Some internal parameters that are important for the success of a digital transformation

According to a study from McKinsey shows that 70 % of all digital transformation efforts fail. The reasons are many.

Here are some reflections I have made over the years

My experience as a digital transformational leader and management consultant for the last 20 years is the following parameters significant to succeed with a digital transformation.

1. Failure to understand the core concepts of business processes

If one is to be able to digitize any business processes, it is essential that one understands how today's work processes work. As many struggles to understand their business processes, it begins with having a diverse understanding of what is a business process. The lack of a clear understanding of this leaves leaders unable to grasp the implications of digital on their industry’s profit and revenue growth development based on their business processes.

2. Lack of a shared vision and a leading star for the direction of the organization

If no one know understand the vision, or there is a lack of a clear leading star to lead the organization in any direction, it will be difficult for the organization to heading forward. Further it will be difficult for the organization to understand what they are to aim and achieve. I have seen this so many times when I have been brought into restructure failed digital transformations.

Lack of a clear vision and building up a leading star for the direction all starts at the top, and all too often, C-level executives avoid acknowledging that they are not on the same base level.  This may be due to a lack of common understanding of the task at hand, lack of technological insight, or downright competing priorities. If top executives aren’t on the same baselevel, it is a downright guaranteed failure. 

To ensure that top executives are on the same level, one must over-communicate and articulate not just what we’re trying to achieve, but the problem we’re going to solve. A common pitfall after reaching this stage is to sit down and create a work-plan with ambitious deadlines and even more ambitious goals. The problem is that those numbers rarely convince the employees of the company because they are suddenly urged to change.

3. Spread responsibility and authority and set requirements for the organization's ability to make decisions

All too often, as a transformation executive, I have experience that the organization expects the management to fix all the challenges. BUT who is the management? The management is everyone who has a management responsibility, and secondly the individual employee who is responsible for leading themselves. I often say that the issues must be solved as low in the organization as possible. Therefore, the organization must not only be given the responsibility, but they must also be given the authority to make and make decisions without the top management always having the last word and interfering in all details. Therefore, the top management must make room for mistakes to be done. Where no one dares to fail, no one will take responsibility. Instead of presenting an endless barrage of charts, boxes, and figures, executives need to embrace storytelling as a tool to inspire and engage the organization. Management must invite suggestions for improvement, but not just invite input on what is not working and can be improved. One must also challenge the organization to also come up with proposals for solutions that can solve the individual challenges that lie there.

4. Digital replication over digital transformation

Too often I also see that one only copies manual processes into a digital system. This is because the organization lacks process understanding and in digitization. Digital transformation means that we need to prepare a transition from analogue work processes to digital ones. Nevertheless, all too many times, digital transformation efforts end up in replicating and marginally improving manual processes in a digital context. To break free of this approach, I often encourage employees to ask themselves, imagine there was no paper. Would you design your work processes the same way as you have today? Most likely you would utilize the possibilities given by technology to design a frictionless process with as few steps as possible. This is unfortunately not always the case when it comes to the digitization of legacy business processes. As we evolve from the use of IT for process assistance and caseworker support to intelligent automation, the need for a new approach to digitization is crucial. Rather than replicating obsolete practices, we should embrace the opportunity to reinvent existing business practices.

5. Lack of talent

The ability to succeed with digital transformation all depends on the people of your organization. Lack of experience and/or expertise in digital transformation leads to basic mistakes such as unrealistic goals, lack of a clear strategy, underestimating risk, and not allocating enough resources. It may be tempting to fill the gaps through outside hires, but no matter how many experts you acquire from the outside, nothing gets done without leading change within the existing organization. 

Leaders need to acknowledge that behavioural change does not occur in the employee’s free time and set aside sufficient time and attention to promote the desired change and adjust behaviour accordingly. Don’t expect every single employee to both deliver on today’s targets and adapt for the future at the same time.

It is widely recognized that digital change requires employees to learn new skills, but in addition to learning new skills, focus equally on unlearning old habits and obsolete practices. In my many years as a management consultant, the phrase “this is how we’ve always done it” was all too often the go-to explanation for why certain tasks were performed that way. When challenging existing practices, make sure to identify and break down any informal organizational hierarchy that either knowingly or unconsciously directs a web of resistance to change.

Change management is not only limited to top-level management but needs to be embraced by middle management as well. An important question to ask oneself is whether you have any change agents at the middle management level in place. Change agents are those employees that are passionate about new technology and the opportunities that arise in times of uncertainty. Many start out as digital advocates and, over time, develop into experienced business transformers. They recognize the impact of digital and they’re driven to help their organizations adapt.