3 counter-intuitive reasons that digital transformation efforts fail

While digital technologies may improve the speed, efficiency and performance of operations, siloed or one-off projects alone won’t digitally transform an organization.

As organizations race to adopt new technologies, many are reaching for efforts that will digitally transform their operations. In fact, more than 80 percent of chief executive officers are working on some sort of digital transformation project, and 77 percent say they are planning to increase investments in digital capabilities, according to a recent survey by Gartner.

Yet many of these initiatives are falling short of their desired results. While digital technologies may improve the speed, efficiency and performance of your operations, siloed or one-off projects alone won’t digitally transform an organization.

Digital transformation isn’t about transforming the individual pieces of your business, it’s about using data to identify new opportunities and offer more value to customers. Leading digital organizations such as Apple, Uber and Amazon have leveraged their digital initiatives not just to improve their core lines of business but to create entirely new revenue streams.

Business process integration, technology and agile practices may help support a digital transformation, but to truly create value-driven transformation organizations must build upon it with a strategy. Here are three counterintuitive reasons your digital transformation may be stalling:

You focus too much on finding the “perfect” solution
A common mistake is to think one single solution or piece of technology can drive all digital transformation needs.

While the best solutions and platforms offer a streamlined approach, they still rely on multiple technologies and endpoints. You need a technology that can provide the governance and infrastructure to support data analysis. Having an ecosystem to aggregate data and engage in capabilities like AI and machine learning will help you tap new strategies to pilot your digital transformation.
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Big digital companies use their data, algorithms and resulting insights to enact true digital transformation through what I like to think of as their own “cheat codes.”

Amazon’s strategic acquisition of Whole Foods and integration with Prime is one example of what can come from data in massively scaled ecosystem. By observing customer interactions with its existing platform, the company was able to identify a trend where consumers wanted quality groceries delivered to their doorstep. The Whole Foods acquisition then becomes an easy and informed move on Amazon’s part, one it was able to clearly see by maintaining its visibility into consumer and organizational trends.

Digital transformation comes from accepting there is no single solution and that real value comes from being able to continually use data to find new opportunities.

You look to agility to drive business transformation
Three-quarters of executives now say agility helps improve operations, customer service and accelerates the speed at which new products and services get to market, according to an article from Harvard Business Review.

Yet while agility may better an organization’s core performance, it won’t lead to digital transformation by itself. That’s because digital transformation isn’t about doing something better, it’s about doing something different. The key is to leverage data within the digital ecosystem, apply a forward-looking philosophy to spot trends, then use your agile practices to convert that into value-added activities and new sources of revenue.

For example, Apple was able to use data and insights from the Apple Wallet to offer a revolutionary financial product with the Apple credit card. Uber also used data and agile practices to support digital transformation when it identified limited freight capacities and leveraged its platform to found Uber Freight in 2017. The company is now ramping up that line of business with a $200 million annual investment and the hiring of 2,000 employees in the next three years.

You view integration as the final step in the transformation process
Many organizations get stuck in a quagmire thinking integration alone will help them achieve all their digital transformation goals. While integration is essential, it is just a means to an end and not a silver bullet to drive a digital transformation.

The real value in a connected and integrated ecosystem is the ability to understand problems, identify new solutions and transform them into business opportunities.

For example, Amazon’s ability to integrate Alexa with not only its own operations but with third parties was only a first step in unlocking new value. Alexa now offers more than 70,000 skills and integrates with thousands of apps, devices, and services. This proliferation of deployment in homes, businesses and vehicles throughout the world isn’t about the device itself but about opening the endless lines of revenue and opportunity it may bring in the coming years, simply by observing user behavior and creating new lines of revenue based on those trends.

To bring about a true digital transformation, organizations must look beyond simple technology adoption and focus on the bigger picture. The more governance, visibility, control and insights you collect from your existing business ecosystem, the more you’ll be able to see trends and adjust to the changing needs in the market.

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