Summary: Digital transformation–the reinvention of an organization through the use of digital technology to improve performance–is a priority for many businesses these days. However, it’s a complex task. Many businesses dive in without truly understanding the process and make key mistakes along the way. In this article, we explore 5 common digital transformation mistakes to avoid.
According to Accenture’s CEO, “Digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000.”
It doesn’t stop there. The former CEO of Cisco Systems predicts that “Nearly 40% of all businesses will die in the next 10 years if they don’t figure out how to change their entire company to accommodate new technologies.”
In other words, digitization is no longer an option for the today’s business. It’s a necessity. The modern company must transform itself and adopt the technologies and processes needed to operate in today’s digital world.
The problem is, digital transformation is uncharted territory. Many businesses dive in without understanding potential stumbling blocks. As a result, they make key mistakes that can slow down or even derail the whole project.
What are these mistakes? As this is such a large topic, we’ll break it up into two articles. We’ll cover the first 5 mistakes in this article, and wrap it up in a future article. Sound good? Okay, here are 5 mistakes to avoid in your digital transformation journey.
Mistake #1: Starting without a clearly defined goalImagine that you’re going on a vacation. You pile everything into the car and get behind the wheel. Suddenly, you realize something: You don’t have a destination. You know it should be someplace warm. It should have a pool, a nice hotel, and maybe a beach. So, you start driving in the general direction of a warmer climate.
Would this scenario ever happen in real life? Of course not! You would never leave for a vacation without knowing exactly where you’re going.
The problem is, this happens far too often in the business world. This is exactly how some companies approach digital transformation. They know the general direction they want to go. But, they have no clearly defined goals. They haven’t yet mapped out exactly where they’re going.
“One common mistake many companies make when going through a digital transformation is not having a defined and clear goal,” says Uwe Weinkauf, CEO of MW2 Consulting. “A way to avoid this is to first narrow down what your main objective is and understand that it’s about more than just building an app or website. Digital business transformation requires companies to change the way they view their interactions with customers and how you will deliver value to them in the future.”
Mistake #2: Using legacy thinking with digital tools
What would happen if you gave a fancy new smartphone to someone who doesn’t understand technology? Would they make the most out of its capabilities? They might use it to make and receive calls, but all of the other features would go untouched.
I make this analogy to highlight an important point: New technology without a change in overall mindset is a wasted opportunity.
This happens far too often with digital transformation. Businesses purchase new technology, and try to implement it on top of their old processes. As explained below, this limits the capabilities of the technology.
“One common mistake is using legacy thinking with innovative digital tools,” says Ron Wince, CEO of Myndshft. “Often they only take advantage of a fraction of the capabilities that digital tools can bring because they are layering new digital tools on existing processes.”
Mistake #3: Failing to include everyone in the companyBefore beginning a digital transformation journey, you obviously need top-level buy-in. This shouldn’t come as a shock, and I’d say that most businesses get this part of the process correct.
However, the mistake comes when buy-in stops at the top. The business leaders push forward on the project, without including the rest of the business.
What’s wrong with this approach? It ignores those whom digital transformation impacts the most: The front-line workers. They’re forced to change tools, processes, and habits. If the business leaders don’t involve, educate, and train these employees during the process, they’ll run into problems.
“Digital transformation is a beautiful thing,” says Alexandra Bohigian, Marketing Coordinator at Enola Labs. “It improves efficiencies and saves money when correctly implemented. It can also go very wrong and lead to turnover when incorrectly implemented. During a digital transformation, a common mistake business owners make is failing to include everyone in the company. It is so important that anyone who will be affected by the digital changes — even if they seem far removed — is trained and kept up to date on the implementation of new technologies. Employees should feel empowered by these changes after the transformation, not scared or uncertain about how it will affect their job.”
Mistake #4: Thinking that digital transformation is just a technology change
Digital transformation isn’t a small change. In many companies, it requires that employees operate differently. It means they must learn new technology. It means they must change.
The problem: People hate change. They get comfortable doing things a certain way. When they hear that they have to learn new skills or processes, many will fight it.
If not addressed, this can derail your efforts. As explained below, you need to set up a process for dealing with the changes.
“One of the bigger mistakes is believing that a digital transformation is not a people transformation,” says Franklin Gold, President of FG Consulting and Advising. “Digitization changes the heart of the work being done by employees. You must plan for job redesign at the start and make sure employees understand this. They need to know that the transformation is critical for the firm’s survival (no going back). The work people will be doing in the future will be different than the work they are doing today, and that is expected. If employees haven’t bought into this, they will resist change rather than driving change.”
Mistake #5: Assuming old development efforts fit a digital businessI remember speaking with someone who worked at an insurance company roughly 10 years ago about their development speed. He complained that it took them over a year to roll out a basic reporting system. Once it was delivered, only the most technical end users could even understand it.
Unfortunately, these types of stories weren’t uncommon. The worst part: We still hear stories like this today.
To succeed in a digital world, this needs to change. One of the overriding goals of your digital transformation journey must be agility. The old development practices of the past no longer apply. You must deliver solutions quickly, when the business needs them.
Why is this so important? In a digitally-driven world, speed is the name of the game. Your competition moves faster than ever. You must keep up if you hope to stay in business.
However, some businesses make the mistake of assuming their current development efforts can support a digital business. The fact is, you need to rethink your development practice as part of your digital transformation efforts.
What does this mean? It means your development team should have the development tools in place to deliver solutions as the business needs them. Business users should have access to the software they need, or have the ability to create their own solutions. In a digital world, your development practices must adapt.
These are just the first 5 mistakes to avoid in a digital transformation journey, but we’ll cover the rest in a future article. Would you like to add to this list? Feel free to comment below!