4 Challenges of Digital Transformation and How to Overcome Them

4 Challenges of Digital Transformation and How to Overcome Them

In Process Improvementby Michael Deane

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It can’t be denied that the latest technologies have been positively impacting different areas of business.

Companies nowadays employ digital technologies to speed up different processes, operations and the way they deliver value to their customers. Sluggish, manual processes and clunky, outdated hardware are a thing of the past.

Cloud, AI, VR, AR, NLP, or self-driving cars are only a small fragment of this ongoing movement which has the purpose of improving our lives. But the very name “digital transformation,” also known as DT, might be a bit misleading in the sense that it makes one believe that it’s all about technology but also about a cultural shift that has to take place within the organizations themselves. Apart from this exciting promise of a better and more efficient world, digital transformation has had its fair share of challenges which prevent it from enabling its full potential.

1. A Wrong Mindset

Your employees might be your most valuable asset, that’s for sure. But, they’re human and that means they feel comfortable with their routines and it’s hard for them to get out of their comfort zones and embrace change, even if it’s positive and if it will make their jobs and lives much easier. So, no wonder that employees tend to resist and feel threatened by digital transformation.

Besides being afraid that they won’t be able to adapt to it properly, they also might feel threatened by all the new technologies that the company embraces. What if their jobs are at stake here and if you replace them with someone more skilled or simply automate their job and use a smart algorithm to perform it?

This resistance to change is one of the main reasons why 70% of all DT initiatives fail to reach their goals. To be more precise, of $1.3 billion spent on digital transformation in 2018, $900 billion went to waste. So, make sure you make the entire digital transformation adoption process as transparent as possible and convince your employees that there’s something in it for them too.  Present digital transformation as a great opportunity for them to learn new skills and build their expertise, thus improving their own marketability in the competitive job marketplace.

2. Siloed Organizational Structures

The traditional way of performing tasks and hierarchical structures hinder the evolution of organizations on their way of digital transformation. This particularly affects companies that have been leaders in their industry for many years, as their cultures heavily rely on the said stable, hierarchical structure. This everybody-knows-their-place in the company and is comfortable with it creates a certain complacency which slows the progress down.

One way out of this comfortable trap is to try and destabilize your teams and push them towards the uncharted territory of digital transformation and challenge them. The fact that they’ve been performing their tasks on autopilot means that they won’t be ready for the disruption brought on by the new way of doing things. Organize training programs and send them on relevant seminars and conferences so that they can shake their routine and learn how to handle and leverage digital transformation successfully.

3. Failure to Identify and Produce Digital Leaders

On your way to implementing a digital transformation, two equally important factors play an important role – technology and expertise. If either of them doesn’t live up to the expectations, all your efforts will be in vain. So, if we bear in mind that in order to implement a disruptive technology, you need to identify people with an intrapreneurial mindset who are willing to take a risk and drive this technological change.

In order to spot such motivated employees who think outside the box is to encourage and reward creative thinking and efforts to introduce new solutions. True digital leaders don’t wait for managers to tell them what to do and how to do it – they try out new things in order to improve their own performance.

It’s also important to invest in your employees’ professional education and development as that’s one of the best ways of producing digital leaders. However, another way to help your employees focus on their core competencies and high-value work in which they’ll be able to show their true potential and take initiative is to outsource certain tasks that aren’t of high priority.

 4. Reluctance to Ditch the Legacy Business Model

Successful digital transformation doesn’t mean providing the same product just more efficiently with the help of advanced technologies. The trick is to reconsider your existing business model and analyse how relevant it is in this new business environment. For example, Netflix moved on from renting DVDs to streaming – the company recognized that it’s business model was losing its edge and would be rendered obsolete in the near future. So, they adopted digital transformation not only as a way of doing things but also as their new business model.

Such an approach is widely accepted by startups willing to find different monetization methods such as offering their services for free and making profit mainly from advertising or shifting from the “a la carte” to the subscription-based model. Mature companies prefer to stick to their legacy business model, and this fear to take a leap of faith is what hinders their success in digital transformation.

Conclusion

Overcoming these four challenges of digital transformation is a make-it-or-break-it factor when it comes to successfully implementing new technologies in your organization. It’s essential to understand that digital transformation can’t be boiled down to using cloud solutions or artificial intelligence. It represents a major shift and reinventing your business so that it can respond to the demands of an ever-changing market.


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