Why Do Digital Business Transformations Fail?

Digital transformation is undeniably complex and often misunderstood. To look at why things go wrong for some firms, lets take a quick look at three high-profile examples of transformation - two failures and one new initiative. These highlight some common mistakes that senior executives make:

 

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Black Friday: The Sale That Stole Christmas

Black Friday is here.

By here, I mean here in Europe. And it’s here to stay.

Amazon launched Europe’s first Black Friday sale in 2010, with a small fanfare and some success. Most European retailers did the polite thing, and looked bashfully away while their brash American cousins celebrated a day with zero cultural significance this side of the Atlantic. “We’ll wait for Boxing Day” was the overwhelming sentiment.

But consumers bit, and the following year a small handful of global brands like Apple and Walmart (in the form of its UK subsidiary Asda) followed suit. Black Friday grew somewhat organically.

But 2014 was different.

Previous Black Friday successes unleashed a literal tidal wave of copy-cats in the run up to Christmas last year. This was most publically a UK phenomenon, with well-known brands like John Lewis taking part, but don’t fool yourself into thinking it was just a quaintly British emulation of the American trend. French and German retailers like Darty and Saturn also indulged. Akamai saw triple the normal web traffic to retail websites across Europe on Black Friday. But it was the UK that bore the brunt of the impact as:

  • High profile websites buckled and crashed under unprecedented load, with many retailers reporting upwards of a 300% uplift in traffic on Black Friday.
  • Riots in stores saw police called.
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Digital skills are the golden ticket in 2015

It’s no secret that digital skills are in short supply. In fact, while some three quarters of executives tell us their firm now has some form of digital strategy (however rudimentary), a paltry 16% say they have the skills and capabilities necessary to deliver it. Even though the average eBusiness team’s staffing budget is growing year on year, finding the skills and capabilities to execute on a digital strategy is becoming harder and harder.

Our latest annual organizational and staffing backs this up. Our September 2014 Global eBusiness And Channel Strategy Professional Online Survey reveals:

  • eBusiness Teams Have An Average Of 95 Employees. The average eBusiness team has 95 team members. As would be expected, the larger the worldwide revenue, online revenue, or total employee count is, the larger the eBusiness team is.
  • Technology And Customer Experience Are Still The Hardest Roles To Fill. Technology, customer experience, and business analytics are the hardest jobs to hire for.  Additionally, technology and customer experience are the most outsourced, and technology is the most understaffed.  
  • The Digital Skills Gap Continues To Widen. Digital transformation brings an increased level of responsibility for eBusiness employees who are often leading the charge for company-wide transformation in addition to handling day-to-day operations. As all business becomes digital business, eBusiness teams will have an increasingly difficult time sourcing talent. 
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Ready to Write Your Digital Strategy? Read This First.

Digital Business Transformation Will Gain Critical Mass In 2015

In 2014 digital business hit the boardroom and the C-suite offices: At the beginning of 2014, 93% of executives told us that they believed that their industries would experience digital disruption in 2014. But our surveys and interviews also tell us that many executives don’t believe that their firm has the ability to execute on that plan, and many don’t have confidence in the plan itself.
 
As leaders race ahead with their digital business transformations in 2015, eBusiness professionals have to help pivot their firms from planning mode to doing mode or risk falling behind their more digitally savvy competitors.
 
In the report, "Predictions 2015: Digital Business Transformation Will Gain Critical Mass", I outline the key digital business trends that will impact eBusiness and channel strategy professionals in 2015, including:
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Accelerate Digital, Don't Try and Control It

Centres of excellence and shared service teams are nothing new. Its a concept that Technology Management teams have been wrestling with for years, if not decades in an effort to streamline underlying technical architecture and simplify application landscapes. In the digital world, its a less well established approach, but one that is gaining momentum as an emerging set of best practices forms around how to organize and manage a global digital strategy.

Pete Blackshaw has led the charge over the last couple of years at Nestle, establishing a widely publicised Digital Acceleration Team. The team focuses on “listening, engaging, inspiring and transforming” across Nestle’s disparate and diverse markets and brands. Its not just an operational centre of excellence, it walks a fine line between dictating to local teams and being a paper tiger with no real influence. And it does so very effectively.

But why “acceleration team” and not “centre of excellence”.

I believe that the language is important. For a local team, the idea that a global “centre of excellence” is going to roll up and tell them what to do can be a very negative experience. Do the global team understand the nuances of my market? Will migrating our lean, agile eCommerce platform onto the behemoth enterprise platform slow us down?

“Acceleration” helps create a more positive and collaborative approach.  

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Where’s Your Next $Bn In Growth Coming From? Your Home Market? I Don’t Think So…

Depending on the viewpoint of your favorite economist, the recession may be over. But retail growth is far from buoyant in many markets. The UK retail sector shows healthy signs of recovery, while US consumers seem be less confident. There are numerable success stories; John Lewis passed the £1bn online revenue mark this year, while Macys is in its fifth year of double-digit online growth, in spite of a slightly shaky offline performance. But as an eBusiness leader, no matter what your local market conditions, I’m willing to bet one thing.

Your growth targets haven’t gone down.

For many years, growing online revenues has been a core strategy for most B2C firms, and many B2B firms are also riding the eCommerce wave. But as markets become crowded and competition becomes tighter, globalization is an increasingly attractive option for eBusiness professionals. With southern European markets seeing online growth rates in the high teens and even bigger opportunities like Russia and China on the global horizon, it’s no surprise that an international strategy is high on the agenda for many eBusiness leaders.

But going global is complex.

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Digital Business Means its Time to Evolve

I’m returning from three days at Forrester’s Technology Management Forum in London. The theme was “Unleash Your Digital Business”, and a very public event on the first day hammered home the timeliness and relevance of the story.

Parliament passed the “Ordinance for the Regulation of Hackney-Coachmen”in 1654.  London at that time would have been unrecognizable to the modern city-dweller. Over a decade before the Great Fire destroyed swathes of the medieval city. Almost 200 years before Charles Dickens immortalized the orphans, beggars and thieves of the smog-shrouded slums of the industrial revolution. But in essence, the act of hailing a taxi remained unchanged since that day.

You stand on a street, wave at a driver and take your chances.

Enter Uber.

And Hailo, and a number of other clones, but Uber is the main bone of contention here. Uber represents the future. It empowers consumers to make a choice, placing power in their hands, and removing it from the service provider. It’s a poster-child for the Age of the Customer. And London’s taxi drivers aren’t happy about it. I will stop short of debating the politics or legislative aspects here – suffice to say that London’s taxi drivers are so unhappy that an estimated 12,000 of them took to the streets on Wednesday to protest. It was messy. And tragically misguided.

The following day, three interesting things happened.

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Drive Digital Transformation Through Strategic Partnerships

I’m house hunting.

 

It’s a very enlightening way of seeing digital disruption in action. When my wife and I bought our current house over a decade ago, we found it on a property website, but that’s where the digital engagement ended. We physically went to the estate agent to book a viewing. We were given a printed brochure about the house. Our mortgage application was done in person. We took photos of the house, printed them at the local Boots and stuck them in an album. When we moved we had to call our friends and tell them we’d moved.

 

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Navigating the New Digital Landscape

I’m writing this on the train. On my iPad. Connected to the internet (albeit intermittently, thanks to the occasional tunnel) while trundling through the British countryside. I booked my ticket online with Expedia. I used the Trainline app to check the most up to date timetable info just before I left the office. Digital is enhancing my journey. Making it easier.

Every single one of my fellow travelers, with the exception of the sleeping Hipster opposite me, has immersed themselves in their own digital worlds. They tap the screens of smartphones. They watch movies on their tablets. They type meeting notes on their laptops.

The world has gone digital.

But that’s not a surprise, right? Digital is a boardroom topic these days. C-level executives who barely had the faintest notion of what “digital” was a few years ago are waking up the threat that digital disruption poses to their business. Spurred on by apocryphal tales of iconic brands who flushed their futures down the digital toilet, they are facing the reality that their businesses need to take digital seriously.

But here’s the kicker. While senior executives in many firms may now understand the importance of digital for their firm’s survival, few know what to do about it.

At Forrester, we recently ran one of our largest ever global executive surveys in partnership with Russell Reynolds. We asked firms about their digital strategies. Here’s what we found:

  • Seventy three percent of firms that think they have a digital strategy. If this sounds high, that’s because many of these firms are mistaking the fact that they have a website, or a mobile app, as having a digital strategy.
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