5 Digital Transformation Pitfalls to Avoid in 2022
Published on 28 Apr 2022 inKey Takeaways:
Business solutions should be prioritised as well as incorporate digital solutions to business strategies.
Workers with a silo mentality may prevent their businesses from being digitally innovative as there is a lack of trust and collaboration in the workplace.
Misguided transformation goals will stop business from successfully meeting the expectations of consumers today.
Ignoring the digital ecosystem will prevent business to effectively respond to the new digital ways.
Digital transformation is an ongoing process requiring companies to make continual adjustments and improvements throughout.
With 60% of enterprises that have undergone transition, digital transformation has become imperative for businesses to survive. We live in an ever-changing digital world where consumers are constantly seeking out products and services online thus, the impacts of today’s advanced technology-driven economy is inevitable.
For businesses to effectively prosper in this web-based economy, companies must aim to dominate online platforms, shifting from a manual to digital approach to embrace the benefits that are attached to apprehending advanced trends in the market today.
Like all alterations made to the foundations of businesses, digital transformation is greatly associated with pitfalls and impediments as 70% of transformation fails.
To effectively avoid these unforeseen complications, our team at Morphosis will familiarise you and your business with the top 5 most common pitfalls in 2022 to avoid.
Pitfall 1: Disconnect between digital strategy and business strategy
Neglecting business strategy and solely focusing on the digital side of things may lead to a disconnect between the two supposedly integrated strategies. Therefore, it is crucial for businesses to prioritise solutions to challenges even if that means putting digitised plans and approaches on pause.
Two types of strategies:
Digital Strategy: Highlights the various means where technology can be utilised to efficiently modify practices within a business and has the ability to change the business’s overall approach.
Business Strategy: Comprises of business decisions to work towards overall goals and initiatives.
Businesses should continue to take into account probable and real-world outcomes whilst undergoing digital transformation.
Digital strategies may clash with the reality of business goals and objectives; thus, it is crucial for businesses to strategically incorporate digitalisation and ensure that their digital strategies are in line with their main objectives.
Difficulties attached to strategically incorporate technological solutions and business strategy:
Digital strategies and technology actuate investments over businesses’ own aims and objectives, which may lead to integration issues where technologies are unable to fulfil business goals.
Rapid digital adoption not only leads organisations to disregard initial business strategies but also fails to ensure effectiveness of what’s being implemented.
The emergence of disagreements between the strategies surrounding budget.
Solution: Businesses need to effectively achieve full alignment on these two types of strategies, approaching them as one holistic business plan. In other words, the digital strategy should fully support the objectives of the business to create synergy rather than counterproductivity.
Optimisation is the main focus where digital strategies must efficiently work towards the improvement of business outcomes.
The pharmacy store Walgreens have successfully adopted a mobile first mentality which increases in-store traffic and customer loyalty. Their success was fostered by utilising the digital approach to aid businesses aims.
Walgreens combined the two strategies and as a result, they remained digitally innovative despite the enterprise being 118 years old.
Pitfall 2: Siloing digital transformation
Having a Silo mentality through a digital transformation process significantly reduces efficiency.
A silo mentality refers to situations where employees feel reluctant to share information regarding their division to other departments in the same firm. In practice, this means that crucial information about various changes within the company may not be shared between departments and teams.
Collaboration is crucial. The hindrances placed in the way of digital progress are often caused by having a silo mentality which then further leads to the lack of internal co-operation.
With most businesses operating under a hierarchy, departments often solely focus on their primary duties. This may sometimes act as a barrier for digital success as collective vision is being impeded.
Over time, unification becomes a serious issue where communication is poor. Companies like GE, Ford and P&G have ineffectively communicated their objectives in the past, which tremendously decreased their chances of a successful digital transformation.
For this reason, businesses should be able to thoroughly communicate objectives of the transformation. Overall business aims should be clearly communicated to all employees in every department.
Consequences of siloing during digital transformation:
A work culture that lacks trust and cooperation between divisions will lead to miscommunications, misunderstandings and resentment that will potentially prevent digital innovation.
1. Internal conflicts/competition
When employees only focus on their own department’s strategic objectives, internal competition between departments can start to occur. This can create conflict among employees, significantly harming productivity.
Competition is driven by departments working towards the same overall business goals but remain in different stages of the process. This prevents certain information to be shared amongst the workplace and between different divisions.
As a result, employee’s attitudes will gradually differentiate which will harmfully impact the unified vision of the business. To avoid these issues, communication and collaboration is of the utmost importance
2. Inability to scale ideas and initiatives
Being unable to scale ideas and initiatives is driven by information being omitted. Working in isolation will generate misalignment and misunderstandings, preventing the company from proposing the right approach to existing matters.
Progress will be delayed in general with no ideas being put forward as challenges are sure to arise when the organization fails to work collectively.
Agility is incompatible with a silo mindset. Ideas may be deferred due to the gradual adaptation to new alterations during the transformation.
3. Ununified company vision
Siloing causes the team to be disconnected at large, as it hinders the flow of information. The lack of trust between employees will result in employees having different visions for the company as working in unification is being prevented.
When having contrasting visions for the company, employees will be unable to work together effectively as trust and determination is being reduced.
It is crucial that the long-term goals of the business are prioritised as this will encourage everyone to work towards attaining a mutual goal.
Employees will be given a clear sense of purpose making everyone feel integrated as part of the same team.
Pitfall 3: Misguided digital transformation goals
Misguided digital transformation goals are when businesses lack a definite set of strategic and logical objectives that may lead to disruptions where companies fail to meet the expectations of today’s consumers.
Having a misguided set of goals will lead to complex repercussions that may prevent the enterprise from reaching its fundamental objectives. Technology should never be put before business and companies should never focus solely on technology alone.
Back in 2005, Yahoo made the mistake of focusing on one thing and one thing only, dominating the media industry. They solely focused on the media aspect which led them to fully neglect the user experience. Consequently, they failed to generate enough profit to scale, emphasising the importance of setting the right goals for the business.
Root causes of misguided digital transformation goals
Here are three of the most common causes for misguided digital transformation goals:
1. Businesses tend to do too much too soon
This causes them to lose track of projects. Which will decrease overall work efficiency, preventing technology to be optimised.
Having a solid foundation and making the right upgrade and alterations at the right time is crucial for business success. When doing too much too soon, costly and complex issues will start to appear, creating damaging effects on your reputation and cash flow.
Implementing components to your business is pivotal, but doing it at the right moment that is perfect for the business will ensure its survival and allow it to prevail in today’s market.
2. Enterprises being unaware of the full picture
Overseeing the business’s overall plans is crucial in digital transformation. When disregarding long term goals, businesses may end up delivering ineffective digital experiences as a result of the uncertainties that surfaces.
In a similar manner under a different circumstance, the lack of knowledge of specific business components that prevent employees from getting the bigger picture can be fatal. 30% of employees feel as if the business team didn’t understand IT which could be the main rationale behind loss of productivity and opportunity.
Enterprises being unaware of the full picture can result in them implementing new technologies at the wrong time. A lot of time will be wasted, a lot of expectations will be unmet and most importantly it will fail to deliver value in the most efficient way.
3. Introducing technology for the sake of it.
Simply introducing new pieces of technology into a business process without analysing it’s long-term benefits may lead to businesses to invest in new tools that fail to perform effectively, further decreasing their productivity.
Technology does not always pan out.
Adopting the latest techniques in order to follow a trend without actually considering what consumers need as want will lead to the business prioritising technology over their audience.
4. Not understanding that the audience comes first.
When businesses undergo transformation, some may end up neglecting the customer experience making them no longer aware of their needs.
With a focus on customer experience during the transition, there is a 20-30% increase in customer satisfaction. Therefore, the audience should always remain a priority.
When putting technology first, you may fail to prioritise the customers’ demands, which may lead your business to deliver a poor customer experience. It is essential that you incorporate their feedback into projects as this acts assurance that you are going into the right direction.
Pitfall 4: Ignoring the digital ecosystem
The importance of digital ecosystems goes beyond dispute. Ecosystem integration allows businesses to digitally grow where new technologies can be leveraged.
The ecosystem is responsible for today’s new economic rules, dictating the steps in which modern enterprises today aim to pursue.
In fact, 79% of top modern enterprises participate in a digital ecosystem.
In today’s digital ecosystems, the boundaries between industries are starting to blur as more businesses begin to expand their value proposition to overlap with their distant competitors.
For instance, even if Amazon did not have a significant presence in the supermarket industry, they managed to acquire grocery store chain Whole Foods in an effort to expand their digital ecosystem.
Today in an ecosystem environment, your competitors could potentially become your partner, and businesses that weren’t your competitors could become a real threat to your market share over night. An example of how the digital ecosystem is redefining companies that still adopt a traditional approach, pushing them to adapt and respond to the new digital ways and economy.
The collaboration between competitors like Ford and Toyota gave a smooth access to new markets, as they together developed a new hybrid system for trucks.
Whereas Nokia, an enterprise that failed to take into account the reality of the digital ecosystem led them to a swift failure. Nokia failed to shift its focus to the changing digital ecosystem causing their technology to be inferior to Apple’s.
Ignoring the digital ecosystem was fatal to Nokia leaving them vulnerable to competitive forces, indicating the paramount significance of market changes that can be determined by the integration of the digital ecosystem.
Why is it a bad Idea to ignore the digital ecosystem?
As digitalisation paves the way for new advanced technologies, despite existing enterprises having the right approach to the new market, they might be unable to maximise their efficiency when ignoring the map containing digital tools used in organisations.
1. Selecting an ineffective/unsuitable digital technology
Being able to make sense of the new markets helps companies decide on the most suitable type of technological approach to adopt.
Disregarding the importance of digital platforms will result in enterprises possessing the wrong tools to take on challenges. It will become an issue for the long run as more than 30% of the economy could be mediated by digital platforms in 6 years time.
2. Fail to modernise technology to scale innovation
With insufficient apprehension of today’s digital connections and systems, the act of modernisation at the core of technology is out of the question. To be able to successfully support the culture of innovation and follow through such transitions, enterprises must be able to form a solid bridge between their brand and the consumers.
3. Unable to stay interconnected
Businesses need to be able to thoroughly understand the connected digital ecosystems in order to form a decent line of communication with consumers and partners.
Reliable communication is what allows enterprises to digitally grow and connect.
Benefits of the digital ecosystem
Rapid adoption of technology
Allow wide-range data analysis
Increase value of products and services by utilising data
Allow businesses to move maximise productivity and move faster
Assist external interactions and improve performance
Pitfall 5: Thinking you’ve ”completed” digital transformation
21% of companies think they’ve already completed digital transformation despite it being an ongoing process.
Digital markets are perpetually developing meaning that enterprises need to make continual adjustments and adaptations.
This means that a single technological upgrade is no longer sufficient for digitally transforming your business. For example, when 99% of organisations rely on web & mobile applications, simply setting up an online platform will no longer give businesses the digital edge over their competitors.
Tips on how to successfully implement long-term digital transformation:
1. Feedback
Take comments and criticisms from all departments into consideration and present them to your leadership team. Accepting the truth of where the company stands and having a clear communication flow will minimise error throughout the transformation process.
2. Watch out for the warning signs
You should always be aware of any existing errors during the transformation process. It was estimated in 2018 that 70% of digital transformation initiatives failed to reach their goal wasting $900 billion in total.
Warning signs can help you discover and resolve errors in your digitisation process early on, helping you save both time and money in the long run.
3. A holistic approach
The three aspects you will need to consider when it comes to digitalisation includes: products, insights and employees.
Products: Is the business continuously attempting to digitally improve physical products? An app that informs customers about products and promotions offers the audience deeper insights to what you have to offer.
Insights: Digital insights on customers will allow the business to determine what, when to sell to them. More than 40% of all projects containing data analytics will evaluate customer experience by 2022.
Employees: Companies should also focus on working towards creating digital convenience for employees. Having the platform and tools for employees to collaborate and organise insights will increase work productivity and efficiency. It will also exhibit the company’s embracement of digital change both internally and externally.
We can be your lookout
Digital transformation is innovative, dynamic and revolutionary. In today’s digital economy, boundaries have completely shifted, acting as the main determinant for business to undergo transition and change.
As digital transformation gradually becomes a priority, it is important that you are aware of and prepared for the challenges that may arise. Download our digital transformation guide here to learn more about digital trends and the impacts it has on your business.
Whether you’re struggling with adopting digital strategies or being unable to make sense of new markets today, our consulting team at Morphosis are here to help. We are digital experts with 15+ years of experience helping some of Asia’s biggest brands launch new digital products and strategies. To learn more about how we can be of help to you, contact our experts today for a free consultation.
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