Why Digital Transformation is Failing

July 6, 2021
Brent Lupton

Execution versus expectation is a constant challenge

Datisan COO, Brent Lupton, recently spoke to industry leader Business Transformation & Operational Excellence Insight (BTOES Insights) about why there is a widening gap between the expectations of a digital transformation strategy and its execution.

The rapidly shifting landscape of consumer expectation around how brands are meeting their needs continues to be a challenge for brands and this has only been accelerated by the situation with the global pandemic.

Brands have been investing heavily in digital transformation programs in order to meet the gap between consumer expectations and reality head on, however, despite the investment, the gap is widening at an accelerated pace.

The ability to meet the expectations of consumers and deliver an optimal experience is key for brands to increase share of wallet and new customer acquisition and of course, retain customers and build brand loyalty. Even with heavy investment, without clarity on how to close the gap digital transformation programs will continue to fail.

The top three areas where digital transformation programs have been failing:

#Fail One: Digital replacement is not digital transformation

The most common failure point that I’ve observed over the last five years with transformation programs is brands taking the approach of investing heavily in new or replacement platforms without a clear strategic view of what they need out of their martech and adtech ecosystems in order to surface a single view of their customers. This digital replacement approach is expensive, time and resource intensive and ultimately leads to wasted investment.

#Fail Two: Digital transformation is much more than digital

One of the other failure points in delivering a digital transformation program is siloed business units. This is where the term ‘digital’ can be misleading. Even though the strategy and workload may be focused on a digital ecosystem, in order to successfully operationalise the outcomes of the program it needs to be sponsored at an executive level, with the value and impacts to each business unit mapped, timelined and coordinated across the business. Every consumer touchpoint (offline and online) needs to be planned for in order to ensure that consumers receive a consistent and frictionless experience.

Digital transformation, is in essence, organisational transformation and it needs executive sponsorship – both in budget and support. Your board or C-suite will need a clearly thought out and planned out strategy, budget, timeline and value proposition before they will commit resources and investment against a large scale program.

#Fail Three: The destination is too far away

Quite often with a digital transformation program, the journey from being a business with nascent digital maturity to a fully mature, multi-moment business (navigating through the four stages of digital maturity) can seem like a long and expensive journey. This is where many programs fail before they really start to realise any value against the investment.

Over the course of a three, four or five year program of work, team members change, even the executives sponsoring the program may leave the business. Market forces can shift – bringing the investment into question. Ultimately, without a roadmap in place that clearly articulates smaller, tactical initiatives (realising tangible value quickly along the way) that is mapped to the longer term vision and strategy, you will find that the long term vision and goals will likely fail.

The shifting sands of privacy

As consumers understand more regarding the volume of data being captured around their everyday lives, coupled with a number of very public, less than ethical approaches to use of consumer data, expectations around how data is handled and leveraged is rapidly changing, both in terms of the consumers themselves and privacy legislation such as GDPR.

The evolution of privacy laws, including deprecation of third party cookies is an additional layer of complexity that impacts how brands have traditionally reached new audiences via digital marketing channels and it needs to be a high priority initiative for any CMO as they contribute to digital transformation programs (short term) goals.

The key to success

Like any program of work, no matter how large or small, ensuring that you are clear on the objectives and how you will measure success of these objectives is where success starts.

With clear planning, a strategic vision and mindset and the ability to clearly answer three key questions, your brand should be well positioned to execute a successful digital transformation program.

What are you seeking to achieve?

Some of your objectives may be…

Why do you need to be able to answer these questions?

Examples of this may be…

What are some of the current roadblocks that are preventing your business from achieving these objectives?

The answer to this question can form the scope outline of a program of work, examples of which could be:

Execution of Objectives

Understanding how you will successfully execute against your goals and objectives starts with an introspective view of your current business in terms of readiness, maturity and capability.

Digital Transformation can create sustainable competitive advantage

No matter what stage or age or size of your business, digital transformation can be delivered successfully to reinvent, re-engage, grow and create new sustainable competitive advantage in the market. 

While many digital transformation programs have failed, there are a number of brands that have re-invented the way they engage the market and grown market share with digital transformation programs. Some of the brands include:

Lego – on the verge of Bankruptcy in 2004, Lego embarked on a significant transformation program diversifying their go to market strategy and revenue streams and engaging new audiences with an open source approach to product design. Their shift in strategy resulted in growth across EBITDA and revenue (20% annual growth rate).

Audi – shifted the way auto companies showcase their vehicles with the introduction of Audi cities. Audi City is an experience space where customers can discover, trial and purchase different Audi models during the day. 

Nike – In response to the COVOD-19 pandemic, Nike boosted its digital strategy and adapted its message to the “new normal’. Nike innovated through creative digital spaces for customers to interact with the brand’s big influencers: the high-performance athletes.

Datisan is a privacy-centric data and technology partner that focuses on leveraging data to enhance digital transformation and customer experience. Speak to the Datisan team about how we can help create or navigate your digital transformation roadmap.