Digital transformation doesn’t have to be a disappointment

Guest comment by Rob Wild

It does not matter what approach to digital transformation is being used, most people feel let down by it. If taking an agile approach, people are disappointed by lack of visibility on the plan and challenges in maintaining budget over numerous profit and loss cycles.

If opting for a waterfall strategy, people are disappointed by the rigidity of the approach and the inevitable disappointment that comes with deadlines being missed.

And yet for organisations there is no escape from the fact that they must adopt technology to remain even vaguely relevant, let alone competitive. As such, there is a need to close the yawning chasm that has opened up between business expectations and the realities of what can be delivered.

For many businesses, failing to do so results in essential and important change being blocked and real value being lost.

Digital transformation has within it some potentially fatal flaws. It is expensive; it involves the deployment of complex technologies, which in turn requires upgrading the infrastructure on which they operate.

Making the most of it normally requires a large amount of cultural change and potentially a change in people’s roles and responsibilities, which they are resistant to; it takes time, which in turn breeds frustration, especially when there is a notion that technology moves at an excruciating pace and solves all ills at the flick of a switch.

So many efforts fall short of their promise owing to non-technical factors, such as organisational resistance or misguided expectations

And lastly, once it’s finished, someone comes along with the next greatest transformation that you need to undertake, creating uncertainty around when to invest in what and a general sense of initiative fatigue in the process.

Given all of the above, for digital transformation to deliver, you need a robust strategy that lays out why you are doing what you are doing and how that will take place.

By clearly communicating the long-term benefits, creating a dedicated team to execute the strategy, fitting the approach to the realities of your organisation, and demonstrating the necessary conviction needed to solve difficult technical challenges, there is a path toward successful digital transformation that delivers against your business’ needs.

Selecting the strategy that will guide your digital transformation is critical. So many efforts fall short of their promise owing to non-technical factors, such as organisational resistance or misguided expectations.

Having a clear strategy can help overcome these, keep teams committed to the cause, and ensure that you remain on track.

Broadly speaking, there are two strategic approaches to choose from: a sequential strategy or an evolving strategy.

Sequential approaches are an update of the waterfall approach, whereby there is still a step-by-step process, but with the important allowance that learnings from each stage – which are inevitable – may mean that different steps are re- or de-prioritised. Implementing a sequential strategy can be particularly beneficial when you are looking to achieve difficult, pre-defined, long-term objectives.

Whilst such an approach can be seen as rigid and slow to adapt when the outside context changes, having a well-defined step-by-step process can be beneficial for organisations that have cultures predicated on having well-defined objectives, a clear road map to success, and work in investment cycles of five or more years with clear budgetary guidance.

Technological change is, however, not always linear. You only have to look at the rapid growth in the use of large language models, and the equally rapid attempts by many organisations to constrain their use until all the consequences were understood, to understand that you can’t always predict when the next big disruptor is going to come along.

For organisations that want to best respond to such changes, an evolving strategy is often the best route forward.

From the outset, you need to ensure that the team in charge of the digital transformation project is composed of the correct people

Evolving strategies allow for greater flexibility and adaptability, leaving organisations better able to respond to changing circumstances, emerging and developing technologies, and market forces.

A key facet is that it acts more as a framework by which an organisation learns how to deliver digital transformation; accepting that there will be wins and losses along the way and that the learnings from these are as big a part of the transformation process as the objectives.

Evolving strategies are predicated on the fact that priorities, budgets and timelines are likely to be changeable, and that learnings through the transformation cycle will probably take it in new directions.

Choosing between a sequential or evolving strategy depends on a number of factors. With the changeability of both the technology and business landscapes, many businesses tend towards an evolving strategy.

This owes to the tendency to buy into the notion of being agile, moving fast and breaking things. However, such an approach is often not the best fit for the realities of how the business operates, its culture, and how it makes decisions. Without the right fit of approach, you are not going to get the desired outcome.

From the outset, you need to ensure that the team in charge of the digital transformation project(s) is composed of the correct people and that the magnitude of the activity has been properly rationalised.

This team needs to be made up of a range of voices who can be clear on the objectives but also the realities of how the organisation works; for example, there is little point pursuing an evolving strategy if your business’ financial sign off process is inflexible, yet this kind of oversight is exactly what leads to delays and frustrations through a transformation cycle.

Similarly, the transformation cycle will almost inevitably run across multiple accounting cycles, and so understanding the impact of that on sign-off processes and thus the viability of different initiatives can also have a major impact on overall outcomes.

As the pace of technological change continues at pace, there are fantastic opportunities for businesses to increase their profitability, respond to their customers’ needs more successfully, and build lasting competitive advantage.

Understanding the strategic options available to you, whether you opt for a sequential or an evolving approach, can be the key determinant between digital transformation disappointment or triumph.

Rob Wild is Digital Director in L.E.K. Consulting’s London office