Digital transformation continues to take precedence as a strategic priority for many organisations in spite of the pandemic. In fact, it has become a catalyst: a recent study by communications platform company Twilio revealed that 97% of enterprises accelerated their digital transformation efforts because of COVID-19.
However, digital transformation initiatives are never easy. They’re a challenge to implement. According to a recent survey by Bain & Co., of 1000 companies involved in digital transformation efforts only 5% met or exceeded expectations that they had set for themselves. Seventy-five percent (75%) “settled for dilution of value and mediocre performance.”
Let’s take a look at some of the challenges that impede the success of digital transformation initiatives.
1. Fear of Resistance and Disruption
Leaders often understand and appreciate the vision of digital transformation projects but stop short of fully committing to what it takes to succeed. Without a firm, steady commitment to the project the initiative will fail.
Given the amount of effort and investments required by digital transformation projects, there is often a “wait-and-see” approach towards its adoption in many organisations. One of the reasons for stalling is the amount of resistance and disruption it will cause.
How to Overcome This Roadblock
Leadership is an integral component of successful digital transformation projects and implementing effective change management practices.
PwC’s recent 2020 Digital IQ Survey shows that companies who have successfully implemented large-scale digital transformation projects (They call these companies the “Transcenders.”) did not just “talk” about or “encourage” change; they mandated it. This meant collaboration and cross-functional work amongst teams, while providing the tools needed to adapt. Through these methods, they were able to develop a culture that was inherently resilient and innovative.
Interestingly, Cate Gutowski, then vice president of GE Commercial, took a rather unconventional yet similar approach when tasked to lead the implementation of digital technologies into the company’s 25,000 global sales operation. She disregarded the “naysayers” and simply forged ahead with the digital transformation project. By doing so, she says, the organisation created a group of early adopters and innovators. She liked the Law of Innovators theory, from the book Start with Why – which essentially states that in order to grow an initiative into a movement, one has to identify the innovators, who are the first 2.5% of adopters. By focusing on that group, Gutowski says that one can create influence and drive any type of change. They become digital advocates and evangelists for change.
Others might caution against this approach, arguing that it might generate resentment amongst employees. This Corporate Board Member article states that leadership of organisations need to demonstrate credibility, alongside “patience, resilience and the ability to build consensus.” This can be achieved by listening to feedback, addressing concerns, and welcoming input – even when they’re wrong.
It is important to be prudent in choosing the right approach for your organisation. It is not a “one-size-fits-all” solution. Whether it be a hard-line stance towards change, or a slower, more employee-centric method (or a combination of both), a baseline requirement is that of strong leadership, often demonstrated by a steadfast commitment to the project.
2. Lack of Employee Ownership and Required Skillsets
Effecting change of a considerable scale can be an uphill climb. If that roadblock is compounded by a lack of employee training for new and desired technologies, any digital transformation effort is bound to be upended.
Gartner states that what is often missing is an employee understanding of how digital impacts the business. Without this crucial piece of the puzzle, it becomes difficult for them to buy into the need to update their skillsets and subsequently own their roles in the process. They need to be able to see the “Big Picture,” and obtain insight into how they contribute to the organisation’s success.
How to Overcome This Roadblock
The onus is on leaders to understand that digital transformation issues are not specific to technology but are a talent and cultural issue as well. It is important to align talent and culture with the goals of the business. This can be accomplished by developing leaders or hiring individuals who are digitally-minded (i.e. have led initiatives of moving from a manual platform to digital), and by making technical training available to those whose roles are impacted by the change.
On a day-to-day tactical level, utilising the company’s communication channels (e.g. workshops, meetings, newsletters, emails, etc.) to outline the goals of the digital transformation project, as well as what it entails, can be helpful. It is important to provide information, especially at the onset of the journey – so employees understand and assume ownership of their own roles. A roadmap keeps them engaged.
3. Differing Expectations Around Digital Transformation Initiatives
In a study conducted by PricewaterhourseCoopers (PwC) and Corporate Board Member, fifty-eight percent (58%) of directors said their board was “informed enough to support the company’s digital efforts.” But eighty-two (82%) of executives surveyed believed their board was informed enough to provide oversight. This highlights a misalignment: there is a prevailing sense of overconfidence in the board.
This can be attributed to differing beliefs around what digital transformation entails. Executives tend to view digital transformation as the process of “modernizing the brand” or updating business functions with new technological capabilities. For directors, however, digital transformation impacts the entirety of the business model with the potential to reinvent or “redefine the company.” If directors and executives are not on the same page, it becomes difficult to measure the success of transformation initiatives. Their goals become vastly different.
How to Overcome This Roadblock
According to Mitch Gordon, former CEO of Edition Capital Partners and director at Mesa Air Group, says the board needs to be able to ask executives the right questions; this brings any misalignment issues to light. But in order to ask the right questions, there needs to be diverse skillsets and mindsets in the boardroom. Diverse boards who understand how to leverage technology and appreciate innovation to accomplish transformation goals have a distinct advantage over boards who don’t.
Once the board and management have their goals (including risk appetite, old and new technology integration, security, etc.) aligned, management should discuss the project in an accessible and relatable manner. Assumptions on the depth of directors’ technical and digital knowledge shouldn’t be made. Executives need to equip the board with sufficient information to make them digital savvy enough to understand how plans and tactics are working towards strategic goals.
Why Organisations Should Still Do It
For all the roadblocks that organisations might potentially face, the abovementioned PwC Digital IQ study highlights the payoffs enjoyed by companies (the “Transcenders”) who have consistently invested in new, innovative digital ways of working. Here are some interesting statistics:
- 98% don’t fear extinction
- 87% are able to drive innovation across their business
- 17% higher profit margin growth over three years
It seems apt to end this post with a quote from this article in the Harvard Business Review:
“Digital transformation needs to be wholesale. Digital innovation needs to permeate and recast every aspect of the business and the board. Companies that do so will thrive in the new world, and those that do not, sooner or later, will fail.”
In other words, the organisation can’t afford to let inertia impede growth and progress – especially when competitive advantage and long-term continuity are at stake.
How Praxonomy Can Help
The board sets the leadership tone with respect to digital transformation efforts. Through the adoption of board technology solutions, the board can acquire their own understanding of how digitisation can drastically alter the landscape of performance and productivity.
Praxonomy is a board meeting management solution, also known as a board portal, that modernises board meeting workflows from end-to-end. With Praxonomy, the board is able to execute its governance duties without administrative, resource, or logistical constraints. As a practical, affordable, and secure board portal, Praxonomy empowers boards to focus on strategic, value-driven, and effective leadership.
For more information, contact us today.