84% of Companies Fail at Digital Transformation: Here's How to Avoid Being a Statistic

5 min read

Digital transformation is crucial for businesses looking to increase productivity and agility and unlock new value. However, according to Forbes, a staggering 84% of companies fail in their digital transformation efforts. This failure is often due to a lack of strong company culture and leadership and an inability to effectively manage resources and navigate the "Innovation Valley of Death." McKinsey reports that 70% of large-scale change programs encounter poor employee engagement and inadequate management support.

To increase the chances of success in digital transformation, it's important to prioritize the incremental unlocks of business value and ROI and be mindful of areas where resources may be wasted. Additionally, it's crucial to reset mindsets and attitudes toward embracing enterprise agility, as this is the foundation of every successful digital transformation.

When working on digital transformation projects, conducting an enterprise agility diagnostic is useful to determine where to prioritize efforts. This can be done by examining six pillars of enterprise agility: Lean Portfolio Management, Agile Execution, Technical Agility, Customer Centricity, People Enablement, and Leadership and Culture. Recommendations can then be categorized into "do now," "do next," and "do later" activities.

Lean Portfolio Management

This pillar focuses on aligning the portfolio of projects with the company's strategic goals and objectives and ensuring that resources are being used efficiently. To optimize this pillar, it may be necessary to implement lean principles, such as value stream mapping and continuous improvement. "Do now" activities might include conducting a portfolio assessment to identify areas of waste and inefficiency, while "do next" activities could involve implementing lean principles to streamline processes.

Agile Execution

Agile execution is responding quickly to changes and adapting to new situations. This can be achieved through the use of agile frameworks, such as Scrum and Kanban. To optimize this pillar, it may be necessary to train teams in agile methodologies and establish agile governance structures. "Do now" activities could include conducting agile training sessions for teams, while "do next" activities might involve implementing agile governance structures to ensure that changes are coordinated and efficient.

Technical Agility

Technical agility refers to the ability of a company's technology systems to support rapid changes and adapt to new situations. This can be achieved through modern technologies, such as cloud computing and microservices. "Do now" activities might include conducting a technical assessment to identify areas where the company's technology systems may lack agility. In contrast, "do next" activities could involve implementing modern technologies to increase the company's technical agility.

Customer Centricity

Customer centricity involves putting the needs and preferences of customers at the center of all decision-making. This can be achieved through the use of customer feedback and data analysis. "Do now" activities could include implementing customer feedback mechanisms, such as surveys and focus groups. In contrast, "do next" activities might involve data analysis to understand customer needs and preferences better.

People Enablement

People enablement refers to the creation of an environment in which employees can thrive and contribute to the company's success. This can be achieved through training and development programs and by providing employees with the necessary tools and resources. "Do now" activities might include conducting a skills assessment to identify areas where employees may need additional training and development. In contrast, "do next" activities could involve implementing training and development programs to support employee growth.

Leadership and Culture

The leadership and culture of a company can greatly impact its ability to adapt and change. To optimize this pillar, it may be necessary to establish a culture of continuous learning and improvement and cultivate strong leadership at all levels of the organization. "Do now" activities could include conducting a culture assessment to identify areas where the company's culture may be hindering its ability to change, while "do next" activities might involve implementing leadership development programs to cultivate strong leadership at all levels of the organization.

To overcome transformational inertia and drive early movement and success, it's important to increase focus and strengthen prioritization tools and activities. This focused energy can create excitement and commitment to workstreams that aim to develop and strengthen company culture around accepting and embracing change.

Ultimately, the key to successful digital transformation is the ability to embrace change and reframe the transformation as something that is owned and invested in by all employees, not just the leadership team. By cultivating a strong company culture and leadership model, businesses can effectively navigate the Innovation Valley of Death and reach the "innovation action potential," where the transformation has accumulated enough value to be adopted organization-wide.

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