3 Reasons Why Your Digital Transformation Project is Failing

Over the last 5 years, digital transformation has boomed worldwide. More and more companies see the value and also the need to transform their organisations to meet the expectations of increasingly informed and therefore more demanding users.

This growing interest in transformation can be seen in the following graph, which contains the Google searches related to this term. Furthermore, although the last few years have been intense, an even more significant increase is expected in the number of companies that decide to start their digital transformation projects. 

The most recent interest has been triggered by the pandemic and the obvious need that has been created to redefine and reconsider our businesses in order to try and keep them afloat in the face of this new challenge.

However, this intention to transform a company digitally does not always arise from a need within the company, but is driven, rather, on countless occasions, by the "mirroring effect”. The mirroring effect is nothing more than wanting to follow in the footsteps of others without stopping to think about a whole bunch of factors that determine the success of the project.

This has resulted in a large number of companies failing in their attempts to succeed in digitally transforming themselves or, if they do accomplish some sort of success, the results obtained are way below those expected. 

That's why in this post, we want to share with you the 3 reasons why digital transformation projects often fail, so that you can take them into account when assessing whether to include a new platform in your technology stack or not. Hopefully, you can avoid them before it's too late.

Let's go for it!

The indivisible trinomial: Technology, talent and processes.

In order to explain in a very simple way what this indivisible trinomial is, I, Cristian, am going to take a walk down memory lane::

I still have indelible memories of my grandfather, a watchmaker, with his monocle moving dozens of parts in a space as limited as the wristwatch. It was a work of precision, patience and attention to detail unlike many. There was no room for error - the work had to be completed to perfection for the clock to work properly.

Here we find some extreme examples, such as Patek Philippe's "Calibre 89", which is probably the most complex watch ever produced. It contains a total of 1728 parts, each carrying out its own function. All it took was for one of those parts to be in the wrong place and the watch would not work as expected. 

Something similar happens in companies and that is why different departments exist.

Although it is probable that when we talk about innovation, progress and change, we can categorise all these parts within one of these three groups: technology, talent, and irremediably, processes.

A true digital transformation must seriously consider all three aspects equally, otherwise the business clock will not provide the expected benefits.

This gives us the opportunity to start talking about the 3 parts that usually fail in digital transformation projects:

1. Thinking of technology as a lonely superhero

Let’s be real, do you remember any of your favorite superheroes working 100% alone?

We certainly do not, and when it comes to tech there’s not a big difference.

That’s why when considering the business world and digital transformation more specifically, four interconnected elements need to be analyzed: technology, users, companies and legislation.

The problem, however, is that although they are interconnected, as we will see below, they all change at different speeds, this adds an extra layer in our decision making process, since it is extremely relevant to know if our users, our company and the laws that affect us are somehow aligned or ready for that new tech.

A good example that comes to our mind is the banking sector, although most of them have broadly digitized, there are still many branches that allow the non-so-digital customers to keep doing things the way they are used to. 

Nonetheless, it is easy to forget about the importance of asking yourself some important questions once you see the incredible results that can be accomplished by including tech in your company, but really, going back to the superheroes example, the success of that tech will always be dependent by the capabilities you have in your company to make use of it and the openness your users have to accept it.

Here’s our biggest learning so far: 

Start with your goals

It is said that always and never don’t exist, but this is an exception. You should always, really, always start asking yourself what your business needs and objectives are and from there start building and looking for tech in the market that allows you to fulfill that.

The problem with doing it the other way around is that you are more likely to get blindsided by all the amazing things that tech can do in your company without taking the time to analyze if it is really feasible for you to get the maximum out of it.

Here are some interesting questions you should consider at this point:

• Is the inclusion of this technology in line with the company's objectives? In other words, if I include it, do I have use cases that are aligned with my objectives or am I just falling for the ROI that is being offered to me?
• How can this platform be integrated with the rest of my stack? And this point is fundamental to avoid the creation of a technological Frankenstein. In an ideal scenario, except in very specific cases, we must find clear ways of linking new technologies relatively easily to what already exists. 
• Are all the features of this platform necessary for my stack? At this point, it is fundamental to understand whether or not there are overlaps of features between platforms that you already have in your stack and the new technology itself.
• At a glance, is the company ready for this new tech? And if that’s not the case, can you generate changes at a company level to include tech?

2. You are undervaluing the importance of human talent

Tech has evolved so rapidly over the past decades, but the reality is that we have not reached technological singularity (at least not yet!).

This simply comes to tell that human talent is highly relevant for the success of any digital transformation project. 

This is perhaps the area most ignored by companies when thinking about digital transformation, possibly because it is the most difficult to manage.

When we talk about talent, we refer to both the talent of people already present in the company and the incorporation of new people who may be specifically needed to develop something that has not been done in the company up until now.

In relation to the talent already present in the company:

I, Johanna, recently participated in a conference with Tealium. In the Q&A session someone asked: how do you manage change for existing teams?

That was the perfect question for the context of the conference, because in fact, change management is crazy relevant in digital transformation projects

Regardless of what we want to change or how we want to change it, one thing is clear, and that is that to achieve it we need a group of people who trust you and the project and who are willing to take it forward.

One thing we’ve both learned along these years is that highly disruptive projects generate uncertainty and uncertainty can lead many people on your team to think about all the many possibilities of what could go wrong.

Change management focuses on making inclusivity, openness and information sharing an ongoing part of the project. Inclusivity, of course, makes everyone feel part of the new stage and being open and informative will allow you to prevent having people in your team building parallel realities.

You, through proactive conversations must be able to give as much information as you can to avoid frustrating situations and lack of confidence in the team. The company's future vision must be overseen by you and to that end you must practice radical honesty, not political manoeuvring that reassures a few people in the short term.

In relation to new talent:

Many companies truly, really and sadly fail at this point.

The reality is that on many occasions, starting a digital transformation project or getting it to go ahead requires very specific knowledge.

Including technology without thinking first about who is going to exploit it is like buying a Ferrari without having a driving licence. Technology alone is not going to do anything and you are always going to need hands and brains behind the technology with enough skills in order to get the maximum out of it.

During the conference we previously mentioned I addressed this topic from a completely new perspective: I talked about burnout.

As team leaders and managers we really need to start thinking of the human cost we are creating for not being able to correctly dimension our teams, but not only that, over assigning responsibilities, being too tight with due dates or simply not caring for the wellbeing of the people we work with represents an important cost for the company as well.

If we were to stick just to the business factor, underutilization of tech is one of the main reasons why companies end up not seeing value in a piece of tech. This can only be due to:

1. People in your team don’t have the knowledge to fully use it.
2. People in your team do have the knowledge but don’t have enough time to fully use it.

Both of them take us back to human talent and its importance for the business.

As a recommended lecture, take a look at how Netflix operates. They’ve got very clear in mind that driving innovation and moving forward can only be accomplished with a great group of people.

Here are some questions to keep in mind:

● What kind of skills, abilities, experience and knowledge do I need to get the most out of the new technology?

● How will my team be affected by the new inclusion?

● How will I manage the change? For example, if there is a person on my team who might sense that their job is at risk, if so, how will I manage it?

● What budget and suppliers do I have?

● Is there someone specific in the team who can take over the project/exploitation of the new technology?

● If the above answer is no, do I have the capacity to initiate a selection process to find the right person?

3. You include technology without re-adapting your company's processes:

Let’s first go back to Netflix's case, they believe innovation and creators thrive in a processless environment. Nonetheless, when human talent gets overlooked, almost inevitably we end up building processes all over the company. It kind of feels good, we feel in control, right?

But, we are sorry to tell you that business processes are innovation and creativity killers. They keep things tidy, and most of the time, creativity, movement and growth are pretty messy. You need to be willing to mess up and to quickly correct it and learn from it, that is the essence of digital transformation. Trying new, different and more digital ways of doing things.

Now, imagine you have in fact overlooked point two and have created loads of processes to keep track of who does what and when.

Well, the next most common issue is having those processes in place but overlooking how those processes will be affected by the inclusion of tech.

Just like with the undervaluation of talent this will generate a series of negative outcomes that all together will make you underutilize your tech stack and will also keep you far away from the objectives you had set when you started the project.

Here are some useful questions to keep in mind:

● Are there processes in my company and if so, how are those going to be altered with this new technology?

● Do I currently have the capacity to readjust processes? If the answer is no, when can I do it?

● What processes or who is affected either positively or negatively by the inclusion of this new technology?

● Does the inclusion of this technology generally improve the processes and therefore the time-to-market? Or, on the contrary, am I improving one part but making many others worse off?

Now, let's assume that you have managed to reach this point unscathed, have defined the responsibilities of your teams, have clear objectives and a good part of the team on board and are motivated to continue with the development of the project. Now the million dollar question comes up. How do I know if we are doing it right?

The definition of success in a digital transformation project

Success: achieving the results wanted or hoped for.

The definition of success is one of the most subjective things that exist in the personal and business world, so it is key to link the success of the project to SMART objectives.

We are sure you’ve heard of this a 100 times, but just in case, SMART objectives allow you to have very clear in mind what you want to achieve and how long you have to achieve it.

When it comes to defining objectives, we have two options:

1. Focus on the final result.
2. Focus on the whole road that leads to that final result.

As an example, improving the experience of users who interact with our digital assets is one of the objectives that can generate a greater return in the long term. This is the type of objectives that fall more into the second category.

In 2019, user experience became the most important element for the user, surpassing product and price. Even 67% of them are willing to pay more for a product if it ensures a better experience. Digital transformation is fundamental for guaranteeing a better user experience. Nonetheless, companies seem to forget it is not plug and play.

The objectives will set the direction, but, as we mentioned before, the digital transformation process must be seen as a project with long-term results. This generates a conflict because there are still a whole series of needs that the company has at present.

The focus needs to be changed

When we talk about changing the focus, we mean the need for all teams in a company to be guided by the same defined objective, whether that is to achieve the best user experience, minimise investment or both. Everyone is equally responsible for the achievement of the objective, however, in the achievement of that objective there is always a short-term vision and a long-term vision.

Let us use an analogy to explain the idea of the change of focus. Have you ever tried to use the high and low beams of your car at the same time? Here are two options:

1. That you have tried and you have seen that it is not possible.
2. That you have not even considered it because you know that at that moment you want one or the other, but not both.

However, even though the exact same idea applies to a company, many leaders are determined to try to get the same team to take responsibility for and accomplish both tasks.

The lack of delimitation of responsibilities, accompanied by the lack of clarity in focus (short or long-term), is one of the greatest triggers of friction between teams, which ends up resulting in a lot of drama but few actions, which, in the end, only sets the company further back from fulfilling the objectives it set out at the beginning.

As time goes by you will be completing stages, but this is an always on project

When it comes to digital transformation, as a general rule the moment when you finish implementing a new technology is when the project actually starts, with the exploitation of the technology, the implementation of use cases, etc.

The new creation or incorporation of technology outlines a new path towards a future that you still have to go through, which will bring benefits to your company in the medium and long term. Therefore, you must always bear in mind the measurement, maintenance and evolution in order to have a sustainable future vision.

Those responsible for the project have a task that is probably as important as the development of the project itself - managing expectations and giving visibility to the project.

Digital transformation projects involve a high level of investment from the company, which is why expectations management (when a certain milestone is expected to be met) and project visibility are key to maintaining full confidence in its viability and the value it brings to the company.

Conclusions

1. Technology alone is not going to give you amazing results. It captures people’s attention, it fascinates, and it easily appeals. But the real difference, the magic, is still made by people. Especially those who, with or without technology, are instigators of change.
2. Focusing exclusively on the final results is limiting: Spend more time on the factors that generate the expected result, on the process. It is the small areas of progress that really lead to the desired success we are aiming for.
3. Whether you like it or not, the world is evolving, especially from a technological point of view. You may decide not to adapt to the change and continue to operate as you have in recent years because "it has always worked well", but all you will achieve is to widen the gap between you and your competitors, and when you least expect it, they will be unbeatable. Learn from Nokia. And if you want to lead the market, be part of the change.
4. If you are leading a project like this know that you have just planted a seed. It is a great first step, yes, but it will cease to exist if you do not nurture its growth, development and future sustainability. After all, you don't want the big effort to be in vain, but to contribute to the overall growth of the organisational ecosystem.