Digital Transformation (DT) is a risky and potentially costly strategy that no business in this digital age can afford to ignore. If companies fail to innovate by embracing it and, thus, allow themselves to stagnate, another brand will come along and do it better.

By ignoring DT, or taking a haphazard plan of attack, companies put not only their profits, talent retention, and customer loyalty at risk, they also gamble with their very existence.

If implemented improperly, a transformation plan that is meant to revolutionise a company’s operations can end up sounding the firm’s death knell.

In 2006, for example, the Cooperative Bank embarked on a disastrous DT programme that saw the bank spend £300 million to overhaul and rebuild its legacy technology infrastructure. Rather than build on what it had, it made the decision to start over from scratch.

After seven years, the bank was forced to abandon the project with a £1.5 billion capital shortfall. Over-complexity, a lack of coordination, poor-budgeting, key IT staff changes and a failure of senior staff to engage with the project was cited as reasons why it failed during an independent review.

Similarly, in 2013, the BBC had to write off £98.3 million in unusable technology assets due to a poorly planned and implemented DT framework.

PwC, which conducted a review of how the project was managed, found there had been a severe lack of oversight and an inability of the overall governance structure to manage the DT project’s difficulty.

The review also noted that although the tech was prioritised, the BBC failed to keep company culture aligned with DT project.

Why do companies fail to implement successful DT strategies? 

Typically, companies assume too much when they approach their DT strategy, says Esther Stringer, MD at Border Crossing UX, who recently spoke at Digit’s Digital Transformation event in Edinburgh. “They are making too many assumptions and, as we all know, to assume is to make an ass out of you and me,” she explains. “They don’t understand the problem they are trying to solve.

“Sure, they know they need to be more efficient, become digital, stay with the trends, keep up with compliance and they assume if they build it we will come. And they forget to find out what stakeholders – their customers, employees, regulators etc. – actually want from them.

“They should first ask the questions: ‘What are we trying to achieve and why?’, ‘What do our customers want from us?’ and ‘How might we be able to deliver it?’, and then turn their assumptions into hypotheses that can be tested.”

According to Stringer, racing into DT in an attempt to ‘catch-up’ with a competitor is a risky plan of action, cutting corners, not validating theories, skirting user testing and plunging headfirst will work against a company.

Failing to create a shared vision, means its people won’t understand or buy into what it is trying to achieve. It also increases the likelihood of launching a project that isn’t fit for product or the market.

Similarly, going too slow can also spell disaster she says. If you lose momentum you risk becoming obsolete and people will go elsewhere to get what they want.

If the process is dragged out over a period of years, your team could lose trust and belief in the project and potentially you may fail to retain that talented resource that makes your offering unique.

For success in DT, an organisation must establish a clear set of goals and metrics to assess the progression of their journey and break the process down into small prioritised manageable chunks, she explains.

By doing this you will decrease the probability you’ll try to do too much too soon, and thus stretch the company’s capacity too thin.

Bias and personal opinions can easily derail DT projects

Cognitive bias is possibly the biggest pitfall companies fall prey to when embarking on DT. Confirmation bias, self-serving bias and status quo bias can easily delay and even derail it.

“We are all products of our experience and environment. And these dictate our expectations of what we think people think, feel and do. Therefore, we have certain biases when we make decisions. This bias makes us think faster than we should, and believe we have the right answers, when we actually we don’t have a clue,” Stringer explains.

With confirmation bias, you only see what you want to see, avoiding any facts that contradict what you believe. You assume users are like you, and then deliver what you think they want.

Self-serving bias is when you only see yourself responsible for the good things that happen. However, when it goes wrong it is always someone or something else’s fault. If unchallenged, this mindset can breed a toxic environment of blame culture and can result in the project being led by a manager’s gut instinct.

Status quo bias can lead to stagnation, as it plays into people’s preference to stick to habits and established processes. However, staying inside the comfort zone and not evolving puts the company at real risk of being eclipsed, as another more innovative offering will come along and disrupt the market.

To avoid this, bias must first be acknowledged and then challenged, Stringer says. To do this, she believes it is imperative that a company on-boards competent people who bring diversity to the project and make a real effort to foster a company culture of co-creation.

“Surround yourself with curious, competent but different people,” Stringer recommends. “Get the thoughts, opinions, and ideas from a group of diverse people and discover what other people think. Listen to them and let them help you see things in a different way.

“To truly combat bias you must build your own framework for decision making for your transformation built on setting clear goals from the outset, using critical thinking and developing a user centred culture. Put your people at the heart of everything you do: your customers, your employees and your shareholders.

“By building a culture of empathy and understanding of what your stakeholders want and need, and then harmonising them with your goals, you will build momentum and buy-in, across all levels of the organisation, and deliver what matters most to your customers and your organisation.”

“Co-create with your stakeholders and take an open approach to innovation. That way you will know what works, and what doesn’t, faster and will be able to rapidly generate and test ideas with real people.”