Building a Better Digital Transformation
Digital transformation is critical for organizational success. The rate, and pace, of digital innovations, tools, processes, security, and connectivity have created vast – almost infinite – opportunities for change, growth, and enablement. According to a 2021 joint Project Management Institute (PMI) and PricewaterhouseCoopers LLP (PwC) study, adoption will nearly double for artificial intelligence (AI), internet of things (IoT), blockchain, virtual, and facial recognition technologies (PMI & PwC).
Why, then, do so many organizations still struggle with effectively driving change adoption? It’s because they put the ‘digital’ before the ‘transformation’.
- 84% of digital transformations are likely to fail (Forbes); and
- Global professional services firms assess the risk of digital transformation failure between 70 and 95% (McKinsey & Company, Boston Consulting Group, Bain & Company, KPMG).
“we’re doing something wrong in digital transformation, yet we’re still willing to go through the motions knowing that it’s largely a waste of resources” (Forbes).
Understanding common misconceptions and learning from both successes and failures is essential for CxO leaders to navigate this transformational journey.
The ugly truth is that everyone is using digital transformation to hammer the nail of change: change in attracting, retaining, and/or engaging customers; or change in driving operational efficiency, productivity, or cost savings.
“tech is only 20% of the equation.” (Forbes)
Mistake #1: Thinking it’s just about technology. Digital transformation is not just about technology. A successful transformation requires a holistic approach that encompasses people, processes, and technology. For example, Adidas has successfully transformed their business by creating a digital platform to connect with customers and leveraging technology to optimize their supply chain processes. This has resulted in a significant increase in sales and operational efficiency.
Mistake #2: Lack of focus on business outcomes Another common mistake is focusing solely on technology adoption rather than on achieving specific business outcomes. Domino’s Pizza is a great example of a company that focused on business outcomes through digital transformation. They implemented a technology platform that enabled customers to order online, resulting in a 22% increase in sales and a 75% decrease in order-taking time.
Mistake #3: Underestimating the importance of change management Change management is critical for successful digital transformation. Target is an example of a company that failed to implement effective change management. Their digital transformation efforts resulted in major problems with their e-commerce platform, leading to a significant decline in sales and damage to their brand reputation.
Mistake #4: Failure to measure success Measurement is essential for determining the success of digital transformation initiatives. A notable example of failure to measure success is the Boeing 737Max project. The lack of proper measurement and testing led to a disastrous outcome, impacting both the company’s reputation and financials.
On the other hand, there are also companies that have successfully implemented digital transformation initiatives. Walmart is a great example of a company that has leveraged technology to improve its supply chain management and enhance the customer experience. Using digital transformation tools such as AI and machine learning, Walmart has been able to optimize its inventory and reduce costs while offering personalized recommendations to customers.
Another success story is that of GE Aviation. The company implemented a digital twin technology that allowed them to simulate and optimize the performance of their aircraft engines, resulting in significant cost savings and improved efficiency.
The success or failure of digital transformation can have a significant impact on CxO leadership careers. Companies that succeed in digital transformation can stay ahead of the competition and drive growth, while companies that fail risk losing market share and damaging their brand reputation.
Stop. Think about think about the phrase digital transformation. CxOs are focusing on the ‘digital’ and not the ‘transformation’. The abundance of tools, platforms, and cloud solutions has created an abundance of ‘easy buttons’ to force change. These solutions have almost nothing to do with the transformation.
The transformation is about the journey and landing the transformation in a way that encourages your stakeholders to embrace the shift.
Transforming Digitally (a better way):
- Burn your project plan. Yup, I’m a certified Project Management Professional (PMP) and Agile Certified Practitioner (PMI-ACP). Project plans are established to build things – you can’t build people adoption. You have to earn it through tough conversations across the organization to understand what’s important, how disruptive change can be, and what success looks like for those on the ground floor.
- Embrace a ‘low person wins’ mentality. Football professes that the ‘low man wins’. It’s a reference to bringing down a tough opponent. Get down to where your ultimate stakeholder lives, breathes, and operates. Understand what it’s going to take to move the needle; confirm what are they enjoying about your competitors. Operating at this level creates, and sustains, alignment with the outcomes upon which you’re focused.
- Measure. ‘What gets measured gets managed’. Change may not be easy to quantify, but finding a tangible metric is important to make sure you understand if you’re impacting change and adoption.
In conclusion, digital transformation is critical for business success, and learning from both successes and failures is essential for CxO leaders. Avoiding common misconceptions, focusing on business outcomes, effective change management, and proper measurement are essential for successful digital transformation initiatives. Companies that understand these principles and execute them effectively are well-positioned for success in today’s ever-changing digital landscape.
- Adidas (2019). “Adidas Strategy: Winning through the creation of Desire”. Adidas Group. https://www.adidas-group.com/en/investors/strategy/
- Block, C. “12 Reasons Your Digital Transformation Will Fail”. Forbes. Retrieved from https://www.forbes.com/sites/forbescoachescouncil/2022/03/16/12-reasons-your-digital-transformation-will-fail/?sh=de7c2311f1ee
- Bain & Company. “Orchestrating a Successful Digital Transformation”. Retrieved from https://www.bain.com/insights/orchestrating-a-successful-digital-transformation/
- Boston Consulting Group. “Flipping the Odds of Digital Transformation Success”. Retrieved from https://www.bcg.com/publications/2020/increasing-odds-of-success-in-digital-transformation
- “Digital Disruption”. Retrieved from: https://www.pmi.org/learning/thought-leadership/megatrends/2022/digital-disruption
- Domino’s Pizza (2021). “How Domino’s leveraged technology to deliver a better customer experience”. Domino’s Pizza. https://biz.dominos.com/web/media/stories/2021/01/06/dominos-leverages-technology-for-better-customer-experience/
- Forbes. (2019). “Target’s E-Commerce Woes Take a Bite Out of Its Sales”. Forbes. https://www.forbes.com/sites/greatspeculations/2019/03/12/targets-e-commerce-woes-take-a-bite-out-of-its-sales/
- GE Aviation (2021). “Digital Twin Technology from GE Aviation”. GE Aviation. Retrieved from https://www.geaviation.com/digital/digital-twin-technology
- KPMG. “The playbook for a successful business transformation”. Retrieved from https://www.kpmg.us/insights/transforming-transformation.html
- McKinsey & Company. “Perspectives on Transformation”. Retrieved from: https://www.mckinsey.com/capabilities/transformation/our-insights/perspectives-on-transformation#:~:text=Seventy%20percent%20of%20transformations%20fail,sustain%20the%20change%2C%20among%20others
- Rogers, B. “Why 84% Of Companies Fail At Digital Transformation”. Forbes. Retrieved from: https://www.forbes.com/sites/brucerogers/2016/01/07/why-84-of-companies-fail-at-digital-transformation/?sh=277526d397bd
- The New York Times (2021). “Boeing’s 737 Max Is a disastrous project management failure.” The New York Times. https://www.nytimes.com/2021/01/15/business/boeing-737-max.html
- Walmart (2021). “Walmart US Q2 comps grew 9.3% and Walmart US eCommerce sales grew 97%”. Walmart. https://corporate.walmart.com/newsroom/2020/08/18/walmart-u-s-q2-comps-grew-9-3-and-walmart-u-s-ecommerce-sales-grew-97