In a recent Harvard Business Review article, Thomas H. Davenport and George Westerman, researchers with the MIT Initiative on the Digital Economy, consider several recent cases in which high-profile companies like GE, Ford, and Procter & Gamble made massive investments in digital transformations that ultimately failed to achieve their goals. “What can we learn from these examples of digital dreams deferred?” they ask. “How did these smart, experienced leaders make decisions that don’t look so smart in hindsight?”
The issue, the authors posit, is fundamental to the adoption of transformative business technologies. Very similar high-profile change failures happened with the rise of e-commerce and big data, they note. There’s something about digitalization that leads businesses to slip up in specific ways:
Several key lessons emerge when heavy commitments to digital capability development meet basic financial performance problems. A clear one is that there are many factors, such as the economy or the desirability of your products, that can affect a company’s success as much or more than its digital capabilities. Therefore, no managers should view digital — or any other major technological innovation — as their sure salvation.
Second, digital is not just a thing that you can you can buy and plug into the organization. It is multi-faceted and diffuse, and doesn’t just involve technology. Digital transformation is an ongoing process of changing the way you do business. It requires foundational investments in skills, projects, infrastructure, and, often, in cleaning up IT systems. It requires mixing people, machines, and business processes, with all of the messiness that entails. It also requires continuous monitoring and intervention, from the top, to ensure that both digital leaders and non-digital leaders are making good decisions about their transformation efforts.
From our research at CEB, now Gartner, we know that enterprise change is hard. Most change efforts fail either partly or completely, and in today’s business environment, change is happening faster than ever before. The CEB Corporate Leadership Council’s ongoing research on Creating a Talent Strategy for the Digital Age also points to the unique challenges Davenport and Westerman identify with digital transformations.