While digital transformation initiatives are commonplace now in organizations, many aren’t successful. Here’s how to avoid failure.
Digital transformation efforts are not only a regular occurrence in most organizations, but critical to a business’s survival. With 90% of companies undergoing digital transformation, technology is being used more to achieve business goals now than ever before.
A common misconception, however, is that digital transformation is mainly reserved for IT teams, according to Altimeter’s 2018-2019 State of Digital Transformation report. The majority of organizations (85%) reported its digital transformation efforts expanding well beyond IT, becoming company-wide initiatives, the report found.
“The more advanced or progressive organizations are using [digital transformation] as an opportunity to completely modernize the business itself,” said Brian Soils, principal analyst at Altimeter and author of the report. Digital transformation is moving well beyond IT, extending even into human resources and employee engagement, he added.
One of the biggest trends in current digital transformation projects is in employee engagement, said Dave Hennessy, senior vice president of Keystone Partners.
“[Companies are] using a lot of tools to help managers engage their employees,” Hennessy said. “There’s a big shift away from the annual, once a year performance discussions and coaching. The really progressive companies are finding ways to use technology to engage employees, to do check-ins, to find out what their state of mind is, what they’re loving about what they’re doing now, what they’re not loving.”
Digital transformation is not only helping connect people to technology, but also to one another, removing barriers internally and externally, Hennessy added.
Despite the popularity of digital transformation, most organizations run into challenges along the way. In 80% of digital initiatives, only 25% of companies will succeed in creating better ways of working, according to Gartner analysts at the Digital Workplace Summit in May.
Companies can avoid failing at digital transformation projects by avoiding the following three pitfalls.
1. Focusing too much on the digital of digital transformation
One of the biggest mistakes companies make is placing too much emphasis on the digital portion of digital transformation, said Solis. In other words, companies shouldn’t take on digital initiatives for the sake of the trend.
Companies will fail if they follow “Whatever the flavor of the month is, when you look at getting that technology because it’s hot, and it’s what everybody is doing,” said Solis. “If you don’t give it a sense of purpose, then that technology is going to be finite in its value to the organization.”
Teams must work with purpose and not have too many digital transformation projects going on, Hennessy said. If you have too many initiatives going on at the same time, then you will lose control of the projects and not see any success, he noted.
2. Poor communication
Communication is the core of successful digital transformation. Companies must be on the same page with what its goals are with each project, making sure all projects are organized, purposeful, and necessary, said Solis.
When teams get overwhelmed with too many digital transformation initiatives, their communication will begin to crumble, and the projects will follow suit, Hennessy noted. Organizations must make sure everyone in the company is aware and up to speed on the digital changes occuring.
“If the communication is consistent and solid about the ‘why’ for the change, that can help the organization be ready for it,” Hennessy said. “Then you make the change, with a lot of communication around it, reinforce the change over time, and reframe [the organization] into this new state. That’s the model that seems to work for a lot of organizations.”
3. Working in silos
If an organization is executing one or multiple digital transformation projects, it must consider how those projects will affect the entire company, said Solis. By only focusing on the area the digital transformation is associated in, then the organization as a whole will no longer be unified, which causes problems.
“The mistake that companies make is when they launch these digital transformation initiatives in their respective silos,” Solis said. If you have one transformation going on in IT, for example, and another in marketing, those areas must work in coordination with each other to see how the changes will affect the other.