70 percent of big-scale organizational transformation schemes do not reach their intended objectives, according to a Mckinsey study. The failure to accomplish the desired outcomes in digital transformation initiatives can have a direct effect on the financial health of an organization and its reputation in the market. In this article, we will discuss 7 common ways that organizations could potentially fail their digital transformation journey.

Not having a clear vision

When organizations decide to undergo a transformation, which involves updating their tech infrastructure, there must be a clear vision and strategy for success. Without this clarity in terms of desired outcomes, the initiative may face difficulty in expressing productivity gains. Additionally, companies should strive to digitize their backbone while also using existing components and processes, such as customer onboarding, to avoid recreating the same data from scratch. It is also imperative that senior executives dedicate attention to the customer when undergoing digital initiatives.  

“The issue there is senior executives fall into the trap of not putting some attention toward the customer’’ when they are putting in the operational backbone for a digital initiative, Woerner says. “I think what has happened in the last two years is that the need to also accommodate customer initiatives at the same time has been overlooked.” 

Stephanie Woerner, director, MIT Sloan CISR –CIO   

A lack of brutal clarity in vision, strategy, goals, and targets can lead to failure for such a transformation project. Ultimately, rigorous execution along with dedicated resources must be allocated in order for a successful digital transformation.

Focusing on disruptors rather than disruption:

Disruptors, such as startups with new digital business models, can be a huge threat to established businesses. However, if an organization focuses too much on what disruptors are doing instead of focusing on disruption itself, it’s likely to fail in its digital transformation efforts. To succeed in its digital transformation journey, an organization needs to focus on creating true disruption within its own business by leveraging technology and data to create innovative products and services that meet customer needs better than the competition. 

Let’s take for example, Blockbuster didn’t die because of Netflix, it died due to expensive late fees and a limited selection. Taxis aren’t disappearing because of Uber; rather, the lack of convenience and poor service is really at play here. Hotels won’t suffer from Airbnb but instead, sky-high costs and disconnected experiences will be their downfall in this situation.  

What we can understand from these cases is that disrupting a business model is not enough to succeed in digital transformation. Companies need to focus on the customer experience factor and build innovative products and services around it to stay ahead of the competition. 

Not leveraging data:

Data lies at the heart of any successful digital transformation strategy and organizations must have the capacity to collect, store, analyze, and use information from multiple sources. All this requires the implementation of data-driven processes that use algorithms, machine learning, predictive analytics, and artificial intelligence to generate insights from data that can be used for making informed decisions. 

If an organization fails to leverage its data properly then it will fail in its digital transformation journey as well because without understanding customer needs and preferences through proper analysis of collected data it won’t be possible to create innovative products and services that can help in improving customer experience.  

Therefore, it’s important for companies to invest in the right data-driven processes that can help them to analyze customer data and use those insights to make informed decisions. This will ensure that they stay ahead of their competitors and are better prepared for the digital transformation journey. 

Not investing enough resources:

Digital transformation is a complex process that requires significant investments of time, money, and resources such as personnel with specialized skillsets who are capable of handling the technical aspects of the transition. Organizations that don’t invest enough resources into this process will fail in their transformation effort as the lack of adequate resources can hamper the adoption of new digital technologies and lead to delays in implementation.  

Thus, organizations must make sure to have adequate financial, technical, and personnel resources available for successful digital transformation. They should also invest in training existing employees on working with new digital tools and technologies so that they are able to efficiently handle the task at hand. In addition, having dedicated teams or individuals who are solely responsible for overseeing the entire transition process could help ensure that everything related to digital transformation is going according to plan and nothing major is left unattended. 

Pursuing agility without knowing what it means

Agility is a key component of digital transformation, but far too often organizations focus on “agile speed” without recognizing that agility also requires careful planning and purpose. It’s not enough to just act quickly; you have to be able to pivot quickly when things don’t go as planned.  

Without understanding the importance of agility, organizations can end up spinning their wheels with no real direction. They’ll make changes too quickly without considering the long-term implications or they’ll be so focused on planning that they never actually act. Knowing what agility means in your organization is essential to ensuring success during digital transformation. 

Agility is all about how quickly a business can take advantage of changes in the market or technology, by quickly developing new products and services. Companies should incorporate agile principles into their operations and create an environment that is open to change and experimentation. 

Agile principles are: 

  1. Collaborative teams: Collaboration between departments and teams increases efficiency and the ability to respond quickly.
  2. Customer focus: Companies should constantly seek feedback from their customers and use it to inform development decisions. 
  3. Iterative process: The goal is to deliver rapid results using a continuous cycle of improvements. 
  4. Adaptive planning: Companies should remain flexible and have the ability to adjust their plans as needed. 
  5. Embracing change: Companies should be open to new ideas and technology, while also being aware of potential risks. 
  6. Continuous improvement: Companies should use data to drive their decisions and constantly strive for improvement. 
  7. Sense of urgency: Companies should act quickly when opportunities arise and not let them pass by. 
  8. Focus on results: Companies should focus on delivering tangible results, rather than just staying busy with activities.

Prioritizing cost savings over customer experience:

Organizations often make the mistake of prioritizing cost savings over customer experience when it comes to digital transformation. This is a mistake because customers are the lifeblood of any business, and if their needs aren’t met, they’ll quickly move onto something else.  

The goal of digital transformation should be to improve customer experience – not just to cut costs. Companies should focus on how they can use technology to create an enhanced experience for their customers, from streamlined checkout processes to personalized recommendations.  

In order to prioritize customer experience, companies should focus on the following key areas:  

  1. Automation: Automating tasks such as payment processing can help reduce costs while also creating a more streamlined and efficient customer experience. 
  2. Personalization: Using data-driven insights, companies can create personalized experiences for their customers by providing them with tailored offers and recommendations. 
  3. Customer service: Companies should invest in a customer service platform that allows customers to easily get the help they need when they need it. 
  4. Analysis: Companies must analyze customer data to better understand their needs and expectations so they can provide a better experience. 

By focusing on customer experience rather than cost savings, companies will be able to create an environment that is conducive to digital transformation and maximize their results.

You fail to drive a culture of learning:

Changing the way people think and behave. If you want your organization to thrive in the digital age, it must be willing to learn and adapt quickly – something that requires buy-in from the top down.  

It’s important to create a culture that encourages experimentation and rewards learning, while also offering support to those who take risks. That way, employees feel empowered to try out new ideas and innovate in their roles – ultimately driving success in your digital transformation journey. 

Revlon: high-profile digital transformation fails

In the spring of 2019, news surfaced that Revlon would be late in filing its annual financial report due to issues with its SAP ERP system. Subsequently, Revlon’s stock saw a decrease of 6.9% within 24 hours. This was attributed to the company has implemented the SAP system shortly before their acquisition of Elizabeth Arden, while attempting to simultaneously manage the two.  

Subsequently, Revlon experienced major disruptions in their operations upon going live with a new manufacturing plant in North Carolina. These difficulties included an inability to track customer orders, visibility into their supply chain, and timely product shipment – which led to a decrease in retail sales. Furthermore, these events resulted in an investor lawsuit against the company.  

It is clear that during the digital transformation process, a number of key flaws were present. These included inadequate identification and mitigation of risks, lack of clarity surrounding the project’s vision, failure to institute effective control measures prior to go-live, and ignoring how organizational changes can affect success. All factors put Revlon in a difficult situation.  

In brief 

These events demonstrate just how important it is for companies to learn from their mistakes and ensure that the necessary steps are taken when planning a digital transformation. Companies should focus on setting a clear vision, identifying risks, and properly preparing the organization before implementing any changes. This will help to ensure a smooth transition and prevent any further disruption.