How to be set up for success with Digital Transformation
The benefit of Digital Transformation is clear to see.
Digitally advanced companies create 9% more revenue than industry competitors.
The 3-year average profit for digitally centric companies is 5% higher than those behind the curve.
However, there is one key statistic which should be highlighted – Over 70% of Digital Transformations fail to reach their stated objectives. We want to explore some of the reasons behind this worrying figure and share some of the steps companies can take to avoid becoming one of the many failures.
Why do Digital Transformation projects fail?
Digital Transformation typically involves a very complex piece of change that touches many aspects of the organisation, so it’s no real surprise that many of these programmes face challenges.
Some of the more common challenges faced by organisations attempting Digital Transformation include:
- Slow to act – Organisations that are unable to move quickly from strategy to execution typically see a much lower return on investment and a reduced focus
- Wrong scope – It can be hard to find the right balance between having a narrow focus, and trying to boil the ocean
- Lack of investment – Failure to keep the digital ball rolling often means a much greater effort is required to get it going again
- Reliance on IT – We have already discussed at length the problem with not involving the business in Digital Transformation initiatives
Of course, no two Digital Transformations are the same, and no two companies undergoing Digital Transformation are the same either.
For us, that’s sort of the key point. Attempting to carry out a Digital Transformation without considering all aspects of the environment that you are transforming in is like trying to drive a car with your eyes closed.
What needs to be done differently?
We need to take a step back and rethink Digital Transformation.
Before jumping into a new Digital Transformation programme, it is important to assess the state of the environment and understand the digital maturity across the organisation. This means focussing not just on the tools and technology, but on the culture, capabilities and frameworks that underpin success.
Considering all facets of the organisation when thinking about Digital Transformation is critical. One study by the London School of Economics suggests that combining technology with broader management practices and capabilities can increase ROI of initiatives tenfold.
When we consider the impact that our actions have on the environment around us, we are more likely to act in a sustainable way. Digital Transformation is no different.
Sustainable Digital Transformation is a game changer. This means looking at the bigger picture of the organisational environment and coming up with a plan to address not just the strategic goals of the organisation, but also raise up the immature areas so that Digital Transformation becomes perpetual.
Let’s use the example of a bank wishing to create a new customer app. Traditional Digital Transformation would mean focussing on delivering the technology and operations needed to support a shiny new digital channel. Sustainable Digital Transformation means focussing on those things, but also:
- aligning to, or influencing, the bank’s broader digital strategy to make sure the new app fits neatly alongside other channels, and has the right scope and required funding
- ensuring the bank has the right operating model in place, which involves business and technology throughout the programme, and makes effective use of cross-functional teams
- getting the right skillsets and capabilities into the bank to both build the new app, and support a continuous transformation
- implementing balanced governance frameworks and processes to ensure a level of control for the bank, whilst allowing the programme to move quickly and not stifle innovation
- incubating a culture of innovation across the bank to support the new app, and lead to a pipeline of new products and services going forwards
In line with the old adage about teaching someone to fish, focussing on sustainability will shift the perception of Digital Transformation from an ongoing cost, to a one-off investment that will support the organisation’s digital maturity for decades to come.
The Woodhurst Blueprint for Digital Transformation
We help financial institutions of all sizes adopt not just the tools and technology, but the culture and capabilities to stay ahead of the competition in an ever-evolving digital landscape.
Our Blueprint allows us to create and implement sustainable Digital Transformation, based on your specific level of digital maturity.
Have a chat with us if you would like to find out more.