Why MOST digital transformations fail 

Only 3 in 10 digital transformation projects are successful, according to a report by global management consulting firm, McKinsey, with the vast majority of businesses failing to grasp the full benefits new technology can provide.

While no two projects are the same, they often fail for the same reasons and it’s not down to anything complicated, or that can’t be overcome.

These are the top reasons most businesses fail at digital transformation.

1 – No overall aim

“Digital initiatives will fail when there is a ‘lack of a brutally clear vision and strategy’,’’ says Tony Ambrozie, the former Senior Vice President of Technology and Digital at Disney.

This lack of a brutally clear vision and strategy is clear in most failed digital transformation projects.

Often business leaders or IT departments become fixated on the latest tech trend and are quick to jump in, for risk of being seen as falling behind.

However, this rush to be an early adopter without understanding the ‘why’ of the transformation is what trips projects up.

With no overall aim, there’s no roadmap to get to the final destination, which means thousands wasted in money and resources, and hours of lost productivity.

Before getting into a transformation project, it’s essential to understand what the end goal looks like.

2 – No goal-setting

While the overall aim of the digital transformation, whether it’s becoming more flexible or agile to deal with market conditions, tangible goals need to be set in order to figure out whether you’re reaching your aim.

Without SMART goals there’s no way of knowing if you’re hitting the results you want from your digital transformation journey.

Are you seeing productivity gains at the levels you expected? Are you cutting costs from duplicate software functions?

With these goals set you’ll remain focused on getting everything you can out of your digital transformation project and increase your chances of making it a success.

3 – Lack of communication

The human element of digital transformation is often overlooked, usually to the detriment of the project.

According to a report by the Chartered Institute of Personnel and Development, only 20% of employees feel positive about digital transformation projects at their company when they haven’t been consulted.

In contrast, according to the same report, 70% of employees have a more positive outlook and are more receptive to digital transformation when they feel involved in the process.

Without effective communication the introduction of new technology breeds uncertainty, with employees left to speculate whether this new tech is here to help them, or replace them.

Open communication about the nature and aim of the digital transformation project not only reduces this anxiety among teams, but increases the chances of employees embracing the new technology.

Involving employees can also uncover some new insights into how the technology would be best deployed and assist the end users who are, afterall, the workforce.

4 – Lack of engagement

As much as you might want them to, employees rarely embrace digital transformation with the same vigour as managers.

For managers or business leaders these projects are an opportunity to streamline complicated processes, reduce costs and remove bottlenecks. For employees, they’re just another piece of technology they’re going to have to spend months learning to use.

And this isn’t helped when the technology is simply dumped on teams, who are then expected to work things out for themselves.

The resistance that builds up among unengaged employees is the most common reason digital transformation projects fail, according to McKinsey.

Employee engagement during digital transformation is a simple task.

One of the easiest ways is to introduce a simple version of the new technology to a small group of employees and ask for feedback. You can then use real experiences with the technology to adjust the roll out, if needed, or continue to a full implementation.

Introducing new technology to a smaller ‘test group’ of employees can also have other benefits, especially when the upside of the technology is quickly understood.

For example it’s not uncommon for a few members of a sales team to be given early access to a new CRM system before anyone else. They’re fully trained how to use it, and are shown how it can increase their sales – and commission.

When the other sales members see these benefits, they actively want to use the new software.

This is a much better way of doing digital transformation than a blanket drop of new software or hardware with no employee engagement.

5 – No long-term planning

Rome wasn’t built in a day, and the benefits of digital transformation will take time before they’re fully realised.

Quick wins should definitely be established to build confidence in the new technology (particularly important when it comes to board expectations) but digital transformation is a long-term investment, and should be judged as such.

Expecting instant results is a recipe for failure in any environment. Even if something is showing promise or progress, those who seek immediate gratification won’t be patient enough to see the bigger picture and may pull the plug early.

According to Dr Ali Alkhafaji, chief technology officer at TA Digital:

“Too many initiatives fail because they weren’t granted a few more dollars or a couple more sprints to do it right. That is exactly the result of when the project team targets the wrong north star.”

Businesses that have a clear vision for how they want to operate in the future have a clear advantage over those that are simply “winging it.”

Not only because they’re able to aim towards a specific way of working, but also because they’re setting themselves up for success in the event of an unexpected challenge.

For example, businesses that had already made the decision to adopt cloud phone services and video conferencing platforms were in a wildly more capable position than other businesses when the pandemic struck.

They didn’t need to learn to adapt to new technologies, because the new technologies were already in place.

Try to look to the future and anticipate where your business will be able to be improved thanks to advancements in technology.

6 – Decisions made in isolation

Ultimately, it’s the decision of those in charge, such as the Chief Technical Officer, whether or not to adopt specific digital transformation technologies and strategies.

But the sharing of thoughts and ideas across a company, especially if the company is large, is important to fully grasp the potential of what a digital transformation could bring and avoid any department-specific pitfalls.

For example, the leaders of a business may decide to implement new software within a specific department of a company, believing it will boost productivity and profits.

While that may be true, the reality may be that this way of working could negatively impact other departments that work closely with the department in question, resulting in a disconnect between the two.

Alternatively, the software in question may have done a spectacular job company-wide, as opposed to in one single department.

This is something that an in-depth discussion across the board could have revealed, which is why keeping decisions as big and wide-ranging as digital transformations limited to a select few is a bad idea.

Most digital transformations may fail, but yours doesn’t need to be one of them.

With clearly defined goals, effective communication across the board and the knowledge and drive to make a change in your business, you can avoid the pitfalls suffered by other businesses and make your digital transformation a success.

Take it step by step, monitor your progress, and make informed decisions based on your progress. If you’ve followed the above steps and kept a close eye on the effects your digital transformation technologies have had, you should find yourself in a vastly improved position.