Why do so many digital transformations fail?
According to a McKinsey and Company article cited in CIO magazine more than 70% of corporate digital transformations fail.
On paper it’s an equal playing field. The failing entities have the same technology as everyone else, certainly are drowning in very big data sets, and assuredly have a large number of very bright professionals eager for purposeful tasks.
So why do they fail at such an alarming rate?
They fail for three fundamental reasons that are plain to see if you have the ability to be objective, reflective, and honest.
First, a lack of a formal business strategy for the digital transformation can sabotage any gains in technology. Yes, you can do a lot with data science, blockchain, and digital-enablement of all types of processes; however, if you haven’t mapped out how it can exponentially grow the value of an organization, then you are just experimenting without a target.
In this unconscious mindset the most transformative possibilities die on the vine. In fact, directors and vice presidents react badly to changes in business models, which is typically a direct effect of this type of work.
Second, digital transformations fail because they are misnamed, and therefore not managed carefully. Technology is a boon, yes, but it is really just an enabling element.
Digital transformations are actually transformations of mindset, business model, culture, and operations. These are people problems, in the main, not technology issues. Unless you have an ambitious and articulated strategy and a map for aligning all of the people who make up the culture, sorry, but the effort will drown in the quicksand of company politics, quagmired in a lack of hands-on, enterprise-wide change management training.
Third, they fail to enroll the directors and managers as key components in this transformation. As a result, managers manage to the old model, not the emerging one, creating conflict with the every facet of this change. Unless you orient this layer and make their job descriptions and metrics dovetail with the transformation, you are only creating the conditions for conflict, turf wars, silos, and active dissent.
Executives calling for such digital transformations need to have the fortitude to change their revenue streams, reassure their people and investors, and be willing to let go of professionals who are incapable or unwilling to make this shape-shifting change.
Such transformations are holistic innovations in disguise. They should be regarded and treated as such if you plan to be in the top 30% or less of organizations who make the leap—and redefine their category.
Digital transformations can invigorate a sluggish business—just ask Microsoft, for example, but you cannot allow one department the keys of massive change. The whole organization needs to rally behind the effort, work together to both be in the market and bring the market new value. Otherwise, you are just creating the conditions for resentment, blame, and other toxic workplace behaviors that I am sure you don’t want at your place of work.
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Michael Graber is the managing partner of the Southern Growth Studio, an innovation and strategic growth firm based in Memphis, TN and the author of Going Electric. Visit www.southerngrowthstudio.com to learn more.
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