Why do so many digital transformations fail?

Why do so many digital transformations fail?

True story: The large majority of digital transformations do not succeed. What happens? 

Going too big, too fast

There’s a learning curve with anything, and digital transformations are no exception. Even during the cost-cutting of the early pandemic days, digital technology for employees was the one area with increased spending. 

But a key element was often left out: improving digital dexterity. Digital dexterity is not just the ability of employees to embrace and use technologies to produce better outcomes, but their interest in investing in those technologies. 

More and more, people are beginning to understand the importance of digital dexterity. One study found the chances of a successful digital transformation increases by 3.3x when an organization has high digital dexterity.

If employees can’t or won’t use the technology, then the investments will be wasted and can even aggravate another problem: change fatigue. 

As companies scale digital initiatives, it becomes ever more important for their leaders to expand their digital ambition and deliver new value. Equally important is doing this in manageable steps. 

In Harvard Business Review, Professor of Strategy & Digital Transformation Didier Bonnet says that it’s important to simplify and digitize existing processes and functions, then take on the complex, enterprise-wide transformations. Generating new business is the final step. This approach sets you up for success before tackling higher ambitions.

But companies often feel pressured to try the latest strategies and systems that promise the world and don’t have a real return on investment. Unclear business objectives can muddy the water. This doesn’t help when the water was already pretty murky when organizations, big and small, had to quickly adapt to the pandemic. 

As many of us remember and have discussed often, regular office environments became less regular, and digital transformation was on turbo speed. It was a lot to deal with at one time, especially for organizations with a low amount of digital natives. 

Those companies were not only transforming their business, but also how they communicated and collaborated. Often, they sorely missed sitting together as a team where they could slowly implement digital changes. This was a big pain point for many companies, made more difficult the larger they were.

Highly optimistic goals are often a reason for failed digital transformations, pandemic or not. It’s a big challenge to speed up and improve the quality of software delivery while also scaling the organization’s efforts. 

Resources not quite what they should be

It’s also about the people. Can your company always find enough digitally skilled employees with exactly the right competence you need? 

It can make a real difference as organizations work toward gaining–or maintaining–a competitive and long-term advantage within the fast-paced environment of our modern world. This struggle has nailed the coffin for a number of digital transformations. 

Leadership competence also has a huge impact. Statistics show that only 16 percent of all leaders outside of IT have high digital dexterity. 

Add to this that business leaders often find the language and metrics of Agile and DevOps incomprehensible and impossible to quantify. In this situation, optimizing investments, or even understanding their value, is difficult and a digital transition is complicated.

But what you don’t know can be bought externally. It might be smart to bring in external experts with the skills necessary to bridge the gap. It can also be worth spending time to learn as much as you can from other organizations’ experiences. 

Wider organization not onboard 

A lack of engagement outside of IT or the management team is another stumbling block. People throughout the organization sometimes just don’t buy in, and they don’t want to invest extra energy to make the transformation happen. 

This could be as simple as a lack of exposure or knowledge to the new tech. The strategy and direction can’t be something that is only discussed with management. Communication with the entire company is key, and transparency is king. 

Again, leadership can play a significant role here. It’s important for a CEO to build conviction in the team about the importance of the change. They need to convince their team that it’s up to them to make the transformation happen.

Research also highlights the CIO as critical in helping IT leaders to understand digital opportunities. A CIO can be key to improving collaboration across the organization to find the best solutions to digital problems.  

Not having the right procedures in place

Company cultures are different, and it can be difficult to decide how much process and procedure will help a culture continue to thrive. Pretty often companies can miss a variety of procedures that support a successful digital transformation. 

Examples include not having the correct change-management infrastructure set up, or not establishing regular updates with management. Others might not have a transformation department, nor hold regular discussions to track progress.

A related factor is that many have avoided incorporating Agile and DevOps into the infrastructure because their old tools and bureaucratic processes got in the way. 

Change is hard. However, without building a solid foundation, it can be difficult to fully benefit from Agile and DevOps at scale. 

Agile and DevOps don’t solve everything

Agile and DevOps can be seen as pillars of digital transformation and software development. At least 95 percent of organizations use Agile development methods, according to the State of Agile Report. 

It seems risk free to break digital transformation down into manageable phases and learn from the results before moving on. Indeed, these processes usually start well but that’s at least partly because a company’s ways of working are outdated and the employees are unmotivated. Suddenly employees are interacting more often and slowly making important changes.

However, these transformations take time. Teams need patience, and often there’s pressure to move faster than reality allows. As a result, many give up their goal of Agile transformation within months.

Improving the frequency and reliability of software delivery deployments, DevOps is also popular. However, as with Agile, DevOps quickly brings benefits that can diminish over time. 

Neither of these methodologies can make up for wider cultural challenges at a business. They get people working together, but people can also still avoid responsibility and resist change. A company culture needs to have a true culture of collaboration. 

Digital transformations succeed, too

There is a lot of money to waste and much at risk for any organization’s digital transformation. The International Data Corporation (IDC) predicts that the direct digital transformation investment is expected to reach $7 trillion this year. 

The pitfalls listed above are, of course, not the only reasons digital transformation can fall flat. Improper execution, lack of proper governance, prioritizing technology deployment over user adoption, adopting the wrong metrics, and the like have their place as well.    

Perhaps most important is the knowledge that the right skills are needed to drive and navigate change in a dynamic environment. The place where a gap lies might even be in your own skill set. An open and curious mind should get your team far in your own digital transformation story.

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