Where Organizations Go Wrong with Digital Transformation
Despite having a simple framework for digital transformation (spoiler: it’s just a three word hierarchy), countless organizations see their digital transformation programs go sideways. Let’s explore a few examples to see why that happened, and what you can do to avoid falling into the same trap.
As a quick refresher, digital transformation is a hierarchy:
- Strategy
- Processes
- Systems
Start at the top when you’re designing, at the bottom when you’re implementing, and don’t skip steps.
With that in mind, let’s dive into the examples.
Example 1
A services provider wants to acquire more customers to grow revenue, but they don’t have an ideal customer profile (ICP). Instead, they think their service offerings are sufficiently attractive and pointing to big name customers will be enough to convert prospects.
We don’t have to continue further down the hierarchy to see why this is not going to work: the strategy lacks differentiation from their competitors, it also lacks focus on who their target customer is.
To avoid this trap, spend more time crafting the strategy. If you’re interested in a helpful resource, consider reading Alex M H Smith’s No BS Strategy.
Example 2
A professional services firm wants to grow revenue by identifying new opportunities based on how different divisions within their firm are engaging similar clients. They decided that a CRM system implemented across all divisions to track client relationships and interactions will unlock this growth.
However, in this particular industry, relationships are highly coveted and protected. There is little incentive for a professional to share their book and interactions with others, especially if they can’t connect the dots with certainty that it will grow (their) revenue.
We have a decent strategy and a system that is more than capable of satisfying those use cases, but the processes to support the strategy entirely missing.
To avoid this trap, don’t skip on designing business processes. If you’re interested in a helpful resource, take a look at the previous newsletter about spending more time framing problems.
Example 3
A nonprofit organization wants to improve the experience for their constituents by offering an online portal to register for and receive services. Despite niche solutions existing that are tailored to their industry (i.e. the specific services they provide), they decided to extend their existing CRM platform with third party apps with many customizations.
While the online portal is live for constituents, the result is a barely usable CRM system with bugs frequently reintroduced and an expensive carrying cost to “keep the lights on”. The system ended up being the issue here, even though there was a strong strategy and well-designed processes.
To avoid this trap, perform due diligence to find the right system(s) to facilitate your business processes, and actively question whether existing systems or consolidating functionality makes sense. Be sure to estimate the total cost of ownership with any systems, including existing ones.
TLDR: Digital transformation fails when organizations skip steps in the strategy-processes-systems hierarchy. Don’t skip steps and do each intentionally.