Roughly three out of four digital transformations fail – yet organizations remain steadfast in their willingness to execute digital transformations (McKinsey). A failed digital transformation means wasted resources and spend, so why are organizations still willing to invest in digital transformations?
When done right, digital transformations fuel future business growth, promote cost savings, and increase agility, allowing organizations to adapt to ever-evolving market conditions.
Yet executing a digital transformation is multi-faceted and this change doesn’t happen overnight. Without a cohesive change management plan and alignment from leadership, IT, and Experience, organizations become part of the all-too-known statistic of 70 percent of digital transformations failing.
Driving a Successful Digital Transformation
So, why do digital transformations fail? It's not the experience or technology that is falling short, it's the people responsible for driving the transformation and their lack of partnership that is failing.
To execute a successful digital transformation, Experience and Technology teams must set a culture of partnership and recruit champions to fuel the change. Operating under a centralized approach can ensure internal alignment and guarantee that disciplines are working toward business goals.
To implement a successful digital transformation, organizations must follow these five steps:
#1 – Create a Scalable Foundation
To be fast and agile, organizations need a strong base, yet most don't have the patience to build it.
Above all, a top-down partnership between the CMO and CIO will help balance business needs with existing constraints. This partnership should be promoted to all parties and disciplines involved.
Before implementing a digital transformation, organizations should familiarize themselves with their audience. This upfront user research ranges from market research, heuristic analysis, and journey mapping to heat map analysis. This data will help organizations build service design blueprints and touchpoint maps.
Once the user research has been conducted and the touchpoint maps have been developed, organizations must use this data to create meaningful user experiences. Too often, organizations fail to invest in experience design – it’s no wonder 70 percent of e-commerce purchases are abandoned due to poor UX (Baymard Institute).
#2 – Ensure Internal Alignment
Equally as important as investing in experience design and user research, organizations must understand their technology landscape. Too often, business leaders sit in the driver's seat and have imperatives to demonstrate growth – yet they have no incentive or patience for their technology partners to get the basics right.
This results in layers upon layers of "solutions" that open businesses up to risk with key applications that are no longer supported, point-to-point interactions with no regard to scalability that become more complex and costly to scale over time, and the absence of governance/discipline that poses vulnerabilities.
The solution? Avoid working in silos with the Technology team – create multiple touch points to ensure mutual understanding and alignment of the technology landscape.
Start by outlining the technology internal teams use, then outline the technology external users use. From here, list out the priorities (and limitations) of digital transformation – then examine the priorities and limitations of the parties responsible (such as Experience and Technology).
#3 – Ideate Solutions
To begin the process of ideating solutions, organizations should ask themselves these two questions:
- What gaps do we need to close?
- What do we need to execute our solution – who and what needs to be involved?
A digital transformation is most powerful when there’s interdisciplinary alignment and collaboration. Not only does this break down silos, it also fosters knowledge-sharing, communications and encourages departments to focus on the business’s shared goals.
Collaborative visioning workshops ensure all voices are heard and taken into account – this step is crucial to implementing a successful digital transformation.
#4 – Develop and Execute Roadmap
Deploying a roadmap will ensure your strategy is clear, cohesive, and widely understood by all parties involved. Without concrete steps identified and assigned to the appropriate party, your digital transformation risks falling behind.
Since internal alignment was achieved in step #2, creating the roadmap will be much more seamless and straightforward.
#5 – Measure and Champion Results
50 percent of businesses do not define digital transformation metrics or KPIs to track their success (Kiss Flow). With organizations investing $1.85 trillion worldwide in digital transformation initiatives in 2022, tracking KPIs must be a top priority (IDC).
While no two organizations will have the same KPIs, linking metrics to business goals will help gauge the effectiveness of the digital transformation. These metrics must be digestible and should reflect how the transformation was received internally and externally.
Internal metrics consist of factors based on productivity and cost savings. Organizations may want to track metrics such as:
- Productivity (such as hours saved)
- Operational expenses
- Team velocity
- Speed to market
External metrics are based on increased revenue and customer acquisition and loyalty. Organizations may want to track metrics such as:
- User retention Profit margin
- Customer effort score (CES)
- Customer satisfaction score (CSAT)
- Net promoter score (NPS)
Cultivating a Culture of Partnership
Digital transformation cannot be Experience or Technology first, but rather requires:
- A strong, transparent, and healthy relationship between Experience and Technology functions
- A joint commitment to get the technology basics right before moving with pace
- Ties to strategic business outcomes
At MERGE, we are driving digital transformation at the intersection of storytelling and technology. If you're looking to execute a digital transformation at your organization, connect with MERGE today.
