Digital transformation has been a competitive norm in the world of corporate finance for years now. The development of new technologies in several industries, such as DataRails, PureShare Activemetrics, and NetWrix, that have improved the pace and quality of work. However, as aware as every organization with a finance team may be of this, many have consistently made several specific mistakes in this process, which sabotages their attempted improvement. That considered, finance professionals should have a thorough understanding of what the biggest mistakes are in digital transformation, and what actions can be taken to avoid them. 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.
9 Digital Business Transformation Mistakes
1. 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.
2. Too much inward thinking:
Too often organizations focus on what they want to do rather than analyzing customer needs, the opportunities 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.
3. Lack of engagement from all stakeholders:
It is critical for all stakeholders in an organization to commit to involvement in digital transformation. Engagement from the C-suite is particularly important. Unfortunately, there have been a number of cases in which boards of directors regard digital transformation as a management issue, hence not their job. At the same time, some executive team members evade this issue, and treat it as something owned by IT. This cascading disassociation behavior impedes real change. Business leaders need to consider digital transformation as a central part of their mission. When they fail or neglect to do this, minimal progress is made, and consolidated digital transformation cannot be reached.
4. 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.
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 structural investment. If it is not there, you’re very unlikely going to truly transform.
6. Hiring for skill sets rather than strategy:
Hiring the right people to support your digital transformation initiative is imperative. Candidates with a long history of developing a technological skillset might have the most appealing resumes, but it doesn’t necessarily say much about how creatively that candidate can drive a new transformation imperative. Organizations should onboard people who can change hearts and minds and lead through all the data, process, and people challenges you will face. Learning a new application is the easy part. When you’re a technology leader, every day brings a relentless stream of issues and complexities to address. But if you’re too busy chasing down product gaps and escalations, you’ll create barriers to a successful digital transformation and will be vulnerable to an unforgiving market.
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.
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.”
9. 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.