Many organisations are already pursuing digital transformation (DX), recognising its importance in the modern business setting. However, success with DX initiatives has been mostly elusive.
Even major corporations GE, Ford, and Procter & Gamble, for example, pursued digital transformation but ended up failing. These are established corporations that do not suffer from the same resource scarcity smaller businesses deal with on a regular basis. Still, their digitalisation initiatives failed even after spending billions.
Nobody can accuse these three corporate giants of lacking innovation and management competence. They would not exist for a long time without having the ability to adapt to changing market conditions and demands. However, it is clear that they struggled with their DX efforts and there are important lessons to be learned from their experiences.
The wrong Pareto Principle?
There seems to be an 80-20 pattern in digital transformation. It is not the Pareto Principle everyone is familiar with, though. It is not about 80 percent of outcomes resulting from 20 percent of causes. Instead, 80-20 refers to the split between being ineffective (80 percent) and effective (20 percent).
According to The State of Digital Adoption 2021, a Harvard Business Review Analytic Services research sponsored by Digital Adoption Platform WalkMe, an overwhelming majority of organisations are working hard to achieve successful digital transformation. Unfortunately, only 20 percent of them say that their DX strategies have been effective, while the vast 80 percent majority says otherwise.
The study, which surveyed over 500 business executives to collect insights about digital transformation efforts, says that 81 percent of businesses have been pushing aggressively to leverage DX as a tool to differentiate their organisations in the market. However, the strategies organisations employ seem to have deficiencies, issues, or weaknesses.
These issues can be addressed if organisations were to reexamine their strategies and focus on the essential factors of digital transformation.
1. Management commitment and competence
Digital transformation should not be anchored on technology. This sums up the thoughts of the article written by Behnam Tabrizi, Kirk Girard, Ed Lam, and Vernon Irvin for Harvard Business Review. This idea happens to coincide with the findings of the WalkMe-sponsored Harvard Business Review Analytic Services research mentioned earlier.
”While most businesses decide to use the most cutting edge and innovative software in order to sell and perform, digital transformation efforts become irrelevant without a long-term adoption strategy and execution plan in place. This ability to deliver will define the difference between successful and unsuccessful digital transformation,” says WalkMe President and Cofounder Rafael Sweary.
Digital transformation should focus more on the people than the technology. The latter only serve as tools. They cannot become the centrepiece of the DX strategy. The goal should always be to digitalise to make people more productive, efficient, and satisfied in the workplace. People cannot become productive if they are not convinced that the tools or new system they are given make sense.
For this, management plays a crucial role. Employees can only share their thoughts or sometimes raise objections about the process, but they do not have the final say. The management is the one with the capability to examine needs with a broader perspective, set objectives, and formulate and coordinate plans. If they do not know what they are doing, a successful DX initiative is a rather remote possibility.
2. Progress measurement and monitoring
One of the notable findings of The State of Digital Adoption 2021 is that an overwhelming majority of business executives believe that those in the management should have a clear grasp of the DX initiative progress. The report says that “80 of respondents say that it is important or very important for senior management to have a clear and complete overview of their organisation’s digital adoption progress via analytics.”
It is not enough to have plans and strategies. Even the most meticulously thought out courses of action can end up failing if they are just deployed without checking on their progress. No plan is foolproof, and contingencies will always emerge along the way. It is crucial for organisations to keep track of their DX progress to determine issues and introduce tweaks or adjustments. Sometimes, it may be necessary to completely overhaul or replace the strategy.
Another important insight obtained by the Harvard Business Review Analytic Services research pertains to the lack of a systematic method for measuring DX success or progress. The study found that 10 percent of organisations do not conduct any progress measurement while 3 percent say that they are completely incognisant of their progress or performance.
For those who say that they employ means of gauging DX success, there are no established or systemised methods for scrutinising the outcomes of the digital transformation initiative. Some companies say they use employee engagement scores while others say they refer to customer reviews and feedback, company revenue figures, expense reductions, or other P&L-related key performance indicators to evaluate their progress. To emphasise, they do not have standards or benchmarks put in place to contextualise the metrics they obtain.
3. DX initiative facilitation
According to the study, 73 percent of organisations use in-house solutions while 8 percent employ global system integrators or other consultants and 5 percent use original software. The remaining 14 percent turn to various other options.
The 80 percent DX strategy ineffectiveness survey result came from a survey population driven by these percentages, wherein a vast majority of organisations rely on their in-house DX solutions. Only a few take advantage of the original software or expertly designed Digital Adoption Platforms (DAPs).
The study suggests that to improve digital transformation success, organisations can greatly benefit from using a Digital Adoption Platform. “Viewed as a whole, this report explores how a comprehensive digital adoption strategy, powered by a DAP and backed by senior management, could contribute meaningfully to the success of any transformation effort,” an excerpt from the study reads.
DAPs are highly effective facilitators of digital transformation plans, as they provide executives meaningful insights that help them identify and resolve digital friction. They enable greater visibility over DX efforts, allowing management to keep track of progress more easily while dynamically responding to what is happening on the ground.
Moreover, DAPs readily provide the analytics business executives need to examine how they are doing with their digital adoption plans. They also accelerate the entire digital transformation process by providing a framework designed by transformation experts. With this, organisations no longer have to create their own and experiment with various methods and tools. DAPs
“The study confirms that the world’s most digitally transformed companies rely on DAPs to reduce time-to-aptitude, increase competitive agility and improve many other ROI measurements that have been out of their reach until now,” explains Sweary.
Simply put, the management of an organisation plays a critical role in achieving digital transformation success. They can exercise control over the process. As such, they need to thoughtfully decide on what plan to pursue, the solutions and platforms to use, and the monitoring of the DX initiative’s progress.