A common concern for many senior business leaders is the risk associated with digital transformation initiatives. And it’s easy to see why; a recent study showed that close to $1.3 trillion USD was spent on digital transformation project in 2019, and close to $900 billion USD of that was wasted. So why do some digital projects do well, and others don’t?

One of the main reasons is that while many digital technologies provide the possibility of efficiency gains, if people don’t have the right mindset then the project is likely doomed. Here are five lessons that will help you through your next digital initiative.

Lesson 1: be clear on your business strategy from the outset

Leaders who look to initiate a digital change often have a certain digital tool front of mind they want to implement. However focusing solely on the technology can be a mistake; instead the digital initiative should be guided by the overall strategy of the business. This enables you to look at the big picture of how the digital change will impact the various parts of your business, increasing the likelihood of a successful transformation.

Lesson 2: Utilise your insiders

Organisations that are pursuing digital transformation often look to consultants from outside the business for help. These “outsiders” will likely want the business to adopt a one-size-fits-all strategy which they will label “best practice”. The problem is that this “best practice” can often lead to the failure of your digital projects. The best approach to ensure successful digital change is to look at the talent inside your business. Utilise your staff who have in depth knowledge of what processes work and which ones don’t. These “insiders” will have more understanding of your business operations than any outside consulting company ever will.

Lesson 3: Customer Experience is key and must be designed outside in

Improving customer experience is often a key objective of any digital transformation project. If this is true for your digital project, then you need to ensure you implement a diagnostic phase that has input from your customers. This can involve interviews with customers where you ask them to describe what they see as the strengths and weaknesses of your organisation. You could also run focus groups where you ask stakeholders to highlight their needs, challenges and other valuable insights.

This customer feedback can be used as input into your digital transformation project. Having this anecdotal feedback will help you to determine the extent of digital change needed within your organisation. For example it could highlight that only small incremental changes to your tools and processes are required, as opposed to a mass digital overhaul of legacy systems. The only way to know this is via in-depth customer feedback.

Lesson 4: Manage employees’ fear of losing their jobs

Many employees fear that digital will one day take their jobs. If employees in your organisation have this fear, then it’s unlikely they will support any of your digital initiatives. They may have the mindset that if the digital project fails, they’ll be able to keep their jobs. Therefore, business leaders must first identify if those fears exist, and then educate employees on how digital change will provide opportunities for them to upskill and progress their work careers.

To navigate this complex issue, a good approach is to use an “inside-out” process. This is an approach where employees are asked to think through their unique contribution to the business and then join the dots to determine how that contribution fits in with the digital initiative in question. This gives the employee more control over the entire digital transformation process and makes them feel more comfortable with their involvement.

Lesson 5: Embrace a start-up culture

Start-ups are defined by their innovative culture that encourages agile processes, taking risks, experimenting and failing fast. Digital transformation can often be uncertain, with numerous changes needing to be made by various groups within the business who have no clear view on the possible outcome. This often leads to various hierarchies getting involved and slowing things down. That’s why a flat structure is more suitable to ensure the successful running of a digital transformation project.

Because digital tools are highly customisable, the organisation needs to be agile and fluid. If decisions go through various layers of management, mistakes will be missed and will cause problems down the track. A flat organisational structure can help to avoid these mistakes, leading to less complex processes and a more efficient decision-making process.

Final Thoughts

For digital transformation to be successful, sometimes you need to go back to the basics. Focus on ensuring employees have the right mindset to embrace change within the business. The key to this is building a culture that embodies innovation and risk taking across all teams. Business leaders need to take charge and have a clear vision of the future that will drive the technology they adopt, not the other way around.