5 top challenges to digital transformation in the enterprise
Each year, I sit through dozens of hours of research sessions with consumers. If there is one theme I hear consistently it’s that consumers expect the brands they engage with to provide a flawless digital experience in their interactions. And though that’s a notion that is consistent across all age groups, it’s a theme we hear unanimously from millennials. It only takes a quick look around various industries to see that the companies that are delivering a strong, digitally-centric value proposition make up a substantial portion of the growth.
Meanwhile we’ve recently witnessed that many legacy brands are shrinking (i.e. The Limited) or going out of business entirely (i.e. Sports Authority). The bottom line is that companies born before the digital age must substantially transform in order to remain relevant. As Jack Welch said in the year 2000 “If the rate of change on the outside exceeds the rate of change on the inside, the end is near.” Many great brands today are in just this situation.
It takes five miles for an aircraft carrier to turn itself around 180 degrees. If you are on that aircraft carrier while it’s engaging in that ‘quick turn’, you better hold on to something solid because you’ll soon be tilting at a 30-degree angle. Many large companies are not comfortable with making the difficult and rapid hard left required to align themselves with how the world has changed.
Being in the business of helping companies through their digital transformations, I have observed that many of the companies that struggle digitally do employ super-sharp and visionary executives who see what needs to be done. However, those executives face massive challenges when it comes to enacting the kinds of changes that are necessary in order to make that digital leap. Most of the work I do involves partnering with heroic innovators trying to change large enterprises from within. As a result, I have an insider’s perspective on the biggest challenges these companies face when taking on transformation projects and, in fact, spend most of my time working to try to overcome them.
Based on first-hand experience, here are the top five challenges to digital transformation. If you are facing any of these challenges, the list below may, if nothing else, give you comfort that you are not alone.
My rough guesstimate is that perhaps 10-15% of people in the world love change. They are excited by constantly having new challenges to tackle and new things to learn. But for the other 85-90%, change equals pain. It means uncertainty, a challenge to their role or identity, and, worst-case scenario, possibly the loss of a job and their family’s security. After all, once you’ve got a good thing going, its natural not to want to see your applecart overturned. Digital transformation, by its very nature, upsets a lot of apple carts. However the truth is that in times of change, not changing is far more risky than taking the leap. It just doesn’t always feel that way.
The consequences of resistance to change manifest itself in a myriad of ways. Digital projects vital to a company‘s future success can have trouble getting funded, resourced, or marketed. These projects may be modified so as not to threaten retail or partner brands. They are held back by concerns about cannibalizing other revenue sources. They are asked to justify ROI to an unreasonable level of certainty. They are sent through endless legal reviews.
Kodak invented the digital camera, but it was the internal resistance to change that led the company to bury it because it threatened the company’s legacy film business. Imagine what Kodak could have been had it done what Bell Atlantic did when it realized how bleak the future of landlines looked — it became Verizon, which is now a dominant figure in the broadband, wireless and cable television industries. Did mobile phones decimate the landline business? Yep.
