IMD Professor Talks 5 Ways Organizations Fail Digital Transformation
Only five percent of digital transformations achieve or exceed expectations, according to Bain research. This is a massive problem after years of work. So the question is, “What are organizations doing wrong?” To get to the bottom of the answer, IMD professor Michael R. Wade and The Global Center for Digital Business Transformation, an IMD and Cisco Initiative delved deep to determine the five fundamental factors that cause organizations to fail. Here’s what he found.
1. Organizations Focus on Disrupters Instead of Disruption
Too often, industries get bogged down in getting rid of the disrupters instead of focusing on the issue at hand. For example, when Napster came out two decades ago, the music industry was so busy trying to shut them down that they didn’t pay attention to what people wanted—content disaggregation. The same goes for Blockbuster—Netflix didn’t kill it; late fees and limited selection did. The key is to pay attention to the disruption instead of getting hung up on the disrupter.
2. Organizations Build Separate Digital Strategies
While, at the outset, building a digital strategy might sound like a good thing, it can cause many problems. First, it places too much importance on “digital,” and it often takes attention away from more important goals. The other problem is that a digital strategy becomes separate from the organizational strategy. This can lead to overlap and conflict. A better approach is to think about how digital tools and technologies can help support your existing strategies.
3. Businesses Focus Too Much on Digital Disruption
Digital disruption is not the only form of disruption. There are political, economic, and social shifts that also affect industries. The important thing to remember, according to Wade, is that “it doesn’t matter what form disruption comes in.” The impact is similar, and leaders still need to keep an eye on every form.
4. Too Much Attention on Digitizing Silos
Too often, companies develop projects to digitize silos such as “digitizing the supply chain” or “digitizing marketing,” but this normally ends in disappointment. The problem is that making something digital without taking the opportunity to review, revisit, and redesign existing ways of doing things just perpetuates existing issues. The second issue is that silos are often part of the problem. Digital tools should work across a company, and a successful digital transformation “requires a cross-functional approach.”
5. Lack of Understanding of Agility
Finally, many companies spend time pursuing ‘agility’ without understanding what it means. “In a world that is changing rapidly and unpredictably, organizational agility is paramount,” Wade said. The key is understanding that agility is not just one thing but made up of three distinct elements: hyper-awareness, informed decision-making, and fast execution.