Digital Transformation: Why Some Companies Fail

In today’s fast changing society, more and more companies are going digital. It is not a question of whether or not a company will go digital, but rather how and in what scale will they do it.

Huge companies such as Netflix have taken the big leap and improved through innovation and digital transformation. Netflix’s transition from selling DVDs to a subscription model allowed them to offer a better service to their customers. Businesses are not just changing their value proposition but also their internal business processes.

For instance, many companies are already adopting a paperless office to promote more efficiency, productivity and sustainability within their organizations. As digital transformation is becoming a need besides being a competitive advantage, a lot of companies are taking the leap but not everyone is landing smoothly.

Companies that fail to move forward embracing technology are becoming obsolete and slowly facing the danger of extinction. Furthermore, as much as digital transformation promises a lot of benefits in the long run, other executives and decision-makers fail because of these factors:

Over Optimism

Technology and its benefits are now greatly realized worldwide and the future of innovation is promising; which makes some organizations dive head-first into digitalizing without properly realizing the costs apart from its benefits. Executives usually have a vision of what their company could become when they integrate technology in their business, but some leaders fail to realize that vision is one thing, and execution is another. Moreover, decision-makers should be reminded that digital integration is a big investment that will cost the company time, money, and effort from all functions of the organization. Digital transformation could be messy as it deals with a lot of cross-functional activities, infrastructure and resources. Although having a vision for your business is a good thing, it should also be a priority to prepare and plan for the tedious transition.

Pressure

As going digital is becoming a norm for most if not all organizations, everyone has to innovate and move forward from traditional processes. The incentive to gain a competitive advantage by digitalizing may cause some organizations to speed up the transition process. Given that the line between those that are able to successfully transition and those that are failing to do so is becoming thinner by the minute, executives are being pressured into making big and immediate decisions that hold the future of the whole organization. Not being able to reach client needs and consumer expectations that are constantly rising may also cause not just the digital transformation but the whole organization to fail.

The failure of such companies to adapt to change has become every other company’s fear. The pressure to innovate and to cater to the fast-changing demands of the market drives most executives to immediately turn their organizations digital, but executives must be able to consider that digital transformation is not possible with a flick of a finger. It may take months or even years to transition depending on the scale and the openness of everyone in the organization to this shift.

Resiliency to Change

Digital transformation does not stop with shelling out time, money and resources for infrastructure as it also affects the workforce. There are employees who aren’t as involved to this big shift, possibly because they don’t think they are tech-savvy enough or think the training would be beneficial. Shifting traditional business processes includes changing one’s organizational culture which can be far more difficult to deal with than just changing technology.

The employees, who are also considered to be end-users of technology must grow together with the company. Some people may have gotten too familiar with existing business practices that they may be hesitant to try something new. Furthermore, with the diversity of the workforce, the learning preferences may also differ. This means that it might be helpful to offer different and effective options for retraining. Another way to encourage employees to realize the benefits of technology is through a “test-and-learn” approach which could help them get a feel of how the technology works.

Poor Communication

More often than not, the weight of the work falls on CIOs and IT teams when it comes to Digital Transformation. Some companies are not taking into consideration that the transition has to be an organization-wide change to be successful. Executives are the decisions-makers and the drivers for change but they have got to get everyone on board.

Digital transformation is a complicated process of cross-functional activities from different departments that need to work together in order to move forward together. If one or two functions fail to communicate effectively during the transition process, it may not be possible to transition at all.

For instance, the IT department has to work together with the HR department for retraining while everyone else needs to work with them to learn the new processes. Communication includes urging everyone to get on board with the process which makes it an essential part of any Digital Transformation.

Effective communication within different levels and functions of the organization helps a lot in the transition process. This could be achieved with the help of different collaboration tools such as meeting or board portal solutions which could be the first step to integrating technology in your organization.

Digital Transformation Failure and Success

These are just some of the struggles faced by companies undergoing Digital Transformation given that the transition is not linear. Despite the risks, executives and business leaders have to keep in mind that the success lies in leadership, capability building, empowered workers, upgrading tools, and communication to keep the business alive.

The leaders of the company have the responsibility to monitor the progress of digital transformational efforts. Only if the leaders are able to convince and push for the need for digital transformation can the efforts succeed and become the foundations for successful operations of the company in the new few years.