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:

 

  • They think its a technology problem. Take the example of the BBC, in many ways a sophisticated digital player. Under Director-General Tony Hall’s leadership, the BBC’s digital assets, like iPlayer and Playlister, are helping propel the organization into the digital age. However in May 2013, the BBC axed a £100 million digital transformation. PwC, engaged to audit the failure, pointed to a “serious weakness in project management and reporting, as well as a crippling lack of focus on business change”. The BBC saw digital transformation as a technical problem, not a cultural transformation.

 

  • They can’t handle large-scale change. Take a look at the Co-op bank. In 2013 the bank cancelled a major transformation programme, resulting in £300 million of investment being written off, adding to its already crippling capital shortfall. An independant report cited “destabilising changes to leadership, a lack of appropriate capability, poor co-ordination, over-complexity, underdeveloped plans in continual flux and poor budgeting.” Managing large scale change is a tough task, one that many organisations struggle with.

 

  • They think they have all the answers internally. Take the example of the not-yet started transformation announced by Veronique Laury, CEO of European DIY chain Kingfisher. The firm has clear opportunities to increase both its digital customer experience and its operational excellence across its multiple brands. However, Laury defines her approach with the statement “I’m not talking about asking what the customers want, I’m telling them about what they need.” Bold, and potentially visionary, but the risk of excluding customer insight and feedback from the design process could result in a lot of money spent delivering experiences customers aren’t particularly clamouring for. Too many firms think they have all the answers.

The pace of change in the digital world - your customers, your competitors and the capabilities of the technology - means that traditional approaches to large-scale change management just don’t work anymore. Instead, you must learn to embrace iterative, customer-centric innovation to enhance both your customer and your employee experience. This means managing change in a new way.

 

In our recent Brief, Audit Your Digital Transformation Efforts To Ensure Successful Delivery, we provide a best-practice framework to assess your digital transformation program structure. We address questions like How do you know if your team is set up for success? Do you have the right senior sponsorship and cross-functional governance in place? Have you developed the right assets, such as customer journey maps and capability maps, to secure buy-in to your plan from the wider organization? Is your CFO on board with the idea of developing prototype products to prove the value of digital transformation to skeptics?

 

I’ll be talking about exactly this subject at both The Next Web in Amsterdam on April 24th, and at Forrester’s Forum for Marketing Leaders in London on April 30th.

 

Join me there.

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Comments

Digitalisation process for success

Here are five success factors shortly explained https://www.linkedin.com/pulse/five-change-management-success-guidelines...
and the process for cultural and management change in short https://www.linkedin.com/pulse/think-like-toddler-management-cultural-to...

Developing digital channels has to do with developing the company holistically. Starting point is the vision about customer experience and relationship, stage 2 is about understanding the experinces across customer interfaces right now and defining how to improve them quickly and in longer term. Stage 3 is about way of working, organising and managing with knowledge. The last stage 4 is about systems infrastructure and it's capabilities to support the way of working that delivers the experiences across customer interfaces and eventually influences the customer experience and relationship.

The biggest mistake in my opinion is to jump to conclusions and try to manage the change top-down. It doesn't work. People need to fall in love with the change and experience first hand how it's making their life easier and customer's exprience more fulfilling.

Martin, very good post,

Martin, very good post, thanks. I think one additional key reason for digital transformation failures is the inability of board of directors to see the change and adjust company direction accordingly. Just posted some thoughts on this topic with one case example https://www.linkedin.com/pulse/board-never-tweeted-tuomo-virkkunen?trk=o...

The same old non-technical shortcomings

I spend my time going in and out of large organisations to recover failing transformation programmes. Usually a senior leader or manager was charged with running the initiative but they only understand how to address the technical aspects of transformation. They are often technically highly capable, but fail to understand the holistic challenges of business transformation.

Transformation management areas such as Value Estimation, the Business Case Risk Assessments, Benefit Realization Planning, Programme Management and Organisational Change Management are languages they simply do not even understand.

Which is why 70% of transformations fail for "non-technical" reasons.

Read more: http://www.cxo-transform.com/unsuccessful-business-transformation/