In 2012, Procter & Gamble set out to become the “most digital company on the planet.”
The consumer goods giant invested heavily in new technologies and advanced analytics, hoping to transform every aspect of its operations – from the way it managed relationships with retailers to the way it created molecules in its R&D labs.
It failed. Between a broad vision that lacked purpose and a slumping economy, the initiative was doomed from the start. Costs soared, profits plummeted, and within six months the CEO was asked to resign by the board.
Today, we view Procter & Gamble’s failed digital transformation as a cautionary tale. Done right, digitization can drive productivity, replace legacy systems, and future-proof your business. But if the right pieces aren’t in place, no amount of capital or brand power will help you brute force an effective transformation.
Here are five of the most common digital transformation mistakes – and how you can avoid them.
1. Lacking a clear purpose
Procter & Gamble might have been successful if they focused on a few core areas of their sprawling business. Digital transformations should not be siloed, but keeping everyone involved does not mean changing everything at once.
Transformation for the sake of transformation is almost always destined to fail. It may be exciting to think about new technology, but any effort you undertake should be grounded in strategy, support a specific business objective, and consider external factors such as market pressures or the competition.
In field service, there is a clear and present need for digitization. Many organizations still do most things manually, whether it’s filling out close-out packages or reassigning technicians when a task falls behind. Each delay adds up in an industry where margins are tight and competition is high.
2. Adopting a short-term mindset
Organizations often focus on accomplishing short-term goals, but struggle to execute in the long run. Even when the right strategy is in place, success often comes down to the ability to drive enthusiasm for a project. According to McKinsey, transparency, commitment, and mobilization can help reduce the chance of failure by 11 percent.
Whether it’s promoting shared accountability or devoting enough resources to cover the rollout and ongoing support, long-term planning and commitment is often the difference between success and failure.
3. Lack of executive sponsorship
Digital transformations can be an uncertain time for employees and business leaders alike. Before you roll out any new technology, be ready to provide context and support. Everyone in the company should have a clear understanding of what’s happening, why it’s happening, and how that impacts their day-to-day responsibilities.
Once new systems and technologies are in place, it’s important to continue reinforcing their value and providing support. Adoption without implementation and implementation without adoption both fail to deliver on the promise of digitization. According to McKinsey, companies that prioritize ownership and accountability are 45 percent more likely to have a successful transformation.
4. Siloed transformations
Digital transformations are not a turnkey process. To simplify the process, some leaders silo their transformation to a limited part of the company. Initially, this approach helps minimize risk and speed deployment. But over time, it starts to create redundant work and inefficient processes.
Once the digital arm of the company is up and running, they have to continue working with analog teams. Compatibility issues fragment the implementation, pulling early adopters back to manual work. No department works best within a silo, and neither will a digital transformation.
Tackling company-wide integration can be a challenge, but the benefits are worth the effort. According to McKinsey, companies that set their digital transformation as a core organizational priority are significantly more likely to succeed. Evangelists within the company should focus on setting attainable targets and helping the entire organization succeed. This includes everything from onboarding and role transition support to interdepartmental transformation.
5. Resistance to change
The greatest opponent of digital transformation often comes from within your own company – corporate culture. It can be an almost insurmountable beast to tame. No matter how obvious the benefits, some people will distrust the unfamiliar. Legacy systems provide a sense of certainty and job security. New systems represent the new and unknown. Evangelists need to break through this resistance and inspire people to work outside of their comfort zone.
Employees might see change as additional work, but an effective rollout will train workers on how to save time and effort, not the other way around. Business leaders might see another piece of technology as an added cost, but advocates need to show compelling data on the benefits and convince executives to listen to the data.
Transforming the future
According to a recent report by the McKinsey Global Institute, digitization, AI, and automation will help drive more than $13 trillion of economic growth by 2030.
The rewards for a successful digital transformation are tremendous — and the penalties for failure are even greater. Digital technology is a prerequisite to AI and automation, two cornerstones of the Fourth Industrial Revolution.
Undertaking this transformation will not be easy. Companies should expect growing pains and unexpected hurdles. But $13 trillion dollars of opportunity is out there — and companies should be prepared to evolve in pursuit of it.
To read more from the McKinsey report, click here.