7 Digital Transformation Dream Killers

Chances are the phrase "digital transformation" will make you roll your eyes or blow a raspberry.

Every major company is attempting it ... but everyone wants to know if any are truly succeeding? While many customers are expecting augmented and virtual reality experiences, many Brands are still struggling with manual processes, multiple legacy systems and no integration. Is anyone even trying to transform the operational side of the business? And how does all of this tie in with regulations and governance? Will long standing market leaders face sudden demise at the hands of disruptive competitors that enter the market with current and effective digital plays? Why are so many digital transformation initiatives failing? What are the main dream killers of digital transformation? What do the Board, the C-Suite and other executives have to do to succeed with transformation and survive? What should you even care about?

We are officially in the age of "exponential technology growth"! Cost and ease of use disruptions to how business is done are manifesting much faster than transformation efforts!

Harvard Business School reports leading digital companies generate better gross margins, better earnings and better net income than organizations in the bottom quarter of digital adopters. Phoenixes like Amazon which were birthed in the fire of the tech future eat everyone's lunch by resetting customer expectations! Most major corporations are struggling with merely modernizing their systems and gaining minor efficiencies. Will your company live long enough to see this exponential growth? Is it possible to set up company and Board to be "future proof"?

"Digital transformation" is not just a buzzword anymore. Success stories are emerging. CIO. com reports as many as 10, and here are the top 12 according to Brainbridge. Unfortunately, all they talk about is the marketing and sales side of the house. Much is written about how to accomplish digital transformation. While consultants such as McKinsey offer their key tenets, they are by no measure a holistic perspective. No case studies for digital transformation of internal operations or governance seem to be available. According to the 2018 KPMG Harvey Nash CIO survey - 78 percent of nearly 4,000 CIOs worldwide say their digital strategy is moderately effective or worse, suggesting such efforts remain in their infancy. Only 32 percent of those IT leaders say their digital strategy spans the enterprise, with most of the investment focused on the front-end, rather than on deeper operational capabilities. While progress is seen on customer experience, organizations have not done well with building the necessary capabilities in operations, IT-business relationships, vision, engagement, and governance according to this Capegemini report.

Even if one had the vision, the financing, the talent, and the experience of prior transformations, the fantasy of "digital transformation" is governed by a few core factors that seasoned executives, boards, and their consultants are just not taking into account.

It is interesting that the problem is not entirely new. Corporations went though these during the early ERP implementations of the 80s and 90s, then again during the heady days of web-based solutions in the '00s. The vicious circles are somewhat similar but with a few deadly differences! The bleeding edge of technology is moving so fast that any transformation is near obsolete by the time it is implemented. Sweeping culture change that is required to sustain transformation is further complicated as it spans multiple complex technologies and processes. More often than not these efforts dissolve in inertia, misalignment, or vested interests. Product, sales, marketing, and tech do not speak the same language or use the same technologies and aligning objectives becomes a pitched battle. Prioritization and change management play second fiddle to attempts at economies of scale. And worst of all -corporate regime changes and incumbent preferences scuttle investments and initiatives, causing returns to the drawing board again and again. In the digital era, failure is also likely to render the company antediluvian and unable to face the competition!

Corporate Boards and C-Suites must first understand the "live or die" that is digital transformation and ready themselves and the companies they govern. The key differences between previous business transformations and digital are its reliance on multiple technologies, the frenetic pace at which they are all changing, and the life ending impact of failure.

Below are key factors across the company for everyone from Board to IT that need to be carefully managed to succeed at digital transformation:

Set Up and Support Factors:

1. Language of Revenue, Margin & Growth: Ever hear yourself say "what's my motivation?" Companies achieve true alignment when the Board, the C-Suite and the core executives are clear on revenue, margin and growth expectations. They can in turn interpret and trickle these down for the employee roster.

The driving motivations and objectives of digital transformation must also obviously align with these. Any initiatives undertaken without such clarity are baseless exercises. As part of a digital initiative, one client ran a program to put a whopping two million SKUs online. This ambitious endeavor did succeed. However, the effort could have been infinitely more cost effective as barely 15000 SKUs brought in most of the company's revenue. A simple cross check with existing data about online demand and revenue could have saved money, time and probably jobs. Whether focused on top or bottom line, carefully considered company objectives and metrics must be foundational to the digital initiative. Whether reducing CAC or increasing CLV, or creating better experiences and efficiencies across the customer lifecycle, or optimizing supply chain, or creating regulatory governance measures, it must all be cataloged, quantified and disseminated to all as the objectives of the digital transformation initiative.

Some organizations have IT product management wedged between business and IT teams that are charged with building business cases for digital initiatives. This is a good first step. However, such business cases and ROI justifications are rarely comprehensive, not clearly tied to the revenue, margin and growth imperatives, nor distributed and understood adequately by all.

It is the responsibility of the Board and the C-Suite to speak and interpret the language of revenue, margin and growth expectations of any transformation initiatives to all within the company. It is also their responsibility to communicate the urgency of digital transformation and its potential impact on company survival. The leadership and executives managing digital transformation must then align any decisions and changed while also facilitating the work.

2. Communication & Turf Wars: Executives and departments often cannot or just refuse to speak each others' lingo!

I have seen leaders of digital teams who are either too shy (or apprehensive) to talk directly to the business or simply unable to speak the language of business. One executive charged with transforming marketing technology preferred not to chat directly with the merchandising team. Considering that at this company, marketers - "the Business", were directed by merchandisers - also "the Business", this sets up unnecessary layers of translation. Conversely, "the Business" thinks of the digital team as folks to fix their phones and laptops. Worse yet, they refuse to understand the challenges at the technology level. Also in typical corporate dynamics, most stake holders indulge in some form of turf war to secure opportunity and position. Digital transformation initiatives cannot possibly succeed if plagued by unnecessary turf wars or because departments imagine boundaries or cannot speak each others' languages. The Board and C-Suite should ask for and listen to clear communications from all stake holders of digital transformation initiatives. Most importantly, the C-suite (if/when needed) should proactively monitor, and head off deadlocks or conflicts based on whatever best serves the overarching objectives and is feasible (culture, market, tech). Also, it always helps to have folks on the team who can talk both business and tech. Senior leaders who can speak to revenue, KPIs, and metrics as well as how to knit customer digital sessions together across channels for personalization will play central roles in digital transformation.

3. Collective Entrepreneurship: Transformations are high risk career killers!

I have watched many executive stake holders side step the risk by either doing nothing, or notionally identifying a fall guy, or by divesting it to external consultants. Motivated and informed Board and C-Suites can change the culture around risk taking, particularly as it applies to digital transformation. While accountability is important, no executive or employee wants to be fired over failure ... especially if only some of the moving parts are under their jurisdiction. It is the responsibility of the Board and the C-Suite to create a corporate environment where business and tech teams can act in "collective entrepreneurship" and take "calculated" risks without fear of finger pointing and being fired. The Board in particular should actively foster entrepreneurial thinking both for themselves as well as the company. Conservatism may protect share holder interest in the short term but it is meaningless when life ending failure might be imminent. The C-Suite should actively participate in de-risking digital transformation initiatives both before commencing the work and also periodically as the work moves forward. Finally, executive leaders from involved departments must regularly discuss and understand the imperatives and risks for each department and come to a collective view of the path while keeping in sight the rapidly advancing digital landscape.

Execution Factors:

4. Change Management: Everyone knows someone who is still hanging on to their flip phones. And despite the intuitive function of a touch screen, we have all seen those folks struggle with the transition!

Common practice has the digital team doing a design exercise on paper to deliver an ambitious platform. Usually, the business team blesses the design and even participates in user acceptance testing to approve the delivery. At first there is agreement, but later lack of adoption is followed by nit picking and complaints. Digital teams are usually chasing scale. Even if they try, they do not always control the culture of change. Business teams excel at putting distance between themselves and the technology platforms. The plethora of excuses to avoid change is mind boggling and often amusing. This leads to platforms and any processes they contain being blamed for any, all and sometimes unrelated business failures! In some cases, once the platform is delivered, business teams fight among themselves for priority, leading to unnecessary political games.

The digital team cannot walk away after delivering a platform. In turn, the business team cannot pat the platform on the head and expect magic. Digital transformation is a lot of technical detail that the digital team has to educate the business team about. In turn, the business team has to engage with those technical details and processes. Both must work to build up a culture of gradually increasing sophistication of use. As a start, the C-suite must ask to see the Business teams pitch user scenarios in the design phase of digital transformation. The C-Suite should also assign within their own ranks a change management leader.

Additionally, any processes built within the technical platforms should be phased so that the user base can build up the skills and comfort with which they wield these platforms. In Start-up land everyone is familiar with the notion of Minimum Viable Product (MVP). However, MVPs are canted towards a minimal build rather than a guarantee of adoption and use. I advocate an "MVB" or Minimum Viable Business approach where an MVP is ensured to be viable by actually generating revenue. The right way to effect the change management required for digital transformation is to build internal MVBs. This means build feature sets and processes that the Business uses and succeeds with in the field before creating the next level feature set and sophistication. If the plan for digital transformation does not contain build AND FIELD USE sprints rather than just build sprints, business teams will neither be able to provide field relevant feedback nor be accountable for adopting and using the final product. Just ask any company that tried to bring in a rules engine.

5. Build or Buy: Every organization has fanatical savants and charismatic spin doctors - both on the digital side and on the business side, who advocate pet projects!

Neither the tech executive who wants to build everything in house nor the marketing executive who goes out to buy every platform is helping set up a sustainable path for the future. For example - one digital executive convinced his management to let him build a Content Management System (CMS) from scratch. The CMS business space had already culminated and been through the consolidation phase. Many CMS's had released a Version 10 or higher. To attempt to build, maintain, and enhance a complex software platform while trying to catch up to mature Version 10 feature sets was a losing battle. The Digital revolution is moving too fast. Changes in customer expectations are challenging for even established software companies in that particular space to keep pace with. In light of this, companies that are not in the business of software can make no justification for trying to join and beat that race.

On the other side, at most big Brands, the marketing team has been enticed by Agencies and other vendors into buying more than 50 disparate software platforms with no integration between the platforms. Platform proliferation and duplication is an expensive habit. To be fair, this might be a consequence of not having better internal options. However, marketing operations once captive in such a hodge podge can neither disengage nor transform easily to the vision of seamless omnichannel customer lifecyle personalization. Letting such influences infuse critical Digital Transformation efforts with unsustainable agendas leads to failure. Utilizing cutting edge Digital platforms that support core required functionality and can be customized and integrated quickly with each other is the ideal solution.

Sustaining Factors:

6. Longevity: Too often regime changes up end core initiatives, platforms and even strategies.

It is up to the Board and the C-Suite to prevent abandonment of investments and repeated returns to the drawing board. Clearly citing revenue and margin drivers, the required initiatives, and the indicated platforms is neither rocket science, nor subjective and shifting black magic. After the right objectives and drivers are identified they must remain immutable. Strategic initiatives once started can at most allow for tweaking based on the market. Choosing the platforms should be about strategic and long term fit. Most importantly, all of these must be immunized from regime change and re-platforming without adequate justification. Digital transformation will never succeed if it is a two or three year fad that gets changed at the whim of each new management team as they roll over. By my estimate, the coming 2-5 year window will witness the toppling of multiple leaders in different spaces as the competition and digital landscape goes past those unable to transform. There are possibly one or two "fad" cycles at most that can be squandered. The Board in concert with the C-Suite needs to manage this specifically.

7. Future Proof: How old was that last big TV you bought before something next generation came along or it's price dropped to half of what you payed? With the pace of change in technology and customer experience expectations, digital transformation can never be a "one and done" maneuver. Making the company "future proof" means not falling again a few years down the line into the same trap of tech debt, antiquated processes, and inability to compete. Digital transformation needs to be "continuous transformation" and the culture, plan and budget needs to be created for it. Boards should allocate appropriate attention and assign responsibility to owners for this undeniably important part of company survival. What may be relevant in 5 yrs is not easily determined. However, an appropriate schedule for forward planning and strategy with a focus on the digital front allows for the possibility of future proofing the company.

None of the dream killers are easy fixes. It is likely that you and the leaders in your company have experienced and learned from prior transformation activities. However, the digital transformation looming is an urgent, time bound and much more technically complex transformation. Vested stakeholders across Board, C-Suite, executives and employees with an informed and holistic view of the challenges can make things easier. If you are attempting digital transformation, look within (and without) your organization for people who understand the urgency and complexity of the landscape, and can develop mission appropriate solutions.