According to Forbes, virtually all of the companies on the Forbes Global 2000 list have embarked upon digital transformation. But digital transformation is a process, somewhat like the Industrial Revolution, and is likely to take at least another decade before all the companies have fully transitioned, according to the magazine.
In the interim, there’s plenty of room for stumbling blocks along the way. In fact, Forbes estimates that just one in eight companies successfully transitions to when they first begin digital transportation. The other 84%? They are experiencing some degree of business strategy difficulty with it.
That’s a shame, because this digital technology news has the power to transform companies and customer bases, grow revenue, and cost costs as well as streamline business processes.
Employees need to be able to visualize the advantages of digital methods.
So why do digital transformations fail? According to the MIT’s Sloan School of Management, there are five potential reasons.
- Expectations were unrealistic
It’s common for organizations to become excited about new technology that promises breakthroughs or significant jumps in revenue and profit. But actually implementing the day-to-day transformation is more difficult, and it doesn’t end once the new technology is up and running.
- Talent is not sufficient
Companies with talented employees don’t necessarily have the competencies to make a digital transformation happen. The talent and competencies for a transformation may be different, and it may take a while to identify what is needed. Growing existing employees into a transformation can also present separate challenges.
- Communication break down
Effective digital transformation requires effective communication, especially between the business groups and information technology (IT) department. Siloed information has hindered many a digital transformation.
- Digital culture is not strong, or nonexistent
Digital transformation requires a digital culture, to a large degree. Employees need to be engaged in the digital transformation and to be able to envision how their products and services will improve following digital transformation.
- Continual competition
Because many companies are transforming digitally, customers have plenty of choice, and may be subject to continually rising expectations about digital performance. Better and transformative digital products and services are becoming the norm, so companies face constant challenges in bettering theirs.
So how can companies meet these challenges better. It’s a good idea to monitor digital transformation activities to ensure that one or more of the five challenges is not cropping up in some stage. As digital transformation becomes the norm for companies, the danger is that companies that don’t transform will be left behind.
Some industries, like bricks-and-mortar retail, have already felt the impact of a sector transformation by a digital leader like Amazon. Last year’s rash of bankruptcies in stores that relied on their physical presence for sales and market leadership was a cautionary tale for companies engaged in digital transformation: transform, join the transformers, or become history.