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Daniel Gripton • Apr 01, 2021

6 reasons why digital transformations fail

Let’s start with a fact presented by Harvard Business Review. Their study suggests that up to 47% of companies believe the problem with digital transformation is the risk-averse culture.


Put simply, the company culture is too reluctant to launch the digital transformation.


If you are one of those companies, or one of the hesitant crowd, it’s understandable for the risk of failure to come into your decision making. The numbers around transformation failures are commonly cited, but while digitization holds such potential for businesses it really can’t be ruled out—especially when the risks can be mitigated.


While the reasons for derailed digital transformations are many, and rarely come down to a single factor, there are six common contributors every business should consider before committing to change:


 

  1. A lack of digital skills
  2. No concrete strategy
  3. Budget restrictions
  4. Technology issues
  5. Inadequate collaboration
  6. Incorrect management

 


 

Lack of digital skills

 


Five years! That’s the average shelf life of skills, or the period of time after which your digital skills become obsolete. In other words, digital skills are constantly changing and the vast majority of the population is not able to adapt.


However, there is a solution and some countries have already put it in practice. Michigan’s Ross School of Business, for instance, launched a scholarship program that pays for graduates to take classes there forever.


Singapore introduced a scheme that gives $500 to every Singaporean above 25 years of age for a start under the SkillsFuture program. These countries realized that skills and education affect the labor market and the economy.


You should remember that education is not a luxury, but a necessity. Therefore, you should put it in the spotlight as you do with your life insurance or retirement savings.


Think of it as an investment into yourself necessary to succeed on the labor market and, finally, to help your company with the digital transformation.


 

No concrete strategy

 


Now you know what you want to achieve so you can get to work right away. The first step you should take is to develop an appropriate strategy since some companies fail in their digital transformation due to poor strategies.


Especially small businesses do not have enough funds allocated to the transformation, and should invest wisely. In case you do not plan transformation properly, you might waste all the money with no valuable results or build your transformation on poor solutions for your business. Again, this would be the result of not developing the strategy.


You should set your goals beforehand and put in place clear rules to achieve these goals. This will give you insight into what tools you should use for the digital transformation and which employees should be engaged.


 

Budget restrictions

 


It’s no surprise that a limited budget is one of the barriers. This is one of the most common issues, especially for small businesses. What’s even worse, this challenge is not so easy to overcome. Companies have to work with what they have.


However, even the lack of funds can be managed by thorough planning and determining the amount of money and how you want to spend it.


In many cases, moving away from the conservative management and investing could do the job. Digital transformation is a long-term return on investment, and the more you put in the better return you can expect—providing you have the rest of your strategy and process in place.


 

Technology issues

 


If you don’t pay much attention to technologies, it’s time to change that. One of the biggest barriers to digital transformation are legacy IT systems, as over half of the respondents in the Harvard Business Review survey noted.


Technologies are the main crucial factor when it comes to going digital. Just think about how virtual interviews or employee onboarding software make your work easier.


When introducing new software, focus also on cybersecurity which presents a threat as more and more information is shared and moved to the cloud.


You must do your best to ensure your data is safe in the digital.


 

Inadequate collaboration

 


Every company has a different structure. At large companies with many departments, the communication of employees is very limited, if any.


And this is also a blocker to the digital transformation. Managers and employees must work in harmony and cooperate since digital adoption is not only about a single department, but also going company-wide. If the employees strive for the change jointly, they will succeed sooner than when working individually.


 

Wrong management

 


Fear of the unknown, unwillingness to learn, or overwork – these are the reasons for employee pushback. This is when good managers who motivate employees by making digital adoption fun, interesting, and beneficial for the employees, play a crucial role.


Poor management complicates the digital transformation due to the constant employee pushback as well as lack of supervision of effective strategy implementation.


Article by

Daniel Gripton

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