Digital transformation was undoubtedly one of the buzzwords in medium and large European companies in the mid-2010s. Bold promises of technological advancement, monumental projects in areas such as CRM or ERP, all fueled by a booming economy and full order books. Process digitization was hailed by many CxOs as a panacea for efficiency and cost reduction. Shortly thereafter, the COVID pandemic turned our world upside down, forcing people to work from home and starkly revealing the true state of digitization. Several years have passed since then, and certain digital technologies, such as the digital workplace, have now become widely established, while in many other areas, transformation is progressing much more slowly.
70% of (Digital) Transformation Processes Fail
It is alarming to observe how many (digital) change processes in companies come to nothing. According to a McKinsey study, 70% of digital transformations fail! The question we need to ask ourselves as companies is: Why is this happening?
Reasons for the failure
The simple answer is: Digital transformations fail due to resistance within the organization. It’s not the technology but the culture that becomes the critical success factor of digitization. The reasons for the failure may sound trivial, but they pose a fundamental risk to the success and acceptance of change processes:
- No clear communication about the necessity of the change processes
- Unclear goals and visions of a transformation project
- Incomplete or delayed information to the teams
- No clearly recognizable added value for employees
Digital Mindset as a Basis for Successful Digitization
Due to the fact that the reasons for resistance are primarily cultural, only improved organizational behaviors can counteract the resistance. Paul Leonardi describes very clearly and vividly in his book “The Digital Mindset” how a digital mindset helps create a framework in organizations that enables the successful implementation of digital transformations. He identifies six key areas that are central to success:
- Openness and agility
- Customer-centricity
- Ability to accept criticism
- Proactivity
- Creativity
- Error culture
The challenge facing a company is the need to actively work on the digital mindset within the organization. In our blog, we describe elsewhere which skills leaders and employees need to develop for this and how 21st century skills can be a game changer in this context.
Technological Change
It would be too simplistic to claim that technology is merely an enabler for change. Especially recent developments, such as the widespread use of AI or advances in quantum computing, make technology a relevant driver of possible digital transformation again. Forbes, Gartner, and similar analysts regularly publish assessments of relevant tech trends, which provide a good overview of these and similar topics from a relatively high altitude. It is absolutely sensible to follow trends, analyze their potential, test them continuously and prototypically, and integrate them into the company where possible.
But above all, this form of proactive handling of new technology demands a lot of openness, a positive error culture, the ability to accept criticism, and creativity. In short: A digital mindset!
Fritz Krassnitzer
Email: fritz.krassnitzer@leaders21.com
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