Top 5 Lessons to Learn from Failed Digital Transformation Strategies
According to research, 70% of digital transformations fail. This is a high figure considering the number of companies that actually implement digital transformation. Fortunately, there are lessons to be learned from these failed strategies that can help organizations implement digital transformation successfully.
A failed digital transformation doesn’t spell doom for a company, but it can mean lost revenue, resources, and time. It can also affect business credibility. Let’s have a look at some failed digital transformation strategies and learn lessons to drive better outcomes and achieve success.
Why Digital Transformation Strategies Fail
1. Lack of Clear Vision and Goals
This is one of the most common issues with failed digital transformation initiatives. Most companies embark on digital transformation to look more futuristic or visionary and don’t set clear metrics to measure the strategy’s success. The transformation becomes too complex or goes over budget and is abandoned when brought under scrutiny. It’s vital to have clear goals and objectives when launching a digital transformation strategy. Digital transformation initiatives must also help businesses achieve measurable goals.
2. No Executive Buy-In
Without executive buy-in, digital transformation initiatives are likely to be met with resistance. It’s important to ensure that senior leadership is on board before launching initiatives. Studies have shown that change triggers an emotional response in people, and senior executives are not exempt. CIOs should anticipate this and leverage different change models such as The Kübler Ross Change Curve to improve the chances of digital transformation success.
Additionally, senior leadership should be kept in the loop throughout and have a say in critical decisions and implementations. Open communication is essential to the success of every digital transformation strategy.
3. Overlooking the People
It’s important to remember that digital transformation is not just about technology but about people. Consider how the changes will impact the people in the organization. For example, if employees feel like they do not have the requisite training to efficiently use a new tool, they may not embrace it, which can lead to an initiative’s failure. Effective communication and training ensure that everyone is on the same page. When implemented the right way, digital transformation can help optimize skill sets as it reimagines business.
5 Lessons to Learn from Failed Digital Transformation Strategies
1. Quality Trumps Quantity
A top American multinational wanted to leverage data to become a technology powerhouse. It designed a whole new business unit to back its digital strategy. But despite having the manpower and finances, its stock price kept dropping. The company quickly shifted focus and started updating shareholders on the happenings, losing sight of long-term innovation goals. It simply did too much without focusing on a particular area. When launching a digital transformation strategy, set goals and pick a team to focus on them. Don’t try to change everything at once.
2. Integrate Digital Strategies with Company Goals
In 2014, a famous American automaker attempted a digital transformation by creating a new business segment. The goal was to build digitally-enabled cars with enhanced mobility. However, this segment was not integrated into the organization, it was seen as a separate business entity with no link to other business units. As a result, the company’s stock price fell and there were concerns about quality in other areas of the organization. Digital transformation initiatives must always be aligned with business goals and objectives.
3. Consider the Market and Industry
A consumer packaged goods company set out to become “the most digital company on the planet” despite being an industry leader at the time of launching the digital strategy. But its goal was too broad and the company didn’t consider its market dominance. It embarked on digital transformation for the sake of it—without taking external factors into account. The economy was not doing too well, hence the return on investment was small. Digital transformation strategies must be flexible and adapt to changing market conditions.
4. Plan Well
A sportswear giant also implemented digital transformation unsuccessfully when it launched a new business unit to handle digital initiatives. It produced a wearable activity tracker which was initially popular with customers. The device provided wearers with detailed statistics. But the company was forced to discontinue its production a few years later because it was unable to exploit the data generated.
The lesson here is to only consider producing digital hardware after setting up a data analytics platform and having workflow software to support the rollout. Without proper planning, digital transformation initiatives can quickly go off the rails.
5. Don’t Ignore the Need for Leadership
A top national broadcaster launched an ambitious digital transformation strategy to modernize its production operations, change how it managed data, and reduce running costs. It planned a complete overhaul of the data management system. But just 5 years later, the digital transformation project was shut down. An audit found that the strategy lacked oversight as there was no executive team to oversee the operations and keep everything on track. The existing governing structure was unable to manage the strategy’s complexity effectively.
Digital transformation initiatives require governance and risk management to ensure that projects stay on track and thrive. Without proper governance, the project is likely to be poorly managed and experience unnecessary delays, cost overruns, and failure.
Implement Digital Transformation the Right Way
These digital transformation examples show us that it’s easier to fail than succeed at digital transformation. Oftentimes, digital transformation is imagined as a vanity project that’ll make a company look visionary and futuristic. Companies that want to implement digital transformation successfully must equip themselves with innovative and efficient digital tools. These tools are an indispensable part of digital transformation and business success.
Organizations must also ensure they don’t repeat the same mistakes when implementing future digital transformation initiatives. Mitigating potential pitfalls is the key to a successful digital transformation.
