There’s a rumor that if you turn off all the lights and say the phrase ‘digital transformation’ three times into a mirror, that your IT staff will appear and cause you grave bodily harm.
Okay, so maybe not. But… if you keep treating digital transformation like some urban legend, you might see an increase in Dilbert comics like this one featuring “The Boss,” a technologically inept leader ready to jump on any trendy phrase even if he has no idea what it means.
However, as buzzy as it sounds, digital transformation is something that is very real.
That said, as a very real process representing a significant change to the business model, it includes the benefits for those who embrace it, the risks for those who don’t, and the potential for failure for those who dive in without a proper understanding or plan.
The number one digital transformation mistake: Going in without a strategy
You already know the risks that exist approaching anything haphazardly. You wouldn’t hire your replacement without a succession plan. You wouldn’t buy a piece of equipment on a whim. You wouldn’t complete an acquisition without due diligence or taking steps to assess cultural fit. Why? Because each of these decisions is significant and there are long-term consequences both good and bad.
Sadly, when 84% of digital transformation initiatives fail, it’s important to look at the reasons why. A topic we discussed in our Digital Transformation Guide, one of the biggest digital transformation mistakes companies make is diving blindly into the process.
Pragmatically approaching hype
Digital transformation needs to be built on sound strategy. Like any business strategy, each step should work toward the end goal. The biggest difference, unlike a piece of capital equipment or a merger, short-term failures are okay—as long as you ‘fail fast’.
Example: The native app boom of 2013
Here’s just one example of companies not only succumbing to hype, but refusing to fail fast. Remember about seven years ago when every company needed to make a native mobile app for customers? They didn’t.
Remember, 2013 represented a time when there were still four mobile operating systems (iOS, Android, Windows Phone, and RIM), featured an environment devoid of development talent, and made it incredibly expensive to build such an app. Therefore, a lot of companies invested hundreds of thousands of dollars to build an app and find out that users just weren’t into it, either due to privacy concerns, space on their mobile devices, or sheer ambivalence.
This was a time when storage space was at a premium and many companies refused to acknowledge that their app wasn’t necessary. Few acknowledged the risks that went into making a native app.
Many could have waited until development process was cheaper or for storage space to expand; others could have saved money by focusing on a responsive website or web app. Today, apps are easier to develop, fit more comfortably on phones than they used to, and deliver the right results for the right companies.
For the right use case, an app might only be a small step in building customer relationships. This leads us to the other end of the spectrum.
Narrow-minded thinking and transformation paralysis
The alternative to the premature native app boom of 2013 would be ignoring technology advancements or failing to build a strategy altogether. In fact, not acting at all could be more dangerous, especially as technology evolves more rapidly than ever.
Added to this, tomorrow’s technologies are built on things being used today.
Take a look at Gartner’s “Strategic Technology Trends for 2020,” a list of things that will begin to impact organizations in the next three to five years. In this, you’ll notice that something like ‘hyperautomation’ requires you to automate processes, leverage current analytics capabilities, and use AI (three current technologies).
Example: Underutilizing an app in 2020.
As development has gotten easier, phone storage has gotten bigger, and processing power has ramped up, the decision to make an app might be only a small part of the marketing mix in today’s world. In our guide to digital transformation mistakes, our example company, a movie theatre, wanted to create a mobile app for consumers.
For this use case, it’s a great idea. This app is based on loyalty, and represents something customers would keep on their phones.
This theatre can use the app to cultivate direct relationships with customers, increase the number of trips to the box office, and drive up ticket and concession sales through personalized offerings. From here, they will pair this with a website to make it easier for consumers to watch previews, buy tickets, and more.
For companies like this, however, an app is table stakes, and only focusing on an app isn’t enough. A proper strategy may start with the app, but have plans to implement technologies that augment the app, allow the company to collaborate in new ways, and deliver a new business model.
Applying strategic planning knowledge to digital transformation
Today’s business leaders already know how to build a strategy. Set goals, break those goals into manageable chunks, and expand.
Applying it to digital transformation is a bit more complicated—the market changes faster, there’s a risk of setting goals too high, too low or in the wrong direction, and as mentioned above, you could get distracted by a shiny new object that appears on some tech blog.
Here are a few notes on building a comprehensive digital transformation strategy:
- Start small and expand incrementally, but always keep a broader goal in mind. “Big” leaps are much more manageable when you have a stable foundation. Our example company needs to know what they are going to do with the app and the data that app will generate before entering into this space.
- Prepare for the ramifications of your decisions. In a digital transformation strategy, you will need to prepare for the new challenges that come if the process creates a new business model. In our example, this movie theatre partnered with gaming companies to give consumers access. Now, our example company is in a new industry with new competition.
- Know what you’re going to do with the data. It’s great that our example company added all of these new features. What are they going to do with the data? How do they intend to manage it? Could the data uncover new business models? Understanding how to connect, analyze, and protect consumer data is a core part of a digital transformation strategy.
- You’re not always in control. Fail fast and pivot. You’ve probably heard the phrase “fail fast.” This is one of the most counterintuitive parts for traditional leaders. In an environment as fast as the digital transformation landscape, trying to predict, control, and eliminate variances is a losing game with diminishing returns. Transformed companies aren’t meant to be rigid, because once you stop to figure out what happened, you just stepped back five turns.
Are you making any more transformation mistakes?
Digital transformation is tough. Not only does it mean different things to different industries, it means different things to different companies. Further, with new, unexpected partnerships, it may represent a blending of industries. Our example movie company entered the entertainment app space.