Everyone seems to want to get on the digital transformation bandwagon. Unfortunately, it is easier to “do digital” than it is to “be digital”.
Here is a very plausible explanation for why so many efforts fail.
The digitisation of the global economy has had many effects on global enterprises but few are more significant than the overwhelming desire to undergo digital transformation. Modern companies are under tremendous pressure to undergo this process lest they be left in the past, but digital transformation failure rates have become a major problem.
Unfortunately the pressure placed on companies to update their operations has lead to companies rushing to incorporate new technologies without fully understanding how they will improve their daily operations. In the past it has been noted that a whopping 84% of companies fail to achieve digital transformation.
The reason for this astronomical digital transformation failure rate has been attributed to everything from complexity to poor organisational structure. While these factors have their place in explaining the high rate of failure amongst modern enterprises there is a more simple explanation; unrealistic expectations.
Approaching this process with unrealistic expectations is one of the main reasons why digital transformation can fail. Not only are companies are under constant pressure to position themselves as ‘thought leaders’ but there is no universally agreed route to implementation.
Source: Digital transformation churn: Why the digital transformation fail rate is so high
Digital Business
As a consultant for digital transformation, I can submit that it is much broader than unrealistic expectations. I might even argue that misplaced expectations are an even better catch-all. but neither explains much. In my experience, companies ‘say’ they want to transform, but they don’t want to leave their comfort zones and they don’t want to pay for it. They want something for nothing. Sure, Digital Transformation is ill-defined and has become something like a buzz word like Agile or Design Thinking.
Transformations are disruptive. Companies are used to marginal changes and moderation, and they are typically very siloed and political. What tends to happen is a company creates a small endeavour and labels is as ‘transformation’, but the endeavour is hardly transformative even if it is successful, and so they may have won the battle but at the expense of the war.
On the other side, we have companies trying to boil the ocean, and even if this succeeds in transforming, they will just end up keeping pace with the rest of the world—and they may have changed in the wrong direction because the terrain shift under them.
Thanks for the insight. Very helpful.
And let’s keep in mind that fully 70% of ALL projects of any significance fail, and 84% of transformation projects fail, so it’s still a big deal, but it’s ‘only’ a 20% variance as opposed to an 84% variance that a failure rate to a baseline of zero might suggest.