Organisational transformations of any kind are hard, and digital ones are harder. Studies and surveys have indicated that the success rate can be relatively low, with many reports suggesting that less than 30% of digital transformation efforts fully meet their objectives.
A 2018 McKinsey study found that even digitally savvy industries, such as high-tech, media, and telecom, are struggling with their digital transformations. Amongst these industries, the success rate does not exceed 26 per cent. But in more traditional industries, such as oil and gas, automotive, infrastructure, and pharmaceuticals, digital transformations are even more challenging: success rates fall between 4 and 11 per cent.
These digital transformations are heavy investments and bets that companies make to drive shareholder value with objectives of re-inventing their business models to more profitable ones reducing costs through efficiencies, enhancing customer experience for customer retention and acquisitions. With success rates of less than 30%, it is evident that these initiatives are not delivering the envisaged value despite the investment.
Organisations that embark on these Digital Transformations need to be mindful of the pitfalls, and the challenges other organisations faced that curtailed the success of their initiatives by adopting some key strategies. These strategies to enhance the success of digital transformation implementation include the following.
- There is a need for a very clear Vision and Leadership: Successful digital transformation starts at the top. Leaders should clearly articulate the vision, objectives, and benefits of the transformation. This vision should align with the overall business strategy. In drafting a digital transformation strategy/ blueprint there is a need for a significant amount of time to be invested in defining the vision, aligning the vision with organisational strategy and re-imagining vividly the new digitally transformed organisation. The Vision should be compelling, and leadership communicate this vision widely in the organisation.
- The leadership should provide ongoing guidance on the execution of the Digital Transformation program. Tracking regularly, the progress, issues, and risks, and making strategic decisions on the execution. The leadership should also track the progress towards achieving the objectives The execution responsibility may be delegated to a specific function within the organisation such a Digital Transformation Office, but the overall accountability for the success of the program lies with the CEO.
- As a follow-on from a clear Vision, there is a need for robust Employee Engagement and Culture Change efforts: Resistance to change from employees is a major barrier to successful digital transformation. It’s crucial to engage employees at all levels, communicate the benefits of transformation, and foster a culture that embraces change and continuous learning. This should be underpinned by Robust Change Management: Effective change management is critical for ensuring that the digital transformation is smoothly integrated into the organisation. This includes managing the people, processes, and technology aspects of change.
- The digital transformation should be driven/underpinned by a Customer-Centric Approach: Digital transformation should be driven by a desire to better meet customer needs. This involves understanding customer behaviours and preferences and using these insights to drive transformation efforts.
- Digital Transformations should adopt Agile and Flexible Approaches: Adopting an agile project management/ delivery methodology, which involves iterative development and continuous improvement, can be more effective than a traditional, rigid approach. This allows organisations to adapt quickly to changes and learn from failures. Traditional/Waterfall methods are not to be entirely to be discarded though, a more pragmatic approach is to deploy Hybrid delivery that borrows from both the Agile and Traditional Water fall methodologies.
- The organisation implementing Digital Transformation should invest in Talent and Skills: Investing in the right talent and upskilling existing employees is crucial. This might involve hiring new talent with digital expertise or providing training for current employees. As part of robust change management, the organisation should invest in basic digital literacy across the organisation to ensure that the whole organisation (without leaving out anyone) has a basic digital skill. This will enhance adoption and enhance the chances of change management efforts.
- Organisations implementing Digital Transformation by Developing Effective Data Management and Use Capabilities. Effective Use of Data: Leveraging data effectively can provide insights to drive decision-making and personalise customer experiences. This requires robust data management and analytics capabilities that should be inbuilt in any digital transformation program.
- Organisations implementing Digital Transformation should invest in Robust Technology Infrastructure such as faster internet, edge computing, and secure, scalable cloud computing. Ensuring that the organisation has the right technology infrastructure to support digital initiatives is essential. This includes not only the core technologies but also the integration of these technologies into existing systems. As digital transformations expand the digital footprint, they also increase vulnerability to cyber threats. Implementing robust cybersecurity measures is essential.
- There is also a need for Continuous Evaluation and Adaptation: Finally, it’s important to continuously evaluate the progress of digital transformation efforts and be willing to adapt strategies as needed. This includes setting measurable goals and using metrics to track progress.
Remember, digital transformation is not just about technology; it’s about rethinking old operating models, being customer-centric, and enabling a cultural shift in the organisation.