Digital transformation offers huge opportunities for business, not just to improve existing operations, but to unlock new ways of working and value channels.
However, digital transformation is far from a simple process. High-profile firms have failed repeatedly, with multi-million dollar projects generating media attention, but little impact on bottom line. It takes significant time and effort to understand what your business needs to succeed. Internally, the digital transformation process can be blocked for a variety of reasons – from cultural resistance to a lack of adequate resources and/or processes. In this article, we look at 5 digital transformation challenges that organizations face internally, and 5 ways to get past them:
1. Poor communication
If you fail to sell the benefits of digital transformation, you run the risk of increasing internal resistance to the project and coming up against cultural roadblocks. Employees might ask - do we even need a digital transformation? The answer in almost every case will be yes. If your company isn’t leveraging digital and building opportunities to digitize processes and offerings you run the risk of falling behind your competitors. “We’re not a software business” is a maxim that no longer makes sense – every business should now consider themselves a software (or software-enabled) business.
If you’re finding it hard to get buy-in, try to communicate business value and pitch these projects by coming up with well-researched quantitative arguments for digital transformation projects, like, “We can replace X amount of labour with this system that costs X amount to license per year.” It may be a good idea to look externally at what your peers are doing – adoption by competitors of digital capabilities may be a good sign it’s time to get your own house in order.Fatigue over the use of the term ‘digital transformation’ is also a very real objection. It’s a buzzword and is a tad overused, so consider rebranding and repackaging your efforts to phrase the program slightly better, or to highlight the benefits it will bring, rather than the means by which they will be delivered.
2. We built that app, software, process. Are we ‘transformed’ now?
Just because you’ve engaged in some form of digitization, be it building a mobile app, digitizing a process, or creating a newly digitized product offering, doesn’t mean the digital transformation process is complete! If digitization offers an opportunity to improve your business and makes sense from a financial standpoint, it should be pursued. If past efforts have failed, look at whether it was because of a failure to create a proper process or structure. Since digital projects and innovation projects are pilots by their very nature, it can be tricky to get the right process in place on the first round. Make sure that the proper process is in place. This may incur lengthier planning phases, but it will help to mitigate risk when it comes to delivery.
3. Speed: You weren’t fast enough. The goalposts have shifted
Ok, so you digitized 5 years ago and built yourself a nice mobile app, it now doesn’t fulfill the needs of where your business is headed. Or you started to move in a new digital direction only to find that due to a new disruptor you’re facing an unexpected market threat. It happens. It’s impossible to predict the future, and easy to get caught up in paralysis by analysis. But there are some steps you can take to forge better plans. Consider using approaches like Google Ventures’ design sprints and techniques such as design thinking in conjunction with comprehensive analyses of internal and external factors. This will help you identify the best plans to dedicate your time and effort to. Also take stock of your project management methodology – if your still using waterfall, please stop. Agile methodology is not just for software development and can give you the speed and agility needed to weather future disruptive trends.
4. Organizational culture
According to research from Gartner, organizational culture is the biggest blocker to digital transformation projects. Even if pilots are successful, scaling organisation-wide change can be a huge challenge. People don’t like change – it creates fear and uncertainty, which may manifest itself as internal resistance to a digital push.Counter this by getting buy-in at board-level and ensure leadership communicates their strong backing of these projects. People are scared of change by nature, and since digital transformation is relatively new, people are afraid they’ll get it wrong. But once you communicate that everyone is learning during these projects, and mistakes are OK, you should be in the right place to start gaining traction.
5. Resource and skill constraints
It’s impossible to nail digital transformation without the right budget and team to manage execution. Digital transformation requires deep technology expertise, so for many traditional businesses, the skill-sets required might not be available in-house. If so you’ll have to decide whether to retrain internal staff or look for external help. Many external consultancies offer digital transformation services that help businesses launch first pilots and develop digital products and capabilities. External experts may also bring fresh, unexpected insights. Whatever your choice, a comprehensive plan should be drawn up to anticipate and resource for skill constraints that may arise. And if there aren’t existing capabilities, don’t be afraid to dedicate budget for retraining.
Digital transformation is by no means an easy process. It requires careful planning, orchestration, and execution to get right. Failures along the way shouldn’t be catastrophized. Keep in mind that digital transformation is an ongoing process of learning. We’re all riding the digital wave together, and proper process, measurement metrics and course-correction will keep you on the right path towards reaping the rewards of digital.