Article

Why digital transformations fail – and what to do about it

Name: Implement Consulting Group
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Digital transformational trends in 2024

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Published

22 May 2024

The notion of digital transformation has been a buzzword for years and consistently a top strategic priority for organisations across industry, as it is a key enabler of growth and a license to play to sustain a competitive position by driving down unit costs.

Almost every organisation is currently undergoing some kind of digital transformation. And while the scope for digital solutions and how they are being developed have changed over the years, and huge investments have been made, the success rate has stayed depressingly low.

Any organisational transformation is hard, but digital transformations have proven relentlessly difficult with a success rate of roughly 30% and only few organisations realising the objectives they set out to achieve.

However, certain organisations continuously succeed in creating and capturing value from digitalisation. Numerous research studies by various thought leaders have identified a set of common characteristics that digital transformations have in common. This article is intended to consolidate these perspectives across various sources – coupled with Implements’ vast experience of advising organisations on digital transformation in distilling a set of recommendations to successfully launch and drive digital transformations in 2024.

Everyone is currently going through some form of digital transformation, yet only few will successfully realise the benefits

Why digital transformations fail

Every digital transformation is unique. Yet there are a number of common characteristics that apply to the majority of the transformations that fail.

These characteristics can be boiled down to six key pitfalls:

Lack of a shared vision
Lack of experimentation and learning
Lack of growth priorities
Transformation is scoped incorrectly
Unfit operating model
No change in capabilities

Perspective

The journey of digital transformation is both complex and critical for organisations navigating the ever-changing landscape of the digital age. While the failure rates of such transformations remain high, there are clear pathways to success that can significantly enhance the odds of achieving desired outcomes.

Several characteristics of successful transformations have not changed significantly, yet a new and emerging tendency of anchoring the digital transformation with the CEO is interesting and restates the criticality of succeeding with digitalisation.

The cross-functional teaming and emergence of the product manager role in acting as a mini-CEO in many organisations is also new because of shorter planning horizons and a need for more frequent deployments and value potential of improving time to market and deploying ahead of competition.

Finally, the transition towards modular architectures and advancements in the ways of organising the data is evolving rapidly and enables organisations to take faster steps towards becoming truly data-driven and operate at speed despite increasing complexity.

In many ways, digital transformation has transitioned from an explorative “innovation” project taking place on top of the business-as-usual IT agenda towards a more strategic transformation with clear benefit expectations and requirements to deliver.

It has become crucial to work on the dual digitalisation agenda of not only constructing capabilities to identify and realise value through new digital solutions for customers and business but also to invest in creating organisations with capabilities enabling them to continually change at pace with the changes around it ahead of competition.

By addressing the common pitfalls outlined earlier and embracing the key characteristics of successful digital transformations, organisations can improve their odds of enabling digital change readiness capability and succeed with their growth and efficiency objectives.

As we navigate the trends and challenges of digitalisation in 2024 and beyond, it is imperative for leaders to recognise that digital transformation is fundamentally about people, not just technology. By investing in talent development, upskilling internal capabilities and driving organisational change with firm commitment, organisations can pave the way for a future where innovation thrives, value is continuously realised, and customer needs are met with agility and responsiveness.

In essence, the journey of digital transformation is not just a destination but a continuous evolution – a journey where organisations must continually adapt, learn and grow to stay ahead in the digital age.