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Why Digital Transformation Is Easy To Start But Difficult To Finish

Why Digital Transformation Is Easy To Start But Difficult To Finish

Digital transformation(DX) is on every company’s mind today. Many companies start out on this journey with stars in their eyes - but how many of them complete the journey achieving what they set out to?

IDC expects spending on Digital Transformation (DX) to total upto US$ 7.4 trillion between 2019-2023. The cause for concern? 

“A staggering 70% of digital transformations fail - large-scale change programs don’t reach their stated goals “- McKinsey

Let’s explore why it's easy to start DX yet so difficult to complete it:

Why is it easy to start DX?

DX is easy to adopt due to the quick management buy-in that an organization can get.

Some factors why the buy-in happens are: 

1. Strategic investment:

“The last ten years of IT have been about changing the way people work. The next ten years of IT will be about transforming your business.”

— Aaron Levie, BOX

Digital change is all pervading in the new normal and no organisation can escape it. It is a strategic investment towards business growth.

2. Increased Customer experience(CX):

You need to be where your customers are - hang out where they hang out. Today, it's mostly digital & social media. Leaders want to enhance CX. 

3. Cost reduction:

Going digital optimizes business processes and automates repeated & recurring tasks, thereby saving costs.

4. Need to reinvent: 

“There is no alternative to digital transformation. Visionary companies will carve out new strategic options for themselves — those that don’t adapt, will fail.”

Jeff Bezos, Amazon

You can expect Jeff Bezos to get it right! It’s pure survival in the volatile world that we live in - do or die. Reinventing your business in line with what technology offers & what society wants is needed for survival. The best time was yesterday. The next best time, today!

Why do companies mess up their Digital Transformation? 

DX is not a sprint - it's a marathon! So while companies start well, they struggle to complete the DX which they embarked on.

Here are some reasons why they don’t go the full nine yards:
Why do companies mess up their Digital Transformation? 

1. Lack of Clarity (& disagreement amongst leaders):

What is DX itself is hazy for most leaders - some think it's an extension of the IT arm, some associate it with digital marketing. Due to this, sometimes, the leadership team is not on the same page and differ in the goals/outcomes to be achieved. So what is DX?

“Digital transformation marks a radical rethinking of how an organization uses technology, people and processes to fundamentally change business performance” - George Westerman, MIT principal research scientist and author 

2. Myopic view of goals - short-term vs. long-terms:

In the rush to complete DX, some companies sacrifice long term goals for short term wins.

A classic case is that of GE Digital. GE built a huge IoT platform and set up a business unit - GE Digital, to make it a technology giant. GE Digital transformed its business models & internal processes and even achieved some success in service margins. At the same time, it had a P&L mandate with reporting quarterly earnings commitments. This turned out to be a bane. The short-term goal came in the way of long-term investments and strategies that were needed. The stock prices remained low for years and ultimately led to a sub-optimal DX, closure of GE Digital & a key reason behind CEO Jeff Immelt’s exit.

Another myopia is over focusing on optimization of operations while ignoring customer experience. Just modernizing business applications, data centers or network infrastructure is not enough. You have to cover the entire ecosystem.

3. Gap between capabilities & scale:

A gap between the digital capabilities for the DX pilot and the actual capabilities - when the rubber hits the road - when the time comes to scale it. This could lead to delays in production, customer deadlines or desperate attempts/changes to meet commitments.

4. Internal resistance to change:

Any change is normally met first with resistance. Employees may not be willing to learn new tools/adapt to digital. DX requires micro-revolutions and multiple experiments and rapid changes that happen in the blink of an eye. If the employees do not have trust in the transformation or there is slow adoption of digital, the DX’s chances of failure are higher.

What can companies do to make DX work?

Although DX involves a lot of investment in terms of money, time & people, yet the benefits outweigh these. Here are 6 tips to make your DX work for you:

  1. Get buy-in from the leadership team, have a long term shared vision & digital roadmap while building a sense of urgency.
  2. Encourage & empower people to work in new ways.
  3. Communicate a change story around the transformation -why is the transformation important and where will this lead the company to?
  4. Do DX with the market and customer in mind - not just technology.
  5. “Shrink the Change, Shape The Path” - Chip and Dan Heath. Use an agile iterative sprint approach- shrink the steps and identify the path for the       step, instead of the waterfall approach.
  6. Take full stock of your tech. stack and identify potential gaps and address them. Decide which ones are obsolete and which ones to continue using.

When Microsoft faced increased competition from companies like Apple & Amazon, it revisited its strategy. It moved from its traditional software to a cloud networking system & created partnerships with other tech. companies and was back in business with a bang.

DX is a rocky path to the top of the mountain, but the view on the top is worth the trek. Ready for the DX journey but struggling to find the artisans & geeks to make it work? Reach out to us at info@clariontech.com, to help you scale the digital mountain.

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