Executive boards constantly push for digital transformation, but it can be difficult for executives to know where to start. Further, it is easy to become paralyzed by the potential directions and options, which leaves many leaders asking one question: What are the biggest digital strategy mistakes that we should avoid?
“ Digital transformation success needs to operate at three levels — corporate governance, management and execution — but companies make mistakes at all three levels”
“Over 80% of CEOs responding to our annual CEO Survey said they have a digital transformation program underway to make their companies more digital,” says Mark Raskino, Distinguished VP Analyst, Gartner. “However, our recent years’ surveys have also shown a lack of business model change penetration and other indicators, which causes us to think that many of these digital initiatives may not be sufficiently deep corporate transformations.”
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Digital transformation success needs to operate at three levels — corporate governance, management and execution — but companies make mistakes at all three levels that will frustrate transformation. Knowing where those mistakes may happen can help enterprises avoid falling into these traps.
“ Over 80% of CEOs responding to our annual CEO Survey said they have a digital transformation program underway to make their companies more digital”
9 Digital Business Transformation Mistakes
- Misread the true scope of digital change. Sometimes an enterprise may misread a situation from the outset by, for example, failing to examine how digital forces will change an industry or having an insufficient corporate mission to see and seize product and business model innovation. Not having a strong understanding of what is happening in your industry can lead to a superficial or narrow scope of change for any digital transformation. Raskino says organizations should think in terms of using digital to reinvent what their industry does.
- Too much inward thinking. Too often organizations focus on what they want to do rather than analyzing customer needs, the opportunities those present, and a full competitive market view for examples and lessons. Raskino said this type of thinking is presuming that digital change is just another operating model change, but that is not the case. “An operating model focus does not consider the overall market. It focuses primarily on efficiency and effectiveness. A business model focus considers the market and how it is monetized. An outside-in perspective is what most successful digital transformation projects hinge on,” he said.
- “It’s not my job.” Some boards of directors treat digital transformation as a management issue and not part of their role, while at the same time, some executive team members avoid the subject and treat it as something owned by IT. This cascading disassociation behavior impedes real change. Digital business transformation must be part of the mission of the organization and in the core of its leaders. If it is not, patchy progress may be made, but transformational progress will elude the company.
- Digital is undefined. Goals are vague. The organization has a hazy and confused vision for digital transformation because digital has not been defined. There are no associated specifics or a coherent plan in place. There is aspiration, and a collection of cool projects, and there is will, but there’s no specificity on what the digital journey is really about. Organizations must do the upfront hard work to define their goals, set specific targets and metrics, and then measure those to ensure the transformation project is on track.
- Incrementalism. When digital is undefined, initiatives may only be focused on improving today and not putting the funding, systems and specific plans in place for real transformation. Management should ask: Is it really “transformational”? The meaning of that word has become very diluted. Digital business works at the level of revenue and business model change and product reinvention. Look for the structural investment. If it is not there, you’re very unlikely going to truly transform.
- Fixed minds. A fixed mindset is one of constrained capabilities. People with fixed mindsets are not in learning mode. Organizations must learn how to develop a growth mindset to build an innovative culture that will thrive in the era of digital business. A growth mindset embraces the idea that new capabilities can be developed through smart learning, good strategies and input from others. Those who embrace this mindset see challenges as opportunities to grow and evolve, and they are resilient even when faced with failure.
- Overplanning. Transforming to digital is more about doing than planning. Organizations can get caught up in endless rounds of analysis paralysis, which slows the transformation project. To combat this, organizations should institutionalize lean startup thinking at every level. Lean startup thinking favors experimentation over top-down planning. This process aims to quickly and iteratively build an innovation to become a “minimum viable product” that can be released to the customer, and then through feedback it continues to evolve the innovation.
- Technology-centric. Organizations should watch out for buying into the hype of the “next big thing.” Organizations should instead focus on reinventing their industry with a collection of technological tools. Transformation is never just doing the next big thing. “Aim at unmet needs — the needs of the market and customers that our industry has never served before,” Raskino said. “Use the technological tools collectively to invent solutions to do things nobody could do before.”
- Culture blindness. Culture is one of the biggest barriers to scaling digital transformation. Culture is perceived to be big, unwieldy and hard to change. Attributes that may be culture barriers for some are, in fact, enablers for others. Organizations should focus on resetting purpose and beliefs to drive culture change. Determine the purpose of the company, what it yields for the world and what the beliefs are of the people coming to work each day. Use culture hacks, some of which can be implemented in less than 48 hours, to move culture from a barrier to an accelerator.
This article has been updated from the original, published on November 6, 2019, to reflect new events, conditions or research.