Every organization today is undergoing some form of digital transformation, and because it's a new process, there isn't a map or guide to help you move from the beginning to the end of such a massive and dynamic project. Perhaps because companies are making it up along the way, there have been some well-publicized setbacks experienced by big, respected companies in their journeys.
Yet avoiding the journey is not an option, either. Consider what happened to travel agency Thomas Cook or retail giant Sears. If you don't keep up with the changes disrupting, or even remaking your industry, you stand to lose your position or even your entire company.
If you are embarking on your digital transformation, how do you know which mistakes to avoid? Gartner analyst Mark Raskino set out to create a list of the big mistakes, culled from the experience of his colleagues in their work with CIOs and executive boards around the world. He delivered that list of Nine Corporate Digital Business Transformation Mistakes to Avoid during a session at the Gartner IT Symposium conference in Orlando, Florida in October, 2019.
Organizations tend to think of digital transformation as a set of technologies. But it goes deeper than that, according to Raskino. Digital transformation must be at the core of the business.
"Anywhere and everywhere technology is becoming part of what we do," he said. "It is part of the core, part of the product, part of the value proposition."
As organizations move to changing their core, Raskino offered the following nine avoidable weaknesses that thwart organizations as they work to achieve digital transformation.
1. A misread of what digital is
Organizations are using digital to completely reinvent industries. This is not about just making your existing systems into electronic systems or customer-facing systems. "Digital business is about reinventing your industry," Raskino said.
The timeline will be different for everyone depending on their business and industry. For instance, oil and gas company Shell is adding some plug-in electric stations even while their primary revenue remains in oil and gas. But that mix is likely to shift in the years to come.
"If we are going into a world of new digital products and services, we have to think what is the underlying customer need and how will we meet that need with the new mechanisms of the digital world," Raskino said.
2. An introspective focus within the company
Many people think of digital transformation as an efficiency plan that works on the operations of a company. After all, we are accustomed to using technology to make operations more efficient. Raskino cautions that organizations must realize that digital transformation is more than that. It's a mistake to look inward rather than at the market overall and what customers value. Look outside your industry at the changes happening elsewhere and transfer that to your own efforts. Looking inward only is "a weak starting point for your digital transformation journey that will end up yielding disappointment 2 to 3 years later," Raskino said.
3. A dissociation through layers of management as they think it's somebody else's job
At the board level, digital transformation is considered a management thing because it's important to investors. So maybe the CEO hires a digital officer to oversee the change. But digital transformation must be internalized at every level of the organization because it must be core to the company. "At every level your thought should be 'Digital is core.' It's not an add on, not a substitution, not support, not something other people do. It's us," Raskino said. "As long as you do that, the culture will shift in a more effective way."
4. A lack of clarity in purpose and guidance in things like metrics and KPIs (key performance indicator).
In an unguided transformation, many groups are doing a bit of digital work here and there. "Now we'll sweep the leaves up into a bucket and we'll call that collection of stuff a transformation," said Raskino. But that's not what it is at all. You essentially have to start with a bigger vision that defines what digital business means for your organization. Is it marketing, commerce, digitization of a product? Are you creating a separate product and business unit that is digital, or are you gradually going to change something in situ? Raskino said you first need definitional clarity about what you mean by digital. Then you need to define, measure, and target your efforts. You need to change your KPIs.
5. Incrementalism rather than reaching for big change
This is what happens when a company tries to make a fundamental change with existing budgets and maybe some savings from efficiencies or cuts to IT. But that's not going to work, according to Raskino. "You can't transform a company to digital within the existing budgets," he said. "You just can't. If you look at what you are up against, the digital giants, and how much money they are borrowing and spending to build a Google, to build an Uber, you know you can't do that with existing budgets." The corrective action for this mistake is to make a structural investment.
6. Fixed mindsets
All the employees in your organization, from executives to managers to individual contributors, must get on board with the fact that they will be learning new skills. Instead of being the director of HR, you must be the director of digital HR. Instead of being the legal officer, you need to be the digital legal officer. "You have to do a whole heap of learning, and people aren't often up for that," Raskino said. "But that is exactly what is necessary. To be successful at digital transformation, everyone needs to consider themselves as learning individuals and develop growth mindsets, according to Raskino.
This is what happens when you hire a consulting firm, put together a big deck, create a transformation program, and then someone leaves the company. So you bring somebody else in, create another deck, and that person leaves so you have to appoint someone else. "The walls are covered in plans that aren't executed by anybody," Raskino said.
The antidote to this is to institutionalize the lessons of a lean startup.
In this mistake, the answer to your problems is all about this year's big technology. Year one it's all about social, year two it's all about mobile. Year three is cloud, year four is big data, year five is AI.
"Those are tools," said Raskino. "But what is the purpose?" Organizations instead need to focus their attention to the unmet needs of customers and then use those tools to create the magnificent products and services of the future, according to Raskino.
9. Attention to cultural change
When you are making core changes, it will impact the people at your organization. They may be resistant to change. But if you want to succeed, you need those people to be part of the process.
"Digital is about reinventing your industry, which means you need people who understand your industry," Raskino said. "You've got to bring a big chunk of existing knowledge." Digital transformation will also need to include explicit programs to change culture, too.