With the acceleration of digital transformation across diverse industries such as the healthcare, retail, food and beverage, agriculture, property, travel, hospitality, banking and finance industries, it is a good time to reflect and review why large digital transformations still get “stuck” today.
Once again, organisational leaders have come to realise that if they do not have the updated or relevant technologies & digital strategies in place to meet the accelerated world changes, there will be a high chance that they can be pushed out of that industry relatively quickly. Therefore, they are jumping on board the change due to the "burning platform”. With a greater openness and appetite that leadership teams have for digital transformation, they have come to accept that digitalisation does not necessarily take away personal touch. For example, greater acceptance in the field of medical practice (i.e. use of technology for consultation) or in education (i.e. use of AI to map a targeted and bespoke learning journey).
However, despite the situations above, there are still key misconceptions and challenges faced by change leaders. Namely:
Misconception #1: Digital transformation is a technical change process
This has led to projects getting stuck mid-way and having to be fixed or restarted – with the industry finding that 80% to 90% of digital transformation projects have failed or fell short of their objectives for a variety of reasons.
Some reasons include inadequate or ad-hoc management of the process - without realising that digital transformation actually involves change management and not just projects with technology uplifts. This results in a lack of upfront strategic effort to define the clear business objectives, design a bespoke and strategic digital approach based on the unique and complex needs of the business.
These also require technological development and selection strategies that are adequately resourced with the right change leaders to drive the innovation process, incubator trials and the corresponding organisational restructuring, taking into account the roles and capabilities of new and legacy teams.
More importantly, there is a need to align and progress the culture of the organisation to embed the change and manage the psychodynamic aspect of such a change including any unconscious change barriers e.g. resistance to change. These are issues that training alone will not be able to address.
Misconception #2: Digital transformation is costly
This may not always be the case as it depends on if the transformation is designed holistically upfront, including whether it is sufficiently resourced and implemented to avoid any "surprise" cost that may come along the process.
Projecting forward or tracking the sum total of the digital transformation over a cumulative number of years can allow organisations to eventually spend less than an ad-hoc approach (doing transformation in parts and “piecing” it together). Also, the allocation of spends across different areas can differ. For example, investments may increase in innovation and development of technology or managing the change. However, this may be offset by the reduction in the cost of running legacy systems and the reduction in the number of teams needed for manual processing. Furthermore, savings from such digital efficiencies can be redeployed by stopping low-value projects that can be identified through data derived from the technology, and redeployed into improving operational efficiencies and costs through developing stronger cost management, sourcing, monitoring of demand and simplifying processes and systems.
Meanwhile, some challenges faced when leading or embarking on a digital transformation journey as a change leader include:
Challenge #1: Lack of collaborative culture
Although this is not often openly discussed, the lack of a collaborative culture where functions within organisations tend to operate as silos makes it challenging for both the business or IT teams to collaborate towards a successful outcome. This is especially so if sponsors are not active and the roles and responsibilities are not closely adhered to with a lack of leadership in change. Normal steady state differs from transformation leadership and collaboration requirements.
Today, there still exists tension, which leads to misconception, in relation to the decision as to which department the digital transformation team should be embedded - whether this should be a technology-led or brand/business-led initiative. To be able to succeed, it will require the entire organisation or at least the affected teams to undergo holistic cultural transformation as well. Often there is too much delegation of responsibility to the technology teams - with marketing or business functions watching from the sidelines. This will not achieve the desired objectives set by the organisation for the business, brand and digital transformation process.
Challenge #2: Chasing the AI Game
What has changed is that, in the current marketplace, the distraction of "digital exuberance" and the fear of job displacement have intensified the disruption. It is not surprising that businesses can become overly focused on the need to adopt the latest generative AI or updated technology to enhance efficiency or improve the customer experience.
In reality, it should be a business-led transformation journey supported by technology and not the other way round. This means that businesses and brands should be adopting new technology in search of opportunities to apply them. Therefore, the most effective digital transformation efforts are usually those that are led by a clearly defined digital strategy and an identified starting point based on well researched insights, needs and analysed business objectives. These should be closely interlinked with channel and technology solutions, as opposed to being preoccupied with and led by the type of technology – be it an AI-driven solution, an application or a chatbot. In addition, a change leader who can navigate the outside – complex change environment implementation across functions and companies with a collaborative and agile culture across teams is also critical for the success of the digital transformation. This should not be confused with the positive benefits that can arise from encouraging and allowing individuals to explore new tools in generative AI in the workplace, provided that it does not compromise output quality and authenticity for the sake of efficiency.
The writer is Wong Mei Wai, Founder, CEO and Chief Change Catalyst of APAC Global Advisory based on her observations in consulting across industries.