Digital Transformation is top of the agenda for many, with figures from IDC forecasting worldwide spend will hit £1.6 trillion by 2022 as businesses aim to keep pace with emerging technologies and increasing disruption challenging existing business models in almost all industry verticals.
While a shift towards capital funding of initiatives points towards recognition of digital transformation as a long-term investment, 72% of leaders surveyed by Couchbase reported their transformation projects are falling short of being truly revolutionary. With 87% also reporting disruption in their respective industries accelerating over the last 12 months, time is running out for digital transformation initiatives to start delivering the expected returns.
Why do so many transformation programmes fail?
A recent report from Harvard Business Review estimated that out of $1.3 trillion spend on digital transformation last year, $900 billion went to waste. What’s leading to so much failure?
Digital leading transformation programmes
Where we’ve worked alongside businesses in the middle or large, ambitious digital transformation projects, we consistently see continuous improvement initiatives, often technical in nature, focused on embedding new, more integrated systems, improving processes and changing the focus of peoples work mispresented as transformational. Whilst holding a lot of merit and value themselves, this ultimately misses the opportunity of transformation to ask deeper, searching questions, rethink the core fundamentals of markets, or even which markets the business operates in.
When the ‘digital transformation’ is taken literally, tools, technology and process lead the way, resulting in some operational improvement, but missing the vital , strategic step-changes needed to meet the challenges of the next decade.
Failing to deploy innovation at scale
Chief Digital Officers, innovation teams and dedicated funding are now more commonplace. Even a lack of formal innovation governance structures hasn’t held back new idea generation through design sprints, agile planning, hackathons, channelling enthusiasm from all parts of the business.
Typically built on a smaller scale, utilising technologies that favour speed and ease of deployment, while many legacy IT systems are built around more rigid infrastructure, with changes requiring much more rigour end up pitting two entirely incompatible approaches against each other.
Without achieving that essential compromise of developing new solutions with wider scale deployment in mind from the outset, many valuable developments never leave that beta state, unable to scale and deliver the wide-ranging benefits the business demands, only serving to frustrate and dishearten team members.
Going ‘big bang’
Successful transformation takes time. While customers and market disruption are key drivers, IT, finance, marketing, operations and customer service ultimately need to deliver the vision. The change required to move from well-defined, long established ways of working to more adaptive, agile approaches can be seismic.
Attempting to land such huge changes and benefits from the outset may feel bold and even inspiring from the outset; however, the operational reality of steering a complex organisation in a different direction in such a short space of time results in challenges demonstrating value, with that early momentum and enthusiasm rapidly running out of steam.
Attempting to duplicate disruptors and their business models
As smaller, nimbler competitors leverage innovative business models, some heavily investor-backed with profitability not a short-term gloal; digital, innovation and transformation can all become conflated, as incumbent leadership teams react by attempting to replicate their delivery models.
This approach neglects to understand the customer journey, and where value can be added throughout, missing key opportunities to leverage differentiating elements and offer a distinctive proposition that is more challenging for competitors to replicate.
The explosion in the use of mobile apps has also stimulated a ‘build it and they will come’ methodology, believing that modern delivery methods will connect with audiences and stave off competition. Such an approach often neglects robust due-diligence prior to development. To deliver value, clear usage cases need to be developed and clear benefits to customers identified alongside a robust plan to drive and maintain adoption. Clear communications and engagement, both internally and externally are critical and quite often missed straight out of the gate.
Not recognising the power, and the challenge of culture change
There is nothing more transformational than employees inspired by change that has been well planned, thought through and deliver clear benefit personally and professionally.
The impact and challenge of the human aspect of change is often underestimated. Thinking people-first not only informs the direction and design but will also recognise that individuals will respond differently to change, required a more segmented approach.
Getting this right will deliver robust and effective support mechanisms for people to develop at the same pace as technology change within the organisation, avoiding frustrated colleagues resisting change in an attempt to keep their heads above water.
The rewards for getting it right
Organisations that have taken a long-term, holistic view of transformation have seen significant benefit delivered. Here, we look at two, well-known transformation journeys and the impact on business value
Honeywell – 83% increase in share value over 3 years
Source: Google News
Honeywell International Inc. produces commercial and consumer products, engineering services and aerospace systems. In 2016, having formed their own internal digital transformation group, they were able to leverage new technologies, including more data-centric devices and offerings. As they reinvented industrial process control and offers modern technology-focused solutions for their customers, they developed a strong ability to bring customer data and insight back in-house and deploy effective internal solutions.
Microsoft – A 258% increase in share value over 5 years
Source: Google News
While Microsoft is well-known for their Windows products and Office productivity suites, increased competition and disruption from Amazon, Google and Apple created a need to re-think their approach and create a forward-thinking cloud business.
With a change in leadership in 2014, the business made some radical changes, shifting away from traditional, single license software, to a more dynamic, subscription-based cloud model across consumer and business markets. Where they had once attempted to control and dominate markets by brute force, their culture began to change, being far more open and embracing partnerships with other software and technology companies.
Their transformation also changed public perception, going from an outdated, stagnant business to that of a forward-thinking, modern provider of cloud solutions.
It’s time for transformation through a different lens
Digital technology has the capability to enable truly transformative approaches, yet shouldn’t be in the driving seat. A single-minded focus on human experience – encompassing customer and colleagues alike will enable innovation and disruptive thinking to thrive, targeting areas that benefit your customers most.