Three Reasons Why Digital Transformations Fail

October 18, 2022
Sean Eirons

“Perfect is the enemy of good” - Voltaire

Analysis paralysis - no, it’s not a new physical disease one can catch, but has been infecting the workplace environment for years. Symptoms may include: over analyzation, data overload, indecisiveness, and spending too much time on determining a solution where the process comes to a literal paralysis state. Analysis paralysis leeches itself onto many hosts in the workplace, but none other than during a digital transformation process.

A 2020 study by Boston Consulting Group found that 70% of digital transformation projects fall short of their goals, with analysis paralysis being a primary factor. Not only that, but an estimated $3.3 trillion will be invested into failing digital transformations by 2025. That’s an expensive tab to pay for a parasite.

Antony Edwards, COO of software testing and monitoring company Eggplant, was quoted saying, “too many people treat digital transformation as something around infrastructure and IT”. He’s correct. Analysis paralysis is the enemy of good, because companies take too much time trying to find a perfect “cookie cutter” solution. Implementing a digital tool helps streamline processes, but those tools are useless if it’s only going to solve short term problems.
"[Digital transformation is] about the company culture, it's about DNA, and it's about business models. And if you don't approach it from that kind of business and customer perspective, it's going to fail," Edwards continued.

So what causes digital transformations to fail?

Poor Internal Alignment

Renowned lecturer and writer Dale Carnegie said that “an hour of planning can save you 10 hours of doing." The same applies to a digital transformation. The planning stage of a digital transformation is where analysis paralysis often comes into play, but is the most crucial cornerstone in building a foundation for further implementation of where you want a digital tool to take you. One of the biggest challenges for planning a digital transformation is establishing internal alignment across the organization. Poor internal alignment includes:

Lack of defined roles and responsibilities. Avi Shua, co-founder and CEO of Orca Security, was quoted saying, "organizations need to understand what the key areas of focus are and what they are trying to achieve from the business point of view -- be it reducing costs, or being more agile or being more secure.” People crave structure and to feel like they are contributing value. With a lack of goals and responsibilities, everyone in the organization is going to be running into thirty-six different directions , ultimately ending up more confused than when they started staying in that “paralysis-like” state.

Alongside not having a clear goals, another factor is employee resistance to change. Change is the law of life and for some, that law is often looked at as a suggestion, especially when that change has a lot of uncertainty. People will resist change whether it be, being too comfortable with the status quo and/or not being able to adapt quick enough. People are naturally stubborn. We think we always know what’s best and the same goes with implementing a new digital tool. Getting the team onboard to see the bigger picture can help overcome that stubbornness of not thinking the new tool will be of benefit. Additionally, not having the proper onboarding, will lead to more confusion and a lack of being able to adapt. It’s like someone telling you to take a rocket ship apart and then put it back together.

Technology Overload

It’s not a secret that technology has helped revolutionize the way we live our daily lives, but is there such a thing as too much of a good thing? Sure there is. Having too much technology implemented can be another symptom of going into that “paralysis” state. This can be due to having the technology run the organization for you, blinding the vision of what you are looking to achieve. When someone doesn’t know what to do, they do everything and with that two things can be true at once. Yes, you do want to install a tool to streamline a process, but not solely rely on it to the point that you lose vision of what you want the digital tool to solve. This relates back to the planning stages, where having a concrete plan will better determine how much or how little a digital tool will be implemented.

A study
showed that 40-50% of salespeople don’t use their digital tools. Even if they do, a majority of the users don’t use the major functions, due to a lack of knowledge of the tool being used. A tool is only as good as the one wielding it and the same applies to implementing new technology. Having a technology overload in a process can lead to the stubbornness of someone trying to learn. Any company can provide the most technologically advanced tool to streamline a process. However, it’s all for naught if the ones using the tool have poor onboarding or there is no transfer of knowledge to keep the process consistent.

Poor Change Management

Referring back to having the right tool for the right job, poor change management is a key factor into why a team can’t adapt properly to change. Oftentimes companies think that by doing a few training sessions or handing out an onboarding packet is enough for their team to learn and adapt to the new digital tool. This is not the case and there is quite a bit of leg work that goes into both the training and the communication of how the digital tools will be used. This includes developing an organizational design structure to define how roles and responsibilities may change, as well as developing an organizational readiness test. This can be a quantitative or qualitative way to measure a team's readiness for any type of change and how they will be impacted.

While digital transformations focus on putting technology at the focal point of a strategy, it should also focus on the people using it. This transformation starts with having the leadership to focus on how this change will impact the changing culture and practices of the organization. With the right structure in place, it will not only help choose the right digital tool, but put the organization in a position to drive the transformation and not the transformation drive them. While every transformation is different, the same principles apply as far as what steps need to be taken. Perfection is the enemy of good and over-analyzing a process to the point of stagnation is the best friend of analysis paralysis.

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