Most Digital Transformations Fail — Here Is Why

"Digital transformation." It is a buzzy term right now. And it is a big focus in many organizations. You might even be tasked with leading one. But are company leaders considering the full scope of what is needed to successfully transform an enterprise organization? Perhaps not.

Research from McKinsey & Company shows that the significant investment allocated towards new technologies can be perceived within the organization as impacting the company negatively. Some teams even think the digital efforts are cannibalizing the company's existing products. Yikes.

Sure, spending big money on a big new initiative can ruffle an organization. But implementing new technology is not usually the failure point — it is much more nuanced than that.

Many  digital transformations  are failing because people do not understand why the organization needs to change in the first place.

Transformation initiatives are only successful if there is a clear directive centered around delivering exceptional customer experiences. New technologies cannot be the end game. The customer needs to be at the core of the work and everyone in the company needs to be involved.

Adopting this way of thinking is a much more holistic approach than most big companies are accustomed to. Our team at Aha! calls it an enterprise transformation. It is about transforming the whole enterprise to revolve around your customer. What problem are they facing? What will make their life easier?

These transformations are often multi-year efforts. We have seen this firsthand with Aha! customers who are using our roadmapping software to manage strategic planning and execution. These companies are investing in a framework for success that can be measured over a long period of time.

So then, why do most digital transformations fail? Because the effort is not focused on the customer and the team has no central place to plan, track, and measure it.

Here are the core competencies required for a winning transformation:

Know why

Enterprise transformation must put the customer and their needs first. So, before your team takes any action, you need to understand why your customer needs a transformation at all. Where is your company lagging when it comes to delivering an exceptional experience? This includes technology along with every other part of the customer journey — including sales, marketing, and support.

Know what

Once you have answered the "why," you can determine what kind of transformation you need. I have written extensively about the three types: digital, data, and solutions. Perhaps your company needs to incorporate new technologies and a digital transformation is, in fact, the way to go. But maybe your team needs to invest in data to identify better outcomes. Or you might need to rethink the way you market and sell your product to offer more holistic solutions.

Know when

After a strategy is chosen, you need a plan for when you will release improvements against that strategy. Remember that transformations are often multi-year efforts, so these improvements will not happen in one dramatic splash — but rather in incremental steps. In order to keep everyone motivated and on track, create a roadmap that highlights major milestones along with when you plan to achieve them. This will serve as a checkpoint to make sure the work is progressing.

Know how

You will struggle with all of the above if you do not have the right tool in place. You and your team need one that can tie your work to the strategy and allows for meaningful collaboration. The tool should also be able to pull your data together to generate reports, so you can measure the impact of your efforts. Product management tools like Aha! can help with this important work.

Without this forward-thinking mindset, any organization will struggle to achieve real change.

Maybe a transformation focused on new technology is the answer. But maybe not. You might need to invest in data to better understand your customer's needs. Or maybe your customer needs you to offer the product in a different way.

The point is that digital transformations often fail because the scope of what it takes to deliver better customer experiences is usually much broader than adopting the newest technology — it takes examining every angle of the customer's journey with your product. 

What does transformation look like at your company?

ABOUT BRIAN AND AHA!

Brian de Haaff seeks business and wilderness adventure. He is the co-founder and CEO of Aha! — the world’s #1 product roadmap software — and the author of the bestselling new book Lovability. His two previous startups were acquired by well-known public companies. Brian writes and speaks about product and company growth and the adventure of living a meaningful life.

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Originally shared on Inc.