Insights | By Howard Tiersky

6 Ways to Fail at Digital Transformation

According to the Boston Consulting Group, 70% of digital transformations fail, which is a huge problem since transformation is critical for many companies’ survival today. How can you avoid that fate?

One way to make sure failure doesn’t happen is knowing what causes it and developing plans to either work around or get through it. Here are five ways companies fail at digital transformation.

THEY THINK ABOUT TECHNOLOGY FIRST

If your definition of digital transformation is technology transformation, that is incomplete. Digital transformation is about changing the way business is done to make it a better experience for your customers, employees, and suppliers.

While that change will be enabled by technology, technology shouldn’t be the main reason. Instead, start with a clear goal of what the customer journey should be after the transformation is complete before looking at what digital solutions you should incorporate to support it, not the other way around.

If you find yourself leading a transformation that’s defined heavily by technology goals (such as ERP upgrade), try to focus the effort on higher level questions, such as the ultimate customer experience you are seeking to drive and the business outcomes it should lead to.

THEY FOCUS ONLY ON DIGITAL TOUCHPOINTS

Your digital transformation may involve a new website, a better app, or a chatbot, but if you’re using digital transformation only as a way to create better digital touchpoints, your transformation won’t realize its full potential. 

If a customer walks into your store and has an experience talking to one of your associates, can that interaction be powered by digital transformation and made even better? Call center interactions can also be massively improved through digital effort. There are all kinds of things digital can do to make the person-to-person interaction better. 

Furthermore, creating a great customer journey focused on digital customers often involves modifying a physical experience to be more effective for customers that live a more digital lifestyle. For example, Taco Bell has added a drive-thru pick-up lane for people who have ordered their food online or through their app. 

THEY LOSE THE “RESISTANCE TO CHANGE” GAME

Digital transformation inevitably means change, and any time you’re driving change within an organization, you’re almost always going to face resistance. 

That resistance comes in different forms and for different reasons, such as executives who resist initial funding because they don’t agree with the change you’re proposing or employees who will try to diminish your project because it threatens their job security. 

When I was consulting for Blockbuster Video years ago, our team presented them with a transformation vision that looks similar, in some ways, to what Netflix is today. But one of the problems we had in getting that plan implemented was that Blockbuster saw themselves at heart as a retail store, so some key executives resisted a vision that involved moving to a model where customers could stream videos directly in their homes. 

Internal resistance is one of the reasons (perhaps the top reason) that digital transformations fail. I talk extensively about the various forms of resistance to change and how to overcome them in my Wall Street Journal bestselling book Winning Digital Customers: The Antidote to Irrelevance, which you can purchase here

THEY GIVE UP WHEN THEY ENCOUNTER PROBLEMS

Digital transformations are always going to face problems, such as technological challenges, schedule delays, lack of immediate customer adoption of a new product, etc. Sometimes, these problems will make you feel like you’ve failed and that giving up is your only option.

And detractors of your transformation efforts may try to use these bumps in the road as a rationale to declare the entire effort a failure.

But it’s rarely true that the obstacles you are encountering mean inevitable failure; most of the time, all you need is perseverance.

If you look at the most successful enterprises today, whether traditional businesses that are thriving in the digital world or digitally-born companies like Facebook and Google, they’ve all encountered moments of great struggle. Apple almost went out of business in 1997, Google spent its early years without a revenue model, Uber faced and continues to face many legal challenges, and AirBnB spent years as an unsuccessful startup before breaking through.

Creating innovative digital experiences is rarely a story of instant success; rather, it is a result of perseverance despite the challenges that were faced along the way. 

THEY DO NOT LISTEN TO THEIR CUSTOMERS

The ultimate success of your transformation is probably going to be driven by the behavior of your customers. Does the improved customer experience delight them? Does their engagement increase? Do they buy more of your products and services as a result? 

Transformations can fail when they deliver experiences that are not aligned with the desires and preferences of their customers. 

It's fairly easy to avoid this problem when you engage in the right type of customer research at various stages of your transformation. (This is a topic that I also go into detail about in my book Winning Digital Customers: The Antidote to Irrelevance. You can access the first chapter for free here or purchase the hard copy here.)

Research can help you understand your customers’ greatest points of pain. What are they challenged by? What’s holding them back from accomplishing what they want? What part of your brand or other brands aren't meeting their needs that you might be able to fill? 

If you base your transformation vision around solving customer challenges, you have a far better chance of succeeding.

THEY MOVE TOO SLOWLY

Digital transformation is about keeping up with the changing needs of your customer. The world is rapidly becoming more digital, and so are your customers. Are you moving fast enough to keep up with their needs?

Jack Welch, the CEO of GE, said that “when the speed of change on the outside exceeds the speed of change on the inside, the end is near.” Speed is an essential part of success during a time of transformation. Doing the right things at the wrong pace won’t lead to success.

Ironically, most companies that move too slowly do so because they think that moving too fast would cause mistakes, but the bigger mistake is to move too slowly. I’m not saying that you should proceed recklessly, but there are ways to move rapidly with acceptable levels of risk. 

If you’re planning your transformation, keep these pitfalls in mind and plan around them. If you’re stuck in the middle of your transformation, the good news is it isn’t too late to make changes.

In my Wall Street Journal bestselling book, Winning Digital Customers: The Antidote to Irrelevance, I walk you through a simple five-step process to successful digital transformation. This methodology is proven and has worked for many companies that I have helped in the past. You can access the first chapter for free here or purchase the hard copy here.

Get FREE access to the first chapter of FROM`s
Wall Street Journal Best Selling Book

WINNING DIGITAL CUSTOMERS


  • Learn the three patterns of all successful digital brands (including companies like Apple, Netflix and Uber).
  • Understand why many great new products fail, and the formula for building products that won’t.
  • Discover the key reasons companies resist change and how to overcome them.
Get FREE access to the first chapter of FROM's
Wall Street Journal Best Selling Book

WINNING DIGITAL CUSTOMERS


  • Learn the three patterns of all successful digital brands (including companies like Apple, Netflix and Uber).
  • Understand why many great new products fail, and the formula for building products that won’t.
  • Discover the key reasons companies resist change and how to overcome them.