According to research, 78% of digital transformation programs fail. At the same time, in most companies, digitalization begins successfully, but after a few months, “failures” begin.
Here are 15 mistakes that analysts say are the most common cause of failed digital initiatives.
- Focus on the short term;
- Underestimation of the role of clients;
- Underestimation of the role of employees;
- Underestimation of the problems associated with the peculiarities of the organizational culture;
- Violation of goal priorities;
- Haste in making decisions regarding the financing of the program;
- Determining unrealistic timelines;
- Underestimation of the role of the IT department in creating a digital transformation program;
- Trying to change everything;
- Attempts to accelerate the process of digital transformation;
- Communication gaps;
- Calculation solely on the specialists of their own organization;
- Underestimation of the issue of compliance with regulatory requirements;
- Underestimation of organizational factors;
- The misconception “with the completion of the initiative, digitalization ends.”
Focus on the short term
Digital transformation is not a project that can be completed in three to six months. Full digitalization can take years. Therefore, when planning an initiative, immediately focus on long-term goals.
Develop long-term scenarios and consider what obstacles will have to be overcome in the future, and what steps will bring the desired result closer.
Underestimating the role of customers
Often in the process of digital transformation, companies focus mainly on technology, “forgetting” about customers. But customers need to be aware of the changes you will be making to your business. If they can’t adapt to drastic shifts, they will most likely leave you.
The best thing is to tell customers in advance about the essence of your digital initiatives and listen carefully to their opinion. By explaining why these changes are needed, you can encourage customers to align their business goals with yours.
Underestimation of the role of employees
Digital disruption affects not only customers, but also employees. Many companies, having successfully begun transformation, then face resistance from the staff. And as studies have shown, in some companies resistance to change also manifests itself on the part of top managers who do not want to deviate from the usual management models. Therefore, in order not to risk the success of the project, make sure that it is received positively at all levels of the organization.
Try to understand what excites or worries employees at the stage of developing an initiative. During the implementation process, establish a feedback system — listen to what difficulties people face in adapting to new technologies and tools. Provide the help you need.
Underestimation of the problems associated with the peculiarities of the organizational culture
For most organizations, building a digital culture is the #1 challenge. Most often, it is attempts to change the culture that has existed in the company for many years that are most resisted. Therefore, by identifying the nature of cultural change at the design stage of the project, you most likely will not get the desired return.
The formation of a new culture is a very complex process, during which the level of business performance can significantly decrease, and in some cases even worsen the position of the brand. Engage your IT staff to help you identify the changes you need and better understand the challenges that come with culture transformation.
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Violation of Goal Priorities
Many companies begin their transformation without prioritizing their goals, hoping that they will set themselves as the program progresses. But research shows that the opposite is true. There is a risk that confusion will reign, which can lead to disaster for the business. Start by prioritizing. Create a well-structured roadmap for the entire program to avoid most potential threats.
Hasty decision-making regarding program funding
Because digitalization is a long process, don’t count on a one-time investment. Create an emergency fund that you will use in case of unexpected circumstances or the need to implement adjustments.
Discuss in detail with colleagues all the factors that may affect the course of the program and evaluate all items of expenditure.
Determining Unrealistic Timelines
Another mistake that most companies make is setting clear deadlines for implementing a program. But so far, no company has been able to achieve full-fledged digitalization in a few months.
Assume that digital transformation is an ongoing process in which you will constantly introduce improvements, otherwise you simply cannot resist the onslaught of competitors. So, set «deadlines» not for the program as a whole, but for its intermediate goals.
Underestimating the role of the IT department in creating a digital transformation program
In some organizations, the involvement of the IT department in the development process of the program is minimal. Accordingly, managers jeopardize the success of the implementation phase and, as a result, the program as a whole.
Involve IT professionals in the development of the concept of the initiative. They know the architecture of the business, understand the users — your customers and employees, and, accordingly, can assess the pace of their adoption of new technological tools. This will help to optimally plan the various stages of the program and its budget.
Trying to change everything
Many companies mistakenly believe that in the process of digitalization, absolutely everything needs to be changed — even what works very well. Implement changes only where needed. Process transformation that does not create any barriers to the effective functioning of the business can increase your costs and reduce productivity.
Clearly formulate goals and determine what exactly needs to be changed to achieve each of them. Change only outdated systems and processes that negatively impact business performance.
Attempts to accelerate the process of digital transformation
Trying to digitally transform as soon as possible can lead to disaster, and even if you can avoid it, you are not taking full advantage of digitalization.
Review your program plans periodically and take your time to move forward. Move slowly, carefully considering each step.
Gaps in communications
Another reason for the failure of digital transformations is the poor quality of communications between managers and ordinary workers. Failure to communicate the benefits of digitalization to employees and other stakeholders inevitably leads to disruption in the implementation of initiatives.
Keep customers, suppliers, partners and employees up to date on the progress of the digitalization program; explain how it will affect their daily work.
Calculation exclusively on specialists of their own organization
Sometimes companies do not have enough human and other resources to fully implement the program.
In order to close the gap in professional knowledge (or compensate for the lack of other resources), organizations attract specialists from partner firms. Then, for example, your team can focus on urgent tasks, and partner representatives can focus on developing and implementing a digital transformation strategy.
Underestimating the Issue of Regulatory Compliance
By not harmonizing the digitalization program with regulatory requirements, you can get the opposite of the expected result.
Establish a dedicated team to ensure that program objectives comply with regulations and internal company policies.
Underestimation of organizational factors
Digital initiatives can stall because basic organizational factors have not been given sufficient attention during the development process.
Analyze the quality of the infrastructure, evaluate the degree of organizational flexibility and formulate the goals and objectives of the program, and only then proceed to its implementation.
The misconception “with the completion of the initiative, digitalization ends”
Having achieved certain results, some leaders believe that the job is done. But digitalization never ends. Improving business based on the progress of technology is a never-ending process.
Build a team of internal experts (or bring in a partner team) to analyze business needs, monitor competitors, and implement the latest solutions when appropriate.