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This Is Why Many Digital Transformation Programs Fail

This Is Why Many Digital Transformation Programs Fail
October 11, 2018

There has been a massive shift of late in focus from building products in isolation to putting the customer at the center and designing products and services keeping in mind customer journeys and preferences. Organisations are becoming more agile and flexible in adopting new business models, business processes and technologies, while also ensuring the best quality and a constant improvement in customer experience scores. One of the ways organisations are adopting these changes is by embracing digital platforms and embarking on what is called a ‘digital transformation’ journey.

This Is Why Many Digital Transformation Programs Fail

Digital transformation, put simply, can mean anything from creating the best user interfaces and a consistent omni-channel experience; to building and disseminating enterprise information assets; to adopting the concepts of AI, ML and advanced analytics; to improving operational efficiencies and what not — basically looking holistically at the entire front-middle-back functions across infrastructure and applications and ripping, replacing, building and optimising components as required to meet digital objectives.

Digital transformation is important – but building a digital culture is more significant

While the digital transformation programs may look best on paper, a vast majority of them fail to take off or eventually fail due to a variety of reasons with the nonexistent digital culture almost always one of them. Undoubtedly, having a well-defined strategy, a robust execution plan, and putting an A team in place is critical to success. But what’s more important is to create a digital culture within the organization, one that promotes people to ditch legacy mindsets and drive new behaviors – simply because industry disruption, better business models, newer customer outreach channels, technology innovation, more effective digital platforms, etc. will never stop coming.

According to a McKinsey report on challenges in meeting digital priorities, 33% of failures in digital projects were attributed to cultural and behavioral aspects

Listed below are only a few things that organizations are doing to address this good problem of digital culture thriving on a digital platform. While there can be many other ways and means to achieve this, in my professional experience I have found these to be quite effective:

  • Digital culture audit – Organizations start their digital journey by performing an inside-out and outside-in audit to see where their people stand and what needs to be done to bring the required change to their perceptions and behaviors. The objective is to educate people on the long-term digital goals and eventually build an environment that fosters the sharing of ideas, learning, openness, and collaboration.

    A nonexistent digital culture is one of the primary reasons why digital transformation programs fail

  • Stakeholder management – Mapping, understanding, and managing key stakeholders (be they the CXOs or the project teams on the ground) are going to be key enablers, not only to get relevant short-term support but also to remove any barriers along the way. These are the people who will be part and parcel of the digital journeys and entrusted to make the program a success. Keeping them abreast of the initiatives and how they would lead to a better experience will always resonate well and go a long way.
  • Measurement framework – While it’s not easy to map and measure digital program objectives vis-à-vis business objectives and financial outcomes, it’s all the more an uphill task to measure the change in culture. One way in which organizations try to address this is by creating parameters that are directly related to change in customer satisfaction scores and periodically measure the outcome of each and every parameter (be it marketing campaigns, social reviews, customer surveys, etc.)

    Improvement in customer experience scores could be one of the ways to measure the change in digital culture

  • Customer interactions – Many organizations build products and services that are more aligned to an internal focus rather than getting continuous feedback from the customers via multiple touchpoints during the lifecycle of building a product or service and incorporating those changes. It cannot be overemphasized how important it is to understand your end customers and engage with them appropriately for better relationships and desired outcomes. This method sometimes serves as a catalyst for wider change.
  • Culture of innovation – This is undeniably a must-have and one of the biggest differentiators as organizations need to embrace a ‘try fast, fail fast’ culture to compete in this fast-paced environment and set themselves apart. The idea should be to instill an entrepreneurial spirit in the organization so that there is a continuous focus on exploring new ideas, experimenting with the latest best-of-breed technologies, learning from failures, conducting proofs of concept and adapting and adopting the outcomes as required.

There is no one approach that fits all here because the objectives and priorities of every organization taking a digital transformation journey are different and every company addresses the digital culture aspect of it in their own way.

I’m keen to understand if you have come across this particular challenge and how you resolved it?