When digital transformation goes wrong: Five ways to get back on track
If done properly, digital transformation can change the way a business operates fundamentally, bringing significant financial and operational gains. But shifting from traditional ways of working to new, technology-driven processes is a large undertaking, leaving room for things to go wrong: spending too much money, taking on more than you can handle and having a gap between innovation and execution are all common things that can go awry.
Digital transformation needs to be more than just an innovative idea, but rather an implementation of a new, thought-out business process that changes how your business operates in an effective way. If this process is lost, it can lead to chaos. If you find yourself contemplating what to do next, here are some things you can do to get back on track.
1. Identify the root of the problem and formulate a recovery plan
There are many changes that take place when a company starts to shift from the way it did things traditionally to a more efficient, digital way. This shift involves money, time, personnel growth, and procedure changes.
"Digital and analytics transformations are often deployed across organizations, involving many departments and third parties. Soft factors like skills, mindsets, and ways of working, as well as hard factors like technology, infrastructure, and data flow, are all being changed at once during such a transformation," says Rodney Zemmel, global leader at consultant McKinsey Digital.
With so many moving pieces, it's crucial to pinpoint the origin of the issue, which could be stemming from a variety of these organizational shifts. Once you pinpoint the issue, formulate a recovery plan, fast.
"First, develop your plans using scenarios that anticipate different likely barriers and how you might overcome them or recover from them. This makes pivoting quick, minimizing negative impacts because you have options ready to go," Monika Sinha, VP analyst at Gartner, tells ZDNet.
2. Re-evaluate if you defined what 'digital transformation' means to your business
There is no universal blueprint for how to execute digital transformation within a business. Digital transformation can mean different things to different companies, industries and the project it is being applied to. It can encompass anything from cloud computing, to the Internet of Things, and onto big data, artificial intelligence and automation. As such, one company's idea of digital transformation can be entirely different to another's, both in terms of application and execution.
"A common failure mode, or an insufficient success mode, is a chief executive saying, 'We're going to go digital', and then making public statements about digital strategy," says Zemmel.
"Then, every person on their leadership team creates their own digital road map. What you end up with, six months or a year later, are many digital pilot projects across the organization."
SEE: Paper catalogues to data catalogues: How digital transformation has changed everything about retail
If you find yourself wondering where everything went wrong, re-evaluate if the team is still on the same page about what exactly digital transformation means to the company.
"Digital transformation is a really broad term," says Paul Silverglate, vice chair at consultant Deloitte LLP. "Being clear about what it means for the organization, and how it will add value both quantitatively and qualitatively, is critical."
3. Make sure changes are within the range of what your business can undertake
Although it may be tempting, you don't always need to optimize every single aspect of the business at once. Trying to do so can cause businesses to take on more than they can handle.
SEE: Digital transformation strategy: 6 ways to keep your project on track
There are many different scales of digital transformation projects, and it's crucial for a company to pinpoint exactly what it's trying to optimize – and to focus the project accordingly.
"We too often see technology implemented for technology's sake," Raj Sharma, EY Americas consulting vice chair, tells ZDNet. "At the core of every technology transformation is a business problem to solve. Leaders need to be clear about what the underlying problem is, why the transformation is underway, and the value for the enterprise."
If you have bitten off more than you can chew, re-evaluate what you need to focus on and what can be dropped. Revisit the goals you defined at the beginning of the venture and see which solutions will get you there. You can start with small shifts and from there move on to larger ones.
"You need a bold vision to institute transformational change. But leaders need to break it up into meaningful chunks that the organization can absorb, one change at a time," adds Silverglate.
"Leaders need to approach digital transformation with a value creation mindset."
4. Make sure you have the right team to bring digital transformation to life
When embarking on any business project, you need to have the right team behind you. This is made up of more than just engineers and those with the skills to put the technical pieces of the project together.
SEE: Digital transformation: Top 5 skills you need to succeed
"IT teams focused on digital transformation become too focused on delivering the technology capability rather than the change itself," says Sinha. Equally, if not more, important are trusted business leaders who can guide the company through transformative change.
"When I assign people to a team, they have to have all three things: they have to have the skill set, they have to have the bandwidth of the time, and they have to have the passion," adds Silverglate. "The passion is really important because it is what fills the gaps of the things that you can't plan in advance."
Having a leader that employees trust and will rally behind is also extremely valuable, Silverglate says: "Find the stars and the culture keepers within the company that can really help drive change, and make them participate in the program or the project. It sends a really big signal to the company when you've taken really valuable people and you put them on a project."
5. Create a space for open dialogue
When things go wrong, it is important to have a space where employees feel comfortable sharing their concerns. Without proper communication, employees will either give up or continue to feel confused. When a project fails, the company is not the only one experiencing the loss – employees are likely to feel it personally, too.
"When digital transformation doesn't go as planned, the priority has to be staying laser-focused on your people. People have been powering the transformation and will feel the pressure of its failure or success," says Sharma.
Building a community in which all members have a safe space they feel comfortable sharing their thoughts will help the company learn from its mistakes, move forwards, and make it easier to climb out of the hole it finds itself in.
"Developing a community of domain experts, technology experts, customers, business partners, and ecosystem stakeholders can provide key insights that shape the transformation and technology needed to deliver outcomes," says Sinha.