Transformation is a life-changing decision for an organization. It requires long-term strategic thinking and the resources required to bring out a transformational change would have a significant impact on the outcome. It is very much possible to have a different outcome than what would have been envisaged at the beginning if resource allocation and strategic direction are not done properly.
As per McKinsey, 70% of the transformations fail. Simply put, they do not achieve what they had desired and envisioned. Consider this as statement 1.
Digital transformation has been in existence for many years however started making sense post-pandemic. Before 2020, as per Forrester, only 15% of firms were digitally savvy, however pandemic changed the game forever. It accelerated the adoption speed to unimaginable levels. As per Microsoft, two years of digital transformation occurred in 2 months.
Adding to these unprecedented levels of growth is the IDC report which forecasts worldwide digital transformation investments to reach $1.8 trillion in 2022, an increase of 17.6% over 2021. Consider this as statement 2.
Now, if we put statements 1 and 2 in a perspective, we would see that most of the investments in digital transformation may not result in the desired outcome. Effectively, disposing of billions of dollars in a drain.
This would mean that there are two hypotheses, which need to be addressed: –
- Organizations seeking digital transformations are not well informed.
- The collective understanding of digital transformation is missing.
In Axestrack experience, both the hypotheses are correct.
Case In Point – In conversations with the client, it appeared that they were interested in hearing the success stories of their competitors and start implementing from there. There are not one but many wrongs with this approach. The key one is taking away the focus from one’s own internal business process, challenges, customer experience, and strategy which, in the first place, defines their existence. What works for one may not work for another. The value differentiation alignment with strategy gets compromised eventually leading to an undesired outcome.
The company wanted to cut short the implementation timings by using a template approach. In other words, “transposition digitally”. This is where the second hypothesis comes to life. The collective understanding of digital transformation was missing.
Have you ever wondered why there is no universally acceptable definition of Digital Transformation?
The reason is simple. Every business has its unique approach to defining customer engagement and strategic direction. We tend to think we are aware however the larger perspective gets muddled up in the quest to declare successful leaders in transformation, as early as possible. This only results in failures and pitfalls.
Here are some of the top pitfalls resulting in transformation failure, as outlined by the IMD survey:-
- No clear or compelling case for change
- Lack of shared vision in the senior team
- Lack of employee engagement
- Low investment in capability building
- Failure to create and sustain momentum
Transformation is not a one-dimensional approach but multi-dimensional. Hence, it becomes necessary to understand that what works for one industry may not work for the other. In short, the transposition of the strategy from one industry to another would fail because each industry has its uniqueness, strengths, and shortcomings to execute a strategy.
In summary, it is the “mindset” and “behavior” of the leadership and the team that drives the success of any transformational initiative, be it digital or non-digital.