want to consider when implementing a digital transformation initiative.
First, we need to understand exactly what digital transformation is. Why? Because if you have a good understanding of the term, where it’s come from, and the background to the actual vision of digitalisation, you will get a fair idea of why it’s been a misconception. This misconception ripples across business leaders, who need to recognise the overall transformation process. That’s why they incur failure in digital transformation.
Let’s dive in!
What is Digital Transformation?
Digital transformation is implementing a software system to improve your operations and radically deliver value to your customers. So, it’s simply looking for a new software system to either implement and introduce to your business or change an existing one which is the same process.
Let’s break down digital transformation in terms of where it’s evolved and developed and compare it with digitalisation and digitisation. Digitisation is simply converting data into a digital format. However, digitalisation is converting manufacturing processes to a more digital format. Digital transformation is a broader term that is quite different from digitisation and digitalisation.
Digital transformation is converting all aspects of your business and connecting these aspects together to improve the productivity and the continuous performance of your firm or business. It’s a process of organisational or societal change driven by ICT innovations and developments.
Digital transformation also includes adapting technology that involves your whole business and plays a massive part in your company’s technology foundation. That’s why we’d like to call it a business transformation because it will convert all your operations to a new model of management, reflecting all areas of how you act and react.
Sounds pretty easy, right? However, it raises a few questions regarding why so many businesses fail to do this correctly and how you go through this process. You need to understand what business leaders are leaving out and what people need to recognise when it comes to the overall process.
Now, let’s break this down and look at the key areas you want to consider while going through a digital transformation initiative. We will discuss some hands-on experience in digital transformation and what failures and successes look like. We will also conduct a relevant literature review of the term to understand what failure rates are from an academic perspective.
Main Principles of Digital Transformation
Digital transformation affects business models, processes, people, products, and organisational structures. So, what are the key principles for implementing digital transformation? Let’s see!
1. Identify Any Gaps
In this stage, you need to shift your focus to what your business can offer or do to your customers. It also directs you to what you’d like to introduce in your business in the near future.
2. Create New Value for Your Stakeholders
If you want to go through this process smoothly, you need to engage your stakeholders in each step to make sure you get their support. You need to plan for brainstorming sessions to listen to their perspectives and hone your adaptability skills to create a new strategy if necessary.
3. Be Ready to Set Up a Cross-Functional Team
As the digital transformation process will affect all departments in your company, you need to have a cross-functional team to discuss all fresh ideas throughout the organisation. This team will also uncover all possible challenges upfront.
6 Ways to Avoid Failure in Digital Transformation
Many companies have a well-thought-out approach to start transforming their business to the new area of digitalisation. However, statistics show that most of them are getting stuck, and their plans are going directly to drawers where no one checks them again. To avoid this hopeless scenario, here are 5 ways to make your digital transformation plan successful and tip the scales of your operations in your favour.
1. Keep Your Eyes on the Resistance Level in Your Organisation
Digital transformation is great for any business. That’s why 91% of companies strive to invest in it, making it a priority. At the same time, it can have implications for specific individual job roles or responsibilities, which has a knock-on effect, leading to resistance to change towards the outcomes of the overall project or process.
The first area we can look at to avoid digital transformation failure in business environments is resistance to change. It can come from anywhere within your business. It may be your primary stakeholders, like your customers, or your employees, who need more time to be ready for this transformation. It could also be your top-level management, your investors, or whoever it may be who wants to resist your new plan to digitise your company.
It’s so important to have a look at this concept of resistance to change and understand your employees’ fears built around technology. Most of them think that this technology will replace them entirely in less than a decade, so they are likely to push against your plans or future decisions.
The immediate response to this problem is to start technology implementation as earlier as possible. However, if you are struggling with this setup, start with new software systems by either replacing existing systems or introducing new ones to improve your business performance and productivity.
Let’s also highlight the importance of executive sponsors’ role in this critical phase. They can create a chapter on the success or failure of the digital transformation program.
Unless you have plans to mitigate this risk or the right communication levels built in from the initial planning stages, you will never be able to manage this type of resistance. If you want to avoid being one of 70% of companies which witnessed a failure in executing their digital projects, plan to open new channels with your team.
Be also ready to take the essential actions by asking yourself some critical questions, such as who your primary stakeholders are and who those individuals or groups that are capable of resisting any of your future plans or actions are. This could be anything from your employees or customers.
Meanwhile, consider carrying out a stakeholder mapping analysis. This tool allows you to identify your key stakeholders and how you need to communicate with these individuals effectively.
Among the main reasons for digital transformation failure is the mindset of employees. They think the technology might infringe on their creativity, and they deal with digital tools as an evil, not an assistant. So, the most important part of this process is to communicate transparently with each member of your organisation.
2. Understand Your Company’s Needs
Now that you understand your primary stakeholders, it’s time to determine why they’re resisting the change. This could be concerning in terms of the different perspectives that come with digital transformation, whether it is a people’s perspective or whether people resist the change due to a lack of communication or involvement with the overall process.
To understand your company’s needs, consider answering these questions:
- Is this transformation from a technology or structure perspective where the employees may lack adequate training and support through implementing new technology?
- Do they understand the new software system that you’re introducing?
- Do they understand how to use it, or are they unaware of how to adapt effectively?
- Are there certain emotions and frustrations built around new structures and changes within your business environment?
That can be summarised in one word: culture. Make sure you have the right corporate culture before diving into digital transformation. You have to hold discussions with all managers to enforce a culture of innovation that allows you to harvest digital-first technology and have it at the forefront of your future aspirations.
3. Create a Clear Strategy
You might face that moment when everything is blurry, and you might lose control of managing your business efficiently. That’s because you still haven’t set digital transformation as a high priority and haven’t created a clear strategy and a vision aligning with this strategy.
Companies that follow a clear strategy for digital transformation have a brilliant tool to track their customers and a good communication network to get all employees connected. They also have a great AI-powered system to manage all boring manual executive stacks, such as creating spreadsheets and so on.
Before investing in any tools or bringing in an outsourcer to set up a new system for digitalisation, you need to have a clear strategy to avoid stumbling midway. So, ask yourself these questions:
- Do you have a clear vision?
- Does your vision align with your strategy?
- Are you following a coherent strategic framework?
- Do your goals align with your overall strategy?
- Does your strategy consider your people, processes, and technology?
It’s important, like any plan, to have a clear step-by-step guide so that everyone understands exactly where you’re going and how you will get there.
This process is down to those employees directing the transformation processing, who will play a crucial role in developing and growing your business and your digital strategy. These individuals must set clear goals and objectives with an informed action plan to achieve them effectively.
Eventually, you need to ask yourself whether you can change this digital transformation strategy within your business and whether you have the right resources to change and the right people to occupy or implement the change.
4. Create a New Scheme of Work
The process of creating a new scheme of work may be difficult for some businesses that are struggling to embed the new working methods. This is because they’ve embedded the existing ways of working for some time, and their employees have become comfortable with their jobs and responsibilities. Over time, these ways of working become more and more difficult to change.
This problem is also down to the management and leadership providing adequate training and support. Their training is very important to ensure that everyone has a clear and transparent understanding of how to use the implemented technology effectively.
It may be worthwhile creating incentives or rewards to encourage people to become embedded in the new ways of working, the new culture, everything you’re trying to implement, and how to become innovative.
At this stage, you have to ask yourself more questions, such as:
- Are you prepared to become a digital-first company?
- Do you have a business which can harvest innovation?
- Are you capable of implementing change and adapting to change?
- Do you have the proper skills, expertise, guidance, and support around implementing the overall change process?
- Are your employees open to adapting to change?
All these key points will have to be considered when going through a transformation process. What’s important here is carrying out some research and analysis of your employees, trying to figure out what exactly motivates them to buy in or change.
5. Set Realistic Expectations
The final point regarding some business transformation failures is setting unrealistic time expectations. It depends on your company, the technology you’re implementing, your capacity, and your overall direction. So, you need to ensure that you’re not setting unrealistic time expectations.
What makes time exceptions unrealistic? There is no short anwer. Many businesses think that they might only take up to a couple of months. In fact, it takes a couple of years, and it can also relate to the current project and the training you provide to your employees. From our own experience in Profiletree, we have taken two years to implement a successful digital transformation.
It’s essential to highlight the importance of the time and effort you need to put into this transformation because you’re going to go through a long process in terms of your planning stage, your internal analysis, and your understanding of your customers and their requirements.
When you set your strategy, pay attention to developing a realistic schedule, especially when implementing a new software system for your team members’ training and support with the right resources. Your reflection on the overall process is also important in terms of understanding and ironing out any of the business needs, limitations, or frustrations that come up throughout the process.
It is a long enough process, and you need to ensure you’re setting out realistic time expectations. By doing so, you’re taking advantage of opportunities, not rushing the overall initiative, and not failing to achieve your desired outcomes.
6. Set Out a Clear Analysis of Your Internal Aspect
Many businesses fall into the trap of how using technology is so cool. They become more excited about enhancing their organisation’s efficiency through advanced tools. This task is often assigned to one or two executives to put together any business case. They might choose the tools for their favour—not for the business’ sake. Occasionally, it might not add value to customer experience or employee performance.
You need to make sure that you’re setting out a precise analysis of your internal aspect in terms of an internal process. This allows you to see what you’re achieving and what you’re setting out to achieve. Accordingly, you can understand your customer’s requirements, set out realistic expectations, goals, and time frames, and decide how you’re going to achieve them.
In this stage, it’s important to ask yourself some key questions:
- What are you trying to achieve?
- What’s your main goal, then?
Make sure you’re smart about your goals. Setting specific, measurable, attainable, realistic, and time-bound goals are the key to ensuring you’re in the right time frame to carry out the overall transformation process.
Bonus: More Tips on How to Get Employees Involved in Your Digital Transformation Program
From our experience in conducting digital transformation, our team always involves employees who are among the biggest digital transformation progressors and motivators. The word “involve” here means the overall installation process to get them on board and the creation of a company culture that motivates employees to participate in the overall changing process. But how can you do that? Through the following:
1. Build a Robust System to Offer Feedback
Setting up a clear loop for your employees to send and receive feedback can be a lifesaver for your business, even if you have critical stakeholders. Offer a comfortable space to let everyone express themselves. That’s not only helpful for your business growth, but it also narrows down speculation and helps you manage exceptions carefully. Meanwhile, create an internal plan to set policies so that everyone knows their responsibilities.
Remember that consuming too much time communicating is not a very good idea. It might backfire on you as so many ideas will lead to nothing but more confusion and putting your plans on hold. Instead, you can have a well-thought approach by combing online meetings, emails, and 1-2-1 meetings according to a schedule everyone knows.
2. Be Honest
Getting in trouble and facing new challenges when running your own business is common, and you do not have to expect anything but enhance your ability to be upfront when any issue provokes for any reason. So, it is a good idea to share any problems with stakeholders instead of giving them empty promises and getting them disappointed when the outcome comes to the surface.
Your stakeholders need to know more than just the launching date. Sharing any detailed updates will give them a reason to support you. Once they feel they are in, you will foster a culture of trust. So, be honest, be truthful, and enjoy your transformation journey.
3. Create a Collaborative Approach
Integrating a new digitalisation program is important to avoid an us-vs-managers scenario. Focus on setting up a collaborative work frame with your stakeholders by arranging monthly workshops and group discussions to identify areas for growth.
To avoid failure in digital transformation, you need to shed light on priorities. Accordingly, all parties will agree on the direction they should travel to make the best of their endeavours.
4. Map All the Stages Towards Your Digital Transformation Program
Offer your employees opportunities to progress within their roles. To lead your organisation to a promising future, plan before starting the overall digital transformation in terms of how you can change your employees’ roles and responsibilities and allow them to progress within their current positions. That will motivate them to buy in the new technology or whatever is being implemented and the new ways of working.
5. Listen to Your Employees as Customers
Have you spoken to your employees as customers to understand their needs for digital transformation? You should because they’re the most important part of an overall transformation process. By speaking to them, you can understand the overall project’s goals to set the right foundation for a relevant business model.
These individuals can understand your business more than you at times in terms of different granular levels of job roles and responsibilities. Having these people involved in the overall transformation process will allow you to understand what you’re setting out to achieve and how long it will take to get there.
Takeaway Before You Go
- 70% or more of business transformations are failing today.
- Determine the key people that you have within your business who may resist your plans.
- To set your digital transformation goals, choose the best approach and tools to fulfil them.
- A lack of a strategy and a vision could make you caught up, which is a thing you don’t want.
- A lack of skills and expertise in implementing digital transformation is a major factor in the failure of digital transformation.
- Company culture will play a massive part in the digital transformation process, along with realistic time expectations.
- Irrelevant technology plays a critical role in digital transformation. Digital transformation is, in fact, a business transformation. So, you’re actually transforming your whole business.
- Without consideration of your people, processes, and technology, you will be left behind and set yourself up for failure.
- Your business needs the appropriate leadership that informs your strategy, directs you in the right possible way, and considers all areas of the business.
- Make sure you invest in exemplary leadership, either internal or external, and make sure they’re considering all aspects of your business. Having plans to manage each of these areas will be the key to your success.
- Be ready for challenges.
- As you want to make your business more resistant, sustainable, and holistic, you need to implement a step-by-step digital transformation program.
- Just because your business leadership and resources are ready for digital transformation doesn’t mean the market is also ready for your revolutionary vision. You need to do ground-breaking research to explore how your customers and the market can adapt to your new way of communication, especially if you’re a new brand and a few can give you a chance.
- Before paying for any software, make sure that it is what you need in this phase and has all the relevant features.
This way, you can validate your business and get the proper setup to improve your customer experience, enhance your employees’ productivity, increase your retention rate, and more. Your business will reap the rewards if you implement your digital transformation initiative as soon as possible.