It can’t be denied that the latest technologies have been positively impacting different areas of business.
Companies nowadays employ digital technologies to speed up different processes, operations, and the way they deliver value to their customers. Sluggish, manual processes and clunky, outdated hardware are a thing of the past.
Cloud, AI, VR, AR, NLP, or self-driving cars are only a small fragment of this ongoing movement which has the purpose of improving our lives. But the very name “digital transformation,” also known as DT, might be a bit misleading in the sense that it makes one believe that it’s all about technology, but also about a cultural shift that must take place within the organizations themselves. Apart from this exciting promise of a better and more efficient world, digital transformation has had its fair share of challenges which prevent it from enabling its full potential.
1. Siloed Organizational Structures
The traditional way of performing tasks and hierarchical structures hinder the evolution of organizations on their way of digital transformation. This particularly affects companies that have been leaders in their industry for many years, as their cultures heavily rely on the said stable, hierarchical structure. This everybody-knows-their-place in the company and is comfortable with it creates a certain complacency which slows the progress down.
One way out of this comfortable trap is to try and destabilize your teams and push them towards the uncharted territory of digital transformation and challenge them. The fact that they’ve been performing their tasks on autopilot means that they won’t be ready for the disruption brought on by the new way of doing things. Organize training programs and send them to relevant seminars and conferences so that they can shake up their routine and learn how to handle and leverage digital transformation successfully.
2. Failure to Identify and Produce Digital Leaders
On your way to implementing a digital transformation, two equally important factors play an important role – technology and expertise. If either of them doesn’t live up to the expectations, all your efforts will be in vain. So, if we bear in mind that in order to implement a disruptive technology, you need to identify people with an intrapreneurial mindset who are willing to take a risk and drive this technological change.
In order to spot such motivated employees who think outside the box, it is important to encourage and reward creative thinking and efforts to introduce new solutions. True digital leaders don’t wait for managers to tell them what to do and how to do it – they try out new things in order to improve their own performance.
It’s also important to invest in your employees’ professional education and development as that’s one of the best ways of producing digital leaders. However, another way to help your employees focus on their core competencies and high-value work in which they’ll be able to show their true potential and take initiative is to outsource certain tasks that aren’t of high priority.
3. Reluctance to Ditch the Legacy Business Model
Successful digital transformation doesn’t mean providing the same product just more efficiently with the help of advanced technologies. The trick is to reconsider your existing business model and analyse how relevant it is in this new business environment. For example, Netflix moved on from renting DVDs to streaming – the company recognized that it’s business model was losing its edge and would be rendered obsolete in the near future. So, they adopted digital transformation not only as a way of doing things but also as their new business model.
Such an approach is widely accepted by startups willing to find different monetization methods such as offering their services for free and making profit mainly from advertising or shifting from the “a la carte” to the subscription-based model. Mature companies prefer to stick to their legacy business model, and this fear to take a leap of faith is what hinders their success in digital transformation.
Overcoming these three challenges of digital transformation is a make-it-or-break-it factor when it comes to successfully implementing new technologies, such as cloud-based software or replacing manual processes with digital solutions, in your organization. It’s essential to understand that digital transformation represents a major shift and reinvents your business so that it can respond to the demands of an ever-changing market.