Why Digital Transformation Fail

Piyush Kumar Chowhan, SVP & CIO, Arvind Fashions Arvind Lifestyle Brand Limited a subsidiary of Arvind Limited, has 20+ years of working relationships and proven track record in launching successful partnerships with international brands. The company has established an outstanding footprint with strong momentum in distribution and operations with cutting edge formats across value to premium brands retail with over 1000 stores across India.

Digital has been a buzzword doing rounds since the beginning of this decade but still the real power of digital is only seen in very few organizations. The power of digital transformation is substantial yet it’s not easy to establish clear pathways to achieve the same. We have a huge impact of digital in our personal lives. We order food via Cloud Kitchens, which have impacted regular fine dining business, we started using ride sharing apps, which is starting to impact the automobile manufacturers, and the list goes on. While Digital has been embraced in our daily lives the ways of working in large enterprises is to deal with old ways of working like paper approvals, process review meetings etc. Why is this so? We try to explore top 4 pitfalls why digital transformation journey is tough and majority organizations have not come out to be successful.

Pitfall 1- Having a Defined Digital Strategy is a Myth
If you interview a CEO and ask him about having a digital strategy in place it’s likely that most of them would say yes. Unfortunately these long-term digital strategies are things of the past and may not yield strong results. Digital Transformation is about learning on the journey and not defining rigid outcome at the end of the same. The market dynamics
are changing so fast that having 1-3 year strategy is not going to take organizations far, leave alone 5 year strategy which some organizations have around Digital. Making the organization ready for Digital is all about experimenting innovative ideas and learning from the experiments to ascertain what works for your organization. Digital transformation can be achieved by defining small
manageable projects which are going to disrupt the ways of working for your workforce and your customers. Organizations should stop hiring Digital officers and allocating separate budget for the same to get into this digital program trap.

Pitfall 2 - CEO has to Drive the Digital Agenda
If we analyze a lot of failed digital transformation one of the top reasons for failure could be buy-in from the CEO in the digital agenda. Though that is necessary but is not a sufficient condition for success. While CEO will be sponsor of the Digital agenda but the whole organization has to rally behind the same. The siloed organization structure of the past need to demonstrate collaboration to define and achieve the benefits of digital. Large organizations which have a lot of legacy structures, are vulnerable to these pitfalls and need to look at organization design to realize the full potential. Agility and Collaboration are two very important cultural elements, which needs to be demonstrated by the entire organization to be digital ready.

Pitfall 3 – Where are the Financial Returns in the Digital Initiatives
Most of the organizations we have looked have built traditional financial management process using the lens of Cost and Benefits to approve investments. These old methods of ascertaining returns and benefits on investment of digital initiatives restrict them to discover the real potential of exponential Digital returns. Amazon never started as leading Cloud provider and hence its investment in data centers could never have passed the cost benefits criteria. Hence, it’s appropriate for organizations to move from incremental innovation to Radical Innovation, which increases the velocity of change within the organization. The speed of change is very fast and the disruption is not from traditional competitors hence traditional models of incremental change to acquire market share are not working. New value discovery methods using experimental innovation needs to be applied to ascertain the value of the digital initiatives.

Pitfall 4 – Digital is about Technology Implementation
This is the biggest myth with which most of the organizations are suffering. The ever increasing advent of new technologies has created plenty of problems to a lot of organizations. The adoption of these technologies needs to be ascertained to the correct business context of the enterprise rather than on its technological prowess. The false aspiration of achieving digital transformation by implementation of technology has let lot of organizations rethink their strategies. Technology could be an enabler but it has to be applied to the organization capability and business use case to achieve its full potential. Recent studies have shown that a large part of digital change could be in applying time tested design thinking principles to existing problems and re-inviting those.

The ever changing digital landscape is a land of opportunity for a few while mirage for others. Organizations have to learn new tricks of the game to be meaningful in the disruptive era. The other aspects around building agile culture, modernizing of technology landscape and re-inventing the business models are quite needed to excel in this transformation journey. The above pitfalls are a few critical watch outs if digital journey has to deliver its intended benefits.