Cracks in the Code: Why Do So Many Digital Transformations Fail?
If 84% of all digital transformations are failing, the question we surely have to ask is… why?
Written by Andrew Martin – CCO, FormusPro
The phrase ‘digital transformation’ is one that promises growth, efficiency, and competitiveness.
Yet if not carefully planned, a surprisingly large number of digital transformations will fail, for a whole host of different reasons.
In fact, it’s estimated that by 2026, the global digital transformation market will reach $1247.5 billion (Markets and Markets) and that digital transformation investment will reach $3.3 trillion by 2025 (Research and Markets) but despite those numbers, Forbes reports that almost 84% of digital transformation projects will fail… 84%!
Now you might think that a failure rate that high might suggest it’s not even worth starting a digital transformation, especially considering how much it could cost.
And yet, the urgency to still try arises from the recognition that digital transformation isn't just a choice anymore; it's necessary for survival. It's a pivotal moment that can elevate an organisation's trajectory or render it obsolete to its competitors.
To navigate this journey successfully, understanding the potential pitfalls is essential.
The substantial investment in terms of resources, cost and vision requires a comprehensive grasp of the challenges that often lead to a transformation's downfall.
Those challenges extend far beyond the tech involved though and mean we have to delve into human psychology, organisational culture, and strategic foresight as a must, before we ever look at the tech.
As leaders, we're used to navigating change and making pivotal decisions but we all also should know, forewarned is forearmed!
Understanding the Human Element
Amidst the world of digital transformation, where technology and innovation so often take centre stage, it's crucial not to overlook the human side of the equation, which is why I start first here.
Whist the tech aspects are, as I say, important, the real heart of a successful transformation will lie within the people who form your organisation. Bringing along their hearts and minds holds the key to success or struggle in the journey.
As leaders guiding this change, you need to understand that the true transformation occurs within people – shaping their behaviours, aspirations and collective mindset.
It's an orchestration that requires strategic insight and empathy.
Recognising that such a fundamental change will evoke a range of emotions, from excitement to anxiety, is vital.
Addressing Employee Concerns Is The First Step To Success
In the midst of any change, people will naturally seek out certainty amidst the unknown.
In the context of digital transformation, uncertainties will create disengagement and resistance at best, and at worst will mean staff avoid using aspects of the transformation solution completely.
Your workforce, well-versed in past transformations and informed by tales of technological disruption, are primed to raise valid concerns… if you will only listen to them.
Questions about job security, skill relevance and shifting roles are all more than fair concerns and should be treated as such.
They can't just be brushed aside.
Instead, they should be acknowledged with honesty, as transparent communication will be the key to engendering trust in the digital transformation.
Transparent communication in fact, should become the theme song of your digital transformation – a melody that will quell worries and pave the way for understanding.
Yet, communication alone can't (and wont) dispel all uncertainties. A canny leader knows that empathy is equally vital.
As you navigate a transformation, use your EQ to understand your team's pulse.
Each employee's perspective is unique, and their concerns will reflect their perceptions. These concerns can be an avenue for dialogue, allowing you to co-create solutions that align personal aspirations with the transformation's path.
Building An Agile Organisational Culture Is The Key To Digital Transformation
In a world of digital transformation in which technology and strategy merge, fostering a nimble organisational culture is also crucial.
It can’t just be about the data and algorithms; true transformation must be rooted in the shared values and beliefs that define an organisation.
The Role Of An Organisations Culture in Empowering Digital Transformation
Digital transformation isn't just about changing systems; It can’t be.
Instead, it should evolve an organisation's entire DNA forward in huge leaps.
Shifting from analogue to digital requires a huge change in mindset for a workforce. That means culture becomes pivotal, shaping how employees view, adapt to and ultimately champion the transformation.
A culture that values innovation, agility, and continuous learning becomes the crucible for transformational success. It will guide a workforce in embracing change and show them it as an opportunity, not a disruption.
Fostering A Mindset That Embraces Change And Innovation
Imagine the art of innovation – a blend of ideas, creativity and the courage to venture into the unknown.
Cultivating such a mindset involves leadership, communication, trust and empowerment – elements that should be core to any strategic approach to digital transformation (or to be fair, any strategic initiative).
As the leader of a transformation, your commitment to nurturing a culture that embraces change is essential. Try to foster open communication that welcomes ideas from all quarters. Encourage calculated risk-taking, recognising its potential for reward. Share stories of innovation that inspire your team to move beyond the status quo.
However, words alone won't build this culture. It's actions that really count.
When leaders consistently learn, promote experimentation and demonstrate agility, culture follows suit.
Your actions compose the transformation symphony if you will… harmonising team aspirations with organisational goals.
Communication And Transparency Are The Foundations of Trust
By now, it should be clear that clear communication and transparency need to be considered pivotal.
As leaders, we understand that success can’t rely solely on advanced tech, but on building trust through candid communication.
The Need For Clear And Consistent Communication
In the realm of digital transformation, where uncertainty can go viral at a moment’s notice, communication needs to act as a compass… helping steer an organisation in the right direction.
However, the blending of innovation and disruption, can create discomfort if staff aren’t prepared for it.
It's during such uncertainty that effective communication needs to be stepped up to guide the way.
Clear and consistent communication provides your workforce with direction.
It not only explains the "why" and "how" of a transformation but also empowers individuals to understand their role in the change.
This shouldn’t be a one-way conversation either; it needs to be an ongoing dialogue in which questions are welcomed and concerns met with empathy.
The Impact Of Communication Trust
When leaders address challenges directly instead of sidestepping them, trust flourishes. Acknowledging obstacles (and even missteps and mistakes), followed by discussing plans to overcome them, fosters belief in capable and accountable leadership.
This transparency also combats any internal resistance.
When employees know the reasoning behind a transformation and witness leadership's commitment to addressing concerns, they become much more receptive in adopting it.
Scepticism diminishes and resistance fades.
Building that trust paves the way for a workforce that welcomes change. However, transparency requires continuous engagement, active listening and adoption based on feedback… it can’t be something you just pay lip service to or adopt in name only.
If a digital transformation means changing how your staff think, it can also mean you may need to do the same.
Empowering All Staff
That’s why involving every part of an organisation is vital when undertaking a digital transformation.
As seasoned leaders who understand strategy, we all know that genuine transformation has to go both beyond the top ranks but also include those same top ranks.
Change works best on a trickle-down economics model after all.
Benefits Of Involving Everyone
Engaging all staff in the process isn't just an option – it's necessary and the benefits will be many. Including different perspectives is fantastic for uncovering hidden opportunities.
Frontline employees often grasp customer interactions, operational nuances and challenges that senior executives might miss. Their involvement enriches your transformation and fosters ownership beyond hierarchy.
Imagine your employees actively shaping change instead of just ‘putting up’ with it.
This engagement doesn't just make them feel good – it leads to practical and robust solutions. Their firsthand insights create incredibly innovative and actionable ideas.
Involving employees will also lead to increased buy-in.
When they see their impact on change, ownership grows. Scepticism turns into enthusiasm.
This shift isn't random; it's a human tendency to support what one contributes to.
Picture the potency of commitment when it flows from every level – the whole organisation aligned with a shared vision because everyone helped create it. That synergy transforms digital transformation from a simple technology focused solution (likely doomed to failure) to a true organisational success.
Encouraging Cross-Functional Collaboration
Innovation often sprouts where disciplines meet, sparking new ideas. Cross-functional collaboration is where these intersections happen.
It's the spark that propels digital strategies from concept to reality.
Nurturing such collaboration involves creating platforms for knowledge exchange, breaking down communication barriers and recognising that each function's expertise contributes to success.
Data Siloes have to be a thing of the past!
Aligning Personal And Organisational Goals
During a digital transformation, it’s always possible personal aspirations will conflict with organisational objectives, so aligning these paths requires a lot of strategic expertise.
Imagine combining personal excellence within a digital transformation project; just imagine what becomes possible.
Such alignment massively boosts engagement. When employees see their personal journey tied to transformation, they become champions of change, not just contributors.
Linking individual goals with a digital transformation's aims also helps to create a shared purpose. Every task, every achievement, becomes part of this shared purpose – a harmonious tune that fosters both personal growth and collective advancement.
Addressing The Hidden Threats Of Shadow IT
Moving on slightly from the human element (although it’s still inextricably linked) is a challenge known as Shadow IT that often casts a pall (or shadow) over even the brightest of visions and digital transformations.
As leaders, we often have to navigate a landscape in which both approved and unauthorized technology usage coexist, and we need to be able to deal with that within the context of said digital transformation.
Understanding Shadow I.T And Its Impact
Imagine your digital transformation strategy as a meticulously crafted vision.
Now picture it endangered by a range of unsanctioned technology solutions used throughout your organisation… that’s Shadow I.T.
The use of technologies beyond I.T’s control or knowledge.
Shadow I.T isn't a minor deviation; it can cause chaos.
Unapproved solutions can lead to data breaches, security vulnerabilities and inconsistencies that disrupt data efforts.
It has the power to undermine your digital strategy, rendering investments fruitless and goals unreachable as well as potentially causing untold harm to a brands reputation.
Security And Compliance Concerns Of Unsanctioned Tech
Shadow IT’s unregulated nature weakens cybersecurity efforts, exposing data to outside threats (or even internal ones).
From there, the consequences will spread fast – from compliance breaches to potential legal issues that tarnish your organisation's reputation.
In a data-driven world, where trust relies on data integrity and security, Shadow I.T's implications become significant.
Strategies promoting transparency, centralised oversight of technology adoption and robust security measures are crucial to tackle this emerging issue.
And back to the subject of this article… It also makes a mockery of digital transformation efforts.
Why spend money on new solutions, if staff will quietly continue to use old methodologies anyway?
Finding the right balance between fostering innovation and maintaining governance is essential in solving this issue.
As leaders, our role is to cultivate an environment where creativity can flourish, within the confines of strategic control.
The Need For Controlled Innovation Channels
Consider innovation as a river – a force that can carve new paths but will also flood and overrun those very same paths if left unchecked.
Providing avenues for employee-driven innovation is crucial, as it taps into their collective creativity and nurtures a culture of resourcefulness. However, the challenge lies in managing the delicate equilibrium between encouraging innovation and avoiding unchecked chaos.
Creating approved channels for innovation is the way.
It means establishing spaces in which employees can collaborate and experiment under the umbrella of governance.
This approach acknowledges that while innovation drives progress, it also requires guidance to ensure it doesn't veer off course.
Striking The Balance Between Innovation And Good Governance
The synergy between innovation and governance isn't contradictory; instead, it needs to be thought of as a strategic balance.
Governance acts as the guardrails that steer innovation in the right direction, preventing it from becoming chaotic. By cultivating a framework for controlled experimentation, you transform innovation from a sporadic spark into a disciplined force that fuels true digital transformations.
You don’t have to think of Shadow I.T as bad.
As with digital transformations themselves, it just requires a bit of a shift in mind set to so as to empower grassroot development.
Cultivating an innovative culture whilst maintaining strategic oversight requires keen observation. Your governance team should always be on the lookout for signs of grassroots innovation – unsanctioned applications, unconventional processes and/or unique solutions.
Instead of treating these as deviations to be got rid of however, view them as indicators of unmet needs and untapped potential.
A good leader’s expertise should lie in identifying those sparks and providing the framework to nurture them into strategic assets.
Try to establish platforms for grassroots innovators to collaborate with I.T and business units, transforming their ideas into sanctioned projects.
This approach combines Shadow I.T's enthusiasm with the organisation's overarching vision.
Failure To Specify Goals, Outcomes, and Roadmaps For Transformation
Moving on from Shadow I.T, we hit the next reason so many digital transformation projects fail… the absence of clear goals, outcomes, and a well-defined roadmap.
Nothing will create chaos and disorder in the digital transformation process as the above will. You’d also be amazed on the number of organisations that start out on the digital transformation path with no clear end in sight, meaning there’s zero chance of measuring ROI.
Every step in a digital transformation should align with a pre-defined strategic goal.
Hyper-specific goals provide direction… guiding initiatives towards clear destinations. Outcomes act as benchmarks, validating the alignment of effort with strategy. A roadmap, guided by foresight, helps you navigate the journey, ensuring each stride forward brings the organisation closer to its transformative goals.
Misalignment Between Digital And Business Goals
When it comes to business, dissonance in goals quickly arises when the digital strategy doesn't sync with the overarching business strategy.
The alignment between digital and business strategies is what roots a digital transformation within the context of larger objectives to provide measurable ROI’s.
It ensures that digital efforts don't operate in isolation but instead harmonise with the strategic direction whilst elevating digital transformations from a tactical pursuit to a strategic motif that enhances the entire organisation.
Addressing Resistance And Leadership Challenges
Digital transformations are all about innovation, but as we’ve discussed, they often meet with a lot of resistance.
That means a leadership role has to extend beyond steering the ship; you're tasked with orchestrating the entire digital transformation from a top-level.
Lack of Top-Level Support And Sponsorship
Imagine a ship with a captain and crew steering in different directions.
This parallels the situation when top-level executives fail to provide active support and sponsorship, to an ongoing digital transformation.
Top-down involvement can’t be a simple formality; it has to be a guiding force.
A transformation without top-level sponsorship is like a ship adrift without a compass.
Leaders need to not only voice support publicly and frequently but also immerse themselves in the transformation narrative.
Their alignment breathes life into strategies, communicates commitment, and steers their staff’s opinions.
Inadequate Commitment Leads To Resource Shortage
Digital transformations fail when the entire leadership team fails to commit… it can’t just be a one-time pledge; it should be an ongoing engagement, fuelling momentum.
That insufficient commitment results in a lack resources (both financial and human) which is so vital to nurturing change initiatives.
That commitment demands unswerving focus, shifting attention from routine ops to strategic evolution.
A half-hearted transformation yields partial results and is a major reason so many projects fail!
Neglecting Concerns About Impact On Daily Tasks and Routines
Imagine suddenly finding the ground shifting beneath your feet – that's what can happen to a team(s) when a digital transformation starts to disrupt their daily tasks and routines.
Transitioning from the familiar to the transformative has to be done carefully to avoid creating the very resistance we’ve worked so hard to avoid.
Unrealistic Expectations In Project Planning
That goes hand in hand with actually scoping out and planning the transformation.
Unrealistic planning leads to unrealistic expectations, normally at the top, but will eventually leaving staff feeling disheartened too when promised improvements fail to appear.
A well-planned project should be realistic, consider the technology complexities involved and account for all workforce capabilities.
Unrealistic timelines lead to burnout and diminish end quality, just as inadequate resource allocation leaves gaps which affecting a digital transformation's end effectiveness.
You also need to watch for scope creep and / or changes in project requirements along the way that could disrupt your transformation's narrative.
Without proper evaluation, these changes derail strategy and end your project as another statistic in that 84% failure rate.
In conclusion, as a leader of a digital transformation, your role is to conduct the symphony, addressing all challenges (both human and tech) with overarching strategy and leadership but that doesn’t mean these challenges should be seen as obstacles… instead, try to consider them as opportunities for growth.
Cultivating innovation, aligning leadership with employee goals, balancing technology and people, and safeguarding data integrity are interconnected tasks that will shape and guide your transformative narrative in the right direction.
And it should go without saying, FormusPro stands ready to help. Yours won’t be our first digital transformation. Or even our hundredth.
Let our staffs expertise support you through the complexities, bridging gaps and fortifying foundations.
Need to know more? Feel free to reach out to us below…