When a company is taking steps to start selling and serving customers in digital channels or expanding to completely new business areas, we often talk about the process of digital business transformation. In this post, we’ll look at some common mistakes that can impact the success of your move into the digital realm.
Five common pitfalls to avoid when undergoing a digital business transformation.
There’s a reason the word “transformation” is used in this context – it explains the magnitude of the change. In a company that’s for example digitalizing sales, there are many things that need to be changed and developed simultaneously: architecture, technology, data, processes, roles and competencies, mindsets, ways of working, and the customer experience. This means that digital business transformation isn’t just a system investment. It’s something that impacts all operational areas including sales, marketing, customer service, IT, and product/service production and development. Here are five common pitfalls to avoid when undergoing a digital business transformation.
1. Lack of synchronization
Transformation impacts end-to-end processes in the organization, people, and solutions – all at the same time. This means the process needs to be synchronized. Let’s take a look at an example change in a B2B organization that’s entering the direct-to-consumer e-commerce business model. First of all, it’s very likely that order, delivery and returns, payment, and customer service processes are completely new or different in a consumer business – and the same goes for consumer data management and consumer marketing. Also, in most cases, completely new e-commerce solutions are required to fulfill consumer experience expectations. All of this requires new competencies and people within the organization. If these different areas aren’t all tackled at the same time, the transformation will likely fail to reach its potential.
2. Not seeing the process as a marathon with sprints
There’s a lot of discussion about how digital products or services are never ready. Instead, they’re continually developing solutions and we should talk about versions. The same applies to digital transformation. What this “never ready” thinking means is that digital business transformation is a long game where the initial vision might represent some kind of finish line. Milestones need to be set along the way. This means that a company or organization must be able to play the long and the short game at the same time, keeping an eye on the finish line but at the same time ensuring that there are short-term benefits as well.
3. Not using agile working methods
Throughout the past two decades, the working methods for digital development have also taken a leap forward. Agile methods challenge legacy methods through the need to shorten time-to-market and payback time. In practice, this means that instead of a long specification period and specification freeze, companies are more willing to start the journey with less understanding of the end product.
That said, agile working methods aren’t easy to implement in organizations that are used to more traditional ways of working like waterfall project models. If we look at budgeting as an example, many organizations use a yearly investment budgeting model for projects or programs that have a beginning and an end. This sort of model works against agile methods and the idea that digital products are never ready.
4. Lack of knowledge about the customer
Every organization and company thinks they know their customers – but this might not actually be the case. Let’s look at a real-life example. A few years back, a tire manufacturer was launching a digital service and order portal in a Nordic country. The company had two business lines for tires, and the commonly recognized thinking about customers was that the majority of the customers would order from both – meaning the go-live order portal should include the two product lines. But when taking a closer look at the three-year ordering data, it turned out that only 5% of customers were ordering products from both business lines. As the example shows, it’s very important to be able to verify customer knowledge to make data-driven decisions.
5. Underestimating the effort involved
There is sometimes a misconception that digital business transformation is an ICT-driven solution investment, but this is only one side of the coin. A lot of effort is also needed to change processes, people, and culture – and this process is typically neglected. If we only look from the company or organization's internal point of view, it takes a lot of time and effort to formulate compelling communication and training to really impact and make a change and to find the correct methods and channels to reach people. It’s also good to remember that this is almost never a one-time effort. Instead, it’s a continuous process to communicate about any development and pace them in a way that you’re not bombarding the organization with information too often.
Digital business transformation challenges legacy business processes and legacy systems and system architecture, brings completely new elements to the business strategy, and usually impacts culture. But by avoiding the common mistakes outlined above, the chance for a successful outcome is dramatically improved.