Here’s Why Digital Transformations Fail

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Companies must evolve. To thrive in today’s modern economy, approximately 80% of organizations have recently undertaken digital transformations. IDC estimates that 40 percent of all technology spending will go toward digital transformations, totaling more than $2 trillion spent through 2022.

And, you know what? A lot of them fail. Forbes estimates that 70% of all digital transformations fail. I’ve personally witnessed at least a half dozen Fortune 100 companies pause their digital transformation or cloud automation initiatives mid-flight.  Often taking them months and sometimes years to get back on track.

No industry or company size is immune. According to McKinsey, digital transformations among traditional sectors only succeed 4-11% of the time. High tech industries don’t do much better, with a whopping 26% success rate.

The question you’re no doubt asking at this point is, why? Why do most digital transformations fail?

The answer is deceptively simple. It’s people. Your probability of success is directly tied to the readiness of your team —  or lack thereof in most cases.

A Digital Business Transformation

“Digital transformation” (or DX) is a bit of a misnomer. It isn’t actually about technology. It’s about evolving your business. We should probably call it a “digital business transformation” (DBX?) because the goal is leveraging digital technologies to fundamentally change the way we provide customer value.

QUOTE-ABOUT-FAILING-DIGITAL-TRANSFORMATIONHarvard Business Review published an article, “The Top 20 Business Transformations of the Last Decade.” Netflix earned the top spot for its evolution from a content distributor to a content-creating powerhouse. Netflix has evolved its business twice. In 1997 they were shipping DVDs. By 2007 they were streaming content. Today they are an award-winning media company employing some of the top creative minds in the industry.

Each pivot required significant technology changes and the people to power them.

Why Most Digital Transformations Fail

Let’s assume you start strong with a clear goal for your company’s digital transformation. The CEO and CDO are leading the charge, and the CIO will spearhead the technology changes. HR is on board to drive workforce planning. Awesome! You know where you are and where you want to be. So, what’s the hold-up?

Who is going to do the work? And, that is where things fall apart … before you’re even out of the gate. In every thwarted DX I’ve seen, the company failed to understand the capabilities of their existing workforce. Who do you have to do the work required? Do they have the skills necessary?

The knowledge exists if you can find it. Technical leaders have an in-depth understanding of the skills and experience required of their teams. HR has a good idea of the skills across the organization…based on existing job descriptions and employee reviews.

Shuffling through spreadsheets and old job descriptions is not going to cut it. Even the best leaders with the best plans will fail without a thorough understanding of your workforce.

Skills Management is the Solution

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The digital business transformation is inevitable. Evolve, or someone else will. So, how do you improve your chances of success? Include skills management at the outset of your digital transformation. Make it part of your digital experience if it isn’t already.  Don’t be part of the 70%. Make sure your digital transformation is a success.

Want to discuss how Kahuna can support your digital transformation? Get in touch.

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