Why Digital Transformations Fail

Learn why digital transformations fail - and how to make yours successful.
Ask business leaders about a recent digital initiative and many will regale you with stories about what went wrong. McKinsey reports that 70% of all business transformations fail — the rate is even higher for digital transformations.
As digital workplace strategy experts, we hear a lot of those stories when our customers first come to us and most fail because of one of these reasons: no clear vision, not the right solution (or the wrong time), not enough of the right people.

Improving Organizational Processes or Experience

Before we jump into the pitfalls, let’s define digital transformations. While Gartner focuses on new business models, we define a digital transformation as the implementation of new or existing technology to improve organizational processes or experience. Examples include improvements to customer-facing systems, adoption of a modern workplace, implementing new back-end systems, or opening up new business lines with technology.

Organizations will undertake a digital transformation for any number of reasons:

  • To improve productivity
  • To meet regulations or prove compliance
  • To address a specific business or customer need
    To gain a competitive advantage by providing better service or products, sometimes at greater scale

The perceived benefits can be quite clear and tantalizing – reducing costs, providing faster and better service, attracting and retaining better talent, being perceived as cutting edge¬ – the list goes on and on. (You can read about our customers’ successes here.)

The Problem With Failure

The danger is that those benefits often don’t materialize or, worse, the organization finds itself in a weaker position. The team will have wasted time and resources on a digital transformation that may have started with the best of intentions and a solid plan but yielded only chaos and discontent. This situation can not only affect the initial project but all subsequent change initiatives as employees become less willing to adopt change and leaders less willing to fund it.

However, there is a better way. By looking at the most common reasons why digital transformations fail, we can understand what to do better.

Reason #1: No clear vision

Clear goals are the underpinning of any strategy. “By building a vision for transformation, it’s easier to shift ingrained organizational behaviors to reshape culture and set tangible targets for digital transformation initiatives,” notes Melissa Henley. The important thing here is building that shared vision that helps shift behavior and reshape culture.

Leaders may indeed start with the vision clearly in mind. However, in my experience, by the time the implementation team is deep in the implementation process, that singular vision has been watered down or has been lost in translation. If the team is not operating with a shared vision, they may not fully understand or commit to the vision set by others.

Additionally, the leaders who are setting the vision and making the decisions may not be operating with a digital-first framework. They lay out the strategic goals and then look for the tools to achieve those goals rather than consider what new goals digital tools enable. Or, “digital” is seen as a strategic pillar unto itself. I have seen a lot of strategic plans that separate digital goals from the rest of strategic plan. This robs any digital initiative of the context of the full strategic plan.

Reason #2: Right Time, Wrong Solution or Right Solution, Wrong Time

Organizations waste an astonishing amount of time and money on software that does not meet their needs. As a principle of a company that partners with and implements software solutions, I wish that new software was always the solution.

However, sometimes the software is either not the right solution for the problem or it is not the right software for the organization. When the software is not the right solution for the problem, it is most often because the organization has not yet fully defined the problem. Clearly, this is related to the issue of not having a clear vision, but it can also stem from not having enough real data or information about the problem. Gathering evidence and checking assumptions about the issues and frustrations employees are experiencing is time-consuming, but it often pays huge dividends.

Another pitfall is when the problem is clearly defined and the software solution nearly a perfect fit, but the project still goes astray because the organization isn’t ready. At the risk of sounding reductive, the best digital tool in the world is only as useful as it is used. In these cases, either the digital transformation is not fully integrated into the strategic vision of the organization (see above) or the problem it solves is not one experienced widely by the organization.

Reason #3: Not enough (of the right) people on board

Successful digital transformations require the perfect blend of senior leadership, managers, and employees. As Greg Sattell notes, it takes only 10-20% of a system to adopt an innovation for rapid acceptance by the majority to follow.
Whether a digital transformation is conceived in the C-Suite or addresses a need expressed by employees or customers, it is imperative that data is gathered from every level of the organization through surveys, focus groups, interviews, or other tools. Too often, this step is skipped for efficiency or cost-reduction reasons.

As Sattel has further observed, this omission can lead to a lack of engagement or even open sabotaging of the project:

Transformation initiatives involve changes in how people think and what they do, which leadership does not control. People have the power to resist and you can be sure they will. That’s why change fails, not because people don’t understand it, but because they don’t like it and actively sabotage it.

As transformation projects nears completion, senior leaders have often moved on to other, more pressing matters and may need to be brought back up to speed. Reintroducing leaders to the digital transformation is a critical juncture and may be where their input has the most power and leverage. If every leader, particularly the CEO or Executive Director isn’t a vocal and active champion of new digital landscape, it undermines the project at its most vulnerable point. “Damning with faint praise” becomes a serious risk. As Tim Ellis states, “leadership is today more than ever about crafting capability to navigate a complex, fast-moving world where anything is possible and the response must be rapid, aligned and yet driven not by coercion but by belief.”

How to Avoid Failure

While no single action will guarantee success, maintaining an open mindset is a good place to start. As our modern workplace software partners, Powell Software, point out, “To start a digital transformation of your enterprise you must first be open to new opportunities, challenging traditional work methods and changing the way employees think and act in the professional sphere.” These actions can help boost the willingness of employees to adopt modern work methods:

  • Talk to the right people: Construct the discovery phase of the project to include representation of all key stakeholders, particularly those who will be changing their behavior as a result of the transformation.
  • Look at the shadows: Survey your company’s “shadow IT” – the applications employees use instead of the Director of Information Technology’s preferred applications or workflows. You will build a more complete picture of what is not working.
  • Be specific and big picture: Communicate the vision and goals to the broadest audience possible while providing all the necessary details and expectations only to those who need them.
  • Create a narrative: Tell a good story about why this change is necessary, how it will help employees and the company in the long run, who was consulted in planning process, and what ongoing support for admins, managers, and end users. If you are building an intranet, learn how to create compelling intranet content.
  • Talk to more of the right people: Check with employees and leaders to see how the transition is going. Are they getting the training and support they need? Are they experiencing how the new situation improves their work? This may provide information about ways to optimize and improve.

Ready to get going, but don’t know where to start?

Digital transformations don’t have to fail. Book time with me to find out how an intelligent approach to digital strategy can avoid headache and frustration. Or check out our Employee Engagement and Experience Summit to learn more.