While digital transformations are increasingly necessary for companies that want to stay on pace with their tech-enabled competition, they aren't always easy to execute properly. In fact, "completely successful" digital transformations are surprisingly uncommon. According to McKinsey, as few as 16% of digital transformations are successful in achieving and sustaining their intended goals. Fortunately, any organization currently engaged in DX has a large body of research to guide them, emerging from the trials of their peers. By examining the top causes of DX failure, enterprises can put themselves in the best possible position for DX success.
A key component of any successful project is communication. For a project as complex and consequential as digital transformation, communication is even more essential. An organization can spend as much money as it wants on cutting-edge software—but if employees aren't properly motivated or equipped to engage with it, it's just more money wasted. This is why misalignment between top and middle management accounts for the greatest loss of ROI for DX initiatives.
If companies want their employees to become active participants in their DX efforts, rather than passive bystanders, they will need to communicate the context and objectives of their drive for transformation. The communication needs to be two-way; without gathering feedback from the individuals who are going to be working with new software, the ability for leadership to refine and optimize new tools and processes is severely limited.
One method an organization can use to build internal employee investment in DX is to craft an effective change story. This requires leadership to define their "why"—the set of reasons they've chosen to pull the trigger on transformational change—often in collaboration with managers and stakeholders on affected teams. Some companies may choose to utilize employee surveys to identify common pain points that can be addressed with new tools, which can also serve as benchmarks for DX success.
The end result is a unifying narrative that aligns the high-level organizational mission with the goals and needs of its constitutive groups. Broadcasting and building their change story helps to unite a company in shared purpose and understanding around DX, and can cut through the fear and uncertainty that can come along with structural change. This approach is supported by a report from McKinsey, showing that companies with successful digital transformations were over twice as likely to have engaged in clear communication about their DX objectives, compared to companies with failed transformations.
Leadership at scale
The larger an organization, the more likely it is to struggle with achieving digital transformation success. This suggests that DX challenges seem to scale with business size and its associated complexity. For these enterprises, it's especially important that top-level leadership step up to the challenge of coordinating transformation, driving adoption, and setting an example for the rest of the organization to follow. However, alarmingly few leaders properly rise to meet the challenge. According to Futurum Research, the senior executive team is responsible for holding back DX initiatives in 68.8% of organizations—over half of which can attribute their issues to the CEO alone.
The data seems to suggest a straightforward conclusion: advanced digital literacy can no longer be considered optional among the C-suite, least of all the CEO. Key technology figures, such as the CIO and IT executives, have a critical role to play in managing the details of a DX rollout. Success is contingent on their planning to balance the changes brought about by new software with the needs of the existing IT infrastructure, and their leadership in collecting regular feedback from users to measure progress. However, the CEO ultimately acts as the face of the DX initiative within the organization, responsible for directing the essential human element of the transformation equation. This means that CEOs need to personally surmount the DX knowledge gap if they expect their workforce to do likewise, and remain visible and engaged throughout the process if the initiative is to catch on.
Problems with DX implementation often arise when deployments target specific systems for improvement without addressing how other, interconnected systems may be affected. When one part of a process becomes more efficient while the rest moves at the same pace, seemingly positive results can actually lead to bottlenecks. For example, if new AI-enabled marketing software is suddenly able to generate new leads much faster than the sales process can work through them, the added efficiency goes to waste. If not addressed, this can quickly spiral and create new problems.
To avoid this kind of unbalanced deployment, companies need to make sure they first map out their DX strategy across every team or department that might be affected. Rather than focusing on one solution at a time, they may discover that an interconnected set of solutions would be more beneficial. In fact, successful transformations tend to deploy more technology than others.
One tool available to organizations coordinating large-scale transformations involving many moving parts is business orchestration software. Orchestration tools pull data from an organization's business software to provide a comprehensive view of all digital processes across every team and department. This bird's-eye view enables leadership to craft precise, conditional rules for how data and resources flow together between new and legacy software. Organizations undergoing digital transformation may use orchestration to identify bottlenecks as they come up, and create new work processes that are capable of bridging the gaps between different tools and teams.
Within a very short time, digital transformation has ceased to be optional in many industries. However, DX is notoriously difficult to pull off effectively, and failure can be a costly experiment. Besides the technology itself, success in digital transformation rests on effective communication with clear objectives, active and tech-literate leadership, and a systems-oriented approach that moves entire processes forward in step. The best chance for success in DX belongs to those organizations that embrace the opportunity to learn, reflect, and collaborate, from the C-suite all the way to the front line.