A recent report cited by the Wall Street Journal pops ballooning hopes that the average business has digitization/digital transformation under control. As you read, keep in mind that this is 2019, not 2009:
Big, established companies in particular have been slow to embrace digital organizational practices, a recent McKinsey & Co. study found. Only 26% of world-wide sales are made through digital channels and only 30% of internal operations have been digitally automated.
Digitization has been a dominant theme for nearly twenty years. One might be forgiven for assuming that most organizations have heeded the call, and that digital transformation only matters for the lagging handful. In fact, the opposite seems true.
Most executives remain uneasy about digital transformation. One study found that in the third quarter of 2017, “digitalization misconceptions” and “lagging digitalization” took first and second place on the list of executive anxieties.
All this despite record-high spending on digitization. The Harvard Business Review reported that over the past three years, most of the $100 billion in U.S. digital transformation projects fell short. Meanwhile, McKinsey admitted that only 14% of digitization efforts met their own definitions of success.
Drawing from recent surveys and thought leaders, we can suggest several broad myths behind this rate of failure:
Myth 1: All is tech, and tech is all
One survey found a pervasive tendency to treat digitization as tech-first and tech-last. And in any digital project, “technology issues are usually the easiest things to work through,” as one analyst put it. But digital transformation is more than an upgrade of technology. As we have argued before, digitization involves every employee and every department. Fail to structure, communicate, and proceed accordingly, and your odds of failure skyrocket.
Again, digitization is not an IT initiative. It is an all-encompassing cultural and conceptual transformation.
Myth 2: Set… and forget
Even when organizations recognize that digitization involves more than tech, they still tend to approach digital projects through tech metaphors. Too many boards see Digital Transformation as a kind of implementation: a budget line-item, a defined process requiring one-time buy-in. In fact, digitization is a variable process requiring constant monitoring and adaptation, including from executive-level stakeholders. Digitization requires time and rarely yields immediate rewards.
Myth 3: The under-estimate
HBR notes a common trend: corporations ready to invest in a pilot program falter when its implications become clear. Businesses task a team with exploring digital transformation, handpicking employees to collaborate in a think-tank setting. This dream team works in a functional silo. When the pilot group completes its research, their findings often shock executives, who authorized the pilot but grossly underestimated the broader project. Delays and funding deficits often follow.
As the authors suggest, the remedy might lie in “ramping up digital capabilities from the get-go,” a suggestion that distills to one point: don’t spend money to look unless you’re ready to leap.
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