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Nearly 70% of digital transformations fail. Learn how to increase your odds of success with digital innovation best practices.
Key Takeaways:- Digital innovation is adopting digital strategies and technologies to create new or improved services, products, business models, systems, and processes.
- Comparatively, digital transformation can include examining and reinventing all facets of your organization.
- A robust digital transformation strategy goes beyond articulating your objectives; it lays out the steps for achieving those goals and provides flexibility for change.
- The sooner you embrace digitization and digitalization, the greater the rewards will be.
Understanding digital innovation and transformation
Digital innovation is adopting digital strategies and technologies to create new or improved services, products, business models, systems, and processes. It involves leveraging modern platforms and tools to drive transformation, boost performance, generate value, enhance customer experiences, and gain an advantage over competing businesses. An excellent example of digital innovation is adopting AI and ML processes to improve cybersecurity, automate tasks, or optimize pattern recognition in data. Comparatively, digital transformation incorporates computer-based technologies into your business strategy, processes, and products. It lets you better serve and engage your customers and workforce. Cost optimization and operational efficiency can also become important transformation objectives in challenging economic times. Digital transformation often happens after digital innovation, takes longer to achieve, and is also typically larger in scale. For example, a digital transformation initiative can include examining and reinventing all facets of your organization, from value proposition to stakeholders and customer interactions, to org charts and employee skill sets, to workflows and supply chains.Essentials of a robust digital transformation strategy
Successful digital transformation requires attention to the outcomes you seek to achieve, your organization’s business processes, technology resources, and the services and products you deliver to the market to meet customers’ expectations and needs. Addressing all these aspects is essential for your digital transformation to take off. Addressing one or two areas might create more efficient processes, new capabilities, or new products. Still, it won’t deliver the sustained, continuous innovation that anticipates and meets changing market and customer requirements. As such, your digital transformation strategy must focus on advancing the technology ecosystem, business models, and operations. It should highlight your organization’s current capabilities (from its existing IT stack to employee skills), articulate what capabilities are needed, and detail the steps you’ll take to obtain those capabilities. In addition, your digital transformation plan must contain the following elements:- Clarity on why the change needs to happen.
- Alignment with core business objectives.
- C-suite sponsorship.
- A funding mechanism that supports innovative processes and iterative development.
- A list of priorities and a procedure for ranking opportunities as they arise in the future.
- Detailed risk mitigation and change management strategies.
- Timelines for initiating actions and achieving objectives.
- Value-focused metrics to measure success.
- Flexibility to adapt your targets as technology and markets evolve.
Overcoming challenges and learning from experience
One of the main reasons why digital transformation efforts fail is the lack of buy-in from stakeholders. When CEOs and other senior executives don’t support an initiative, or fail to set the tone for change and explain why it’s needed, there isn’t much enthusiasm for the transformation—that’s a recipe for disaster. To overcome this challenge, gain executive support from the ideation and sign-off stage. Encourage those leading the initiative to see themselves as change enablers, not just as the effort’s execution partners. They should craft compelling narratives to convince employees that digital transformation is the company's direction and encourage them to develop agile mindsets. Also, provide employees with a demo, a minimum viable product, or an early release of the new app or system to feel like they are part of the transformation journey. Ask for feedback and let your IT team deliver quick improvements based on it. On that note, change efforts can fail when you lack a skilled, high-performing IT team to drive digital transformation as a core competency. So, it’s essential to assemble an experienced team of experts who understand how to implement digital transformation projects and all that can go wrong with such initiatives. Beyond having expertise in the technology needed, these experts must also understand your business, customers, and market. Other common reasons why digital transformation projects fail include:- Lack of a clear vision
- Failing to think through the required technology
- Not figuring out the right value and OKRs
- Lack of a change management infrastructure and collaborative culture
- Budget constraints
