Digital transformation (DX) is on the minds of virtually everyone in the business world these days. As Uber’s sudden and rapid rise has shown, it takes little more than a cellphone app to upend entire longstanding industries these days.
This is causing businesses of all types and sizes to revamp IT infrastructure, upgrade processes, restructure their workforces and otherwise make themselves ready for an economy driven by digital services and applications rather than products. But amid all of this hoopla, a number of misconceptions are taking root, leading some top executives to get the wrong idea of what DX is all about and causing them to ultimately adopt the wrong approach to a successful transformation.
Myth 1: DX is all about technology.
Richard Seroter, vice president of marketing at Pivotal, posted on InfoWeek recently that while tech is an important factor in DX, it should not be the single focus of change. Culture, processes, objectives and a host of other factors all play a role, and each of these drivers will influence changes in the others.
To be successful in today’s digital economy, Seroter says the enterprise must take its eyes off new technologies and start thinking about outcomes. Does it need to improve customer feedback? Should it increase the iteration of new software? How can it deliver greater value? In each case, there will likely be a technology that can help achieve these goals, but the point is to start thinking about what you want to accomplish first and then reverse-engineer systems and processes from there, not just acquire the latest and greatest technology in the hopes that it will give you an edge. Transformation, after all, is about change, not improving the status quo.
Myth 2: People are eager for change.
According to management guru Cheryl Cran, resistance from employees is usually the single-greatest limiting factor to digital transformation. As she explained to CEO World, change is difficult, and it usually requires more work and produces greater aggravation before the benefits are realized. This is why most people react in one of three ways to DX: fear, pushback or a bid to increase their own personal power rather than support the enterprise’s objectives as a whole.
For a successful transformation, business leaders should focus first on making immediate improvements to employees’ processes and workflows, preferably starting with key stakeholders, and then gradually roll out to the wider organization once the key deployment and integration issues are known. (To learn more about getting employees involved in DX, see The Human Element of Digital Transformation: Employee Engagement.)
Myth 3: Everybody is doing it.
Research from Australian telecommunications firm Telstra has found that only 21% of senior decision-makers consider their organizations to be “digitally mature,” while 30% say they haven’t even begun the transformation. What’s more, most programs that have gotten underway tend to be fragmented and incremental, which is not necessarily a bad thing (see Myth 2), but it does point out the fact that DX is still very much in its infancy.
Of course, this should not be taken as an excuse to delay. As Telstra’s Michael Ebeid notes:
This shows a clear opportunity for businesses to both elevate and integrate their approach to digital transformation. While more can be done to integrate digital transformation activity across the business, this needs to be led by a clear company strategy from the C-suite and company boards down.
Businesses should also keep in mind that an entirely new generation of startups is poised to put digital service-based business models into effect without having to undergo transformation at all. Most of these companies will have been created for digital from the ground up and will likely be the first to leverage 5G, the IoT, microservices and a wide range of other developments to drive waste and inefficiency out of existing business models.
Myth 4: Failure is bad.
A recent report from McKinsey and Co. revealed that even among tech-savvy firms only about a quarter of digital projects succeed. In fields like energy and manufacturing, the rate is as low as 4%. Every failure is a learning opportunity, however, and if the digitally transformed organizational structure is sound there should be a smooth process to ingest and analyze feedback, devise recommended fixes and put them into practice. From there, it’s a matter of repeating the process until a successful, optimized workflow is achieved or the entire idea is sent back to the drawing board.
To date, says McKinsey, successful projects tend to focus on new product or services launches and new markets being tapped, not simply digitizing the existing operating models. As well, success often comes only after the scope of the transformation has reached a certain limit, as in multiple business functions or business units. (Want to learn more about implementing DX? Check out The Do’s and Don’ts of Digital Transformation.)
Myth 5: DX is the same for everybody.
Business consultant Lisa Croft noted on CMSWire recently that the drivers of transformation will vary across industries, across organizations and sometimes across business units within the same organization. The challenge is to create a digital ecosystem that is flexible enough so that everyone is able to optimize their own experience but broad enough so that it contributes equally to the collective organization.
Part of this challenge is to recognize the problems you hope to solve and the opportunities you hope to address through DX and then customize the transformation along those lines. It is also important to understand that DX is not a one-and-done deal; the entire organization should adopt the mindset that this is an ongoing process both in terms of technology development and refinement of processes and business models. As such, it will continue to address multiple challenges, goals and outcomes as they evolve over time.
Digital transformation is by no means easy, and the results are uncertain. But at the end of the day, the task for business, as it always has been, is to evolve or face extinction. When faced with a choice between slow and expensive or fast and cheap, few consumers prefer the former.