For many years, enterprises have been in a race to digitally transform how they work through the digitization of all areas of their business, to reduce costs and business frictions through creating efficiencies and delivering increased value to their customers. While many organizations have attempted a transformation, few have been successful.
Research from the consultancy McKinsey & Company finds that less than one-third of transformations are successful.
How do organizations that find themselves today, perhaps after several failed transformations starts or having procrastinated getting started, get themselves back on track before they find themselves too far behind the competition to ever hope to catch up? We reached out to several experts to find out.
First, many of those advised organizations that currently find themselves digital laggards should not rush into a digital transformation out of fear of missing out. “Don’t pursue digital transformation with a FOMO mindset,” said Andy Lin, senior vice president of strategy and consulting at Nexient, a software services provider. “Approach it with clear, measurable business results in mind, such as increased market share or increased revenue. Focus on how the end state of your transformation—business capabilities, technical capabilities, digital experience capabilities and similar—will make the biggest impact, and prioritize accordingly,” he said.
Research from business consultancy West Monroe Partners, which ranked respondents by maturity, found 21% of respondents are digitally mature and 17.9% as very digitally mature. There remains a sizable percentage, 35.9%, who are either not digitally mature at all or slightly digitally mature.
Trailing in digital maturity likely means those organizations find themselves feeling the pressure from some constituents: shareholders, customers, competitors and others, said Justin Rodenbostel, vice president of delivery services at digital transformation agency SPR. “If pressure is coming from lagging customer engagement, then one should become more familiar with customer desires through research or analyze how other industries are innovating and transforming,” he said. “Pressure from competition might require competitive analysis, market research or research into applications of potentially disruptive technologies,” Rodenbostel advises those who are trying to identify where they should focus on their catch-up efforts.
Scrum.org CEO and product owner Dave West agreed: “Enterprises embarking on a digital transformation should look at their business strategy, their customer base and start with that; building teams that align to the customer, empowering them to drive technology and business decisions to make that customer successful.”
Also, when they set a course, enterprises need to be sure to set goals to be set to such business outcomes as well, said Nick Polachek, senior principal strategy for Maven Wave. Instead of prioritizing technical results, such as building an enterprise DevOps pipeline, it’s better to focus on results associated with business-driven outcomes, such as improved customer experience. “To prioritize effectively, you need to understand business drivers and divide technology initiatives into attainable slices that create real business value and quick wins,” he said.
West Monroe found many attributes—from the use of digital in sales to leveraging data—that organizations should prioritize based on their digital maturity. “An organization can fast-track its maturity by prioritizing certain characteristics over others, regardless of industry. For instance, those with the lowest maturity should prioritize innovation that addresses customer pain points and those with the highest maturity should prioritize best-in-class cybersecurity. More accelerators can be found in our research,” said Kyle Hutchins, senior director at West Monroe Partners.
Finally, as the organization attempts to increase its digital transformation maturity, others advise organizations prioritize their digital transformation efforts that will get widespread support throughout the enterprise—which usually translates to initiatives that will increase sales. “Since most organizations are designed to support sales efforts, prioritizing transformation within the sales organization is an effective way to motivate the organization to transform,” said Craig Besnoy, program director and digital strategy consultant at Mindtree, IT services provider.
Still, and this could be why so many digital transformations fail, a sizable percentage of organizations—41%, according to research and strategic consulting firm Altimeter—make investments in digital transformation without ever seeking the guidance from thorough customer research.