The market for digital transformation has grown from just under a billion dollars in 2017 to over 2 billion in 2023 and is predicted to continue growing to 3.4 billion by 2026. Yet nearly 70% of digital transformation projects are estimated to fail today.
Here are five key lessons that can help organisations lead digital transformations that succeed.
Determine the Business Strategy
The first lesson is to figure out the business strategy before investing in anything. Leaders should focus on broader business strategy rather than specific tools.
The projects often become a hive of technology wishes, and the tools and transformations can become quite convincing or be on a trend or hype at that point in time. My advice on the strategy is to focus on the drivers (positive and negative) and the outcomes, for example, access to new markets or business agility. These drivers and outcomes will force the investment in technologies and solutions to be results-based, not for the sake of having a new technology. The worst mistake in transformation is trying to sell technology (plumbing) to the people who have to sign the cheque. The ‘sell’ should be around what the business needs. The project will be a way to get there.
Find In-House Experts first, then complement with external expertise
The second lesson is to leverage insiders and experts. Organisations frequently bring in outside consultants, who often apply one-size-fits-all solutions. Instead, organisations should rely on insiders with intimate knowledge of daily operations and experts with solid experience in specific fields to achieve results. It’s often easy to look for the silver bullet when the answer may actually be multistep. The balance between internal and external skills takes work to deal with. One way to look at this is to determine what skills will be helpful on an ongoing basis. You may wish to have this in-house, but where do you need experience and skills you don’t currently have and possibly need now but not after the transformation is complete?
Start with the end customer in mind
The third lesson is to design the customer experience from the outside in. If the digital transformation initiative aims to improve customer satisfaction and intimacy, then any effort must be preceded by a diagnostic phase with in-depth customer input.
This will require deep customer interaction and information gathering, probably requiring strong UX and design thinking skills if you don’t already have them in-house. The effort and cost give a substantial return in alignment with real needs and the possibility to differentiate your solutions strongly.
Get your people on board
The fourth lesson is to recognise employees’ fear of being replaced. When employees perceive that digital transformation could threaten their jobs, they may resist the changes, and the digital transformation may become ineffective. Management needs to identify and address these fears to achieve successful digital transformation. Make everyone part of the change. Look at people and see how their roles will work and possibly morph over time. Often transformations require currently disconnected and even competing teams to come together. Think about how they can be aligned on a common goal, show the value of working together, and what that will bring to the business and the solutions. Determine jointly with your teams what opportunity comes with the change.
Select the right project management approach
The fifth lesson is to use process techniques borrowed from the tech world to facilitate change. Experimentation and prototyping can help organisations try out new ideas in a controlled environment before scaling them up. This can help reduce the risk of failure and smoothen the transformation process. While it is naive to think you can change overnight, look at lean, agile and design thinking to see if they could help. Understand they are just tools in the kitbag, not a solution to all your issues.
In conclusion, avoiding the common pitfalls of digital transformation projects is possible. By following the above five key lessons, organisations can lead successful digital transformations that achieve their desired results.