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Organizations are currently grappling with a plethora of challenges. The world is on the brink of a recession, there is a war in Europe, natural disasters are becoming more common (due to an escalating climate crisis) to mention a few.

Of course, all of this uncertainty occurs in the context of the COVID-19 pandemic.

While organizations had already started thinking about the future of their workplaces and the role that digital transformation plays in organizations’ futures, the pandemic disrupted and accelerated these conversations.

Businesses are well aware that becoming a digital leader is key to their future triumph – digital transformation success leads to 1.8 times higher earnings growth and more than double growth in total enterprise value, according to research by Boston Consulting Group (BCG)

But as things stand, seven in ten business digital transformations fail. Failure is defined by organizations not meeting their objectives or producing significant value, which, in turn, impacts business bottom lines.

Why do transformations fail?

So, we’ve got the stats – only 30% of digital transformations achieve all their objectives and drive value – but to start to fix the problem, it is crucial to understand the reasons for failure.

The first pain point is the technologies themselves.

Ajay Chowdhury, managing director and senior partner at BCG, tells UNLEASH “most companies simply create one bottom-up initiative after another”, but this ends up creating digital journeys that “detached from everything else”.

BCG’s 2022 ‘Mind The Tech Gap’ report found that part of the challenge here is that companies are unsure about what technologies to implement – 93% of 2,600 executives surveyed said they struggled to navigate the rapidly changing landscape of emerging tech – and then they are unable to scale the solutions they pick.

Part of the problem is that the technologies don’t integrate well with other tools, and are hard to use. 84% of respondents told BCG they were frustrated by cumbersome coordination between and across vendors, while 68% said vendors didn’t help them in prioritizing the steps of their digital transformation.

To break free of these tech barriers, “every company should focus on a few high impact tech and business builds, turbocharge them, and deliver material impact.

“If they do that, everything else will follow: teams will learn to work with tech, they will get out of the gridlock of legacy IT, and they will create new governance and data architecture”, notes Chowdhury.

Of course, achieving this is very difficult alone, so working with external experts and consultants is a good solution. The likes of Accenture, IBM, Capgemini and McKinsey all support businesses with digital transformation.

BCG for instance has launched a new division that specifically focuses on the technology build and design challenges that organizations face.

As well as being a senior partner at BCG, Chowdhury is the BCGx lead for the UK, the Netherlands and Belgium, he explains that BCGx acts “as a force multiplier for our clients…turbocharging digital transformations through tech solutions ready to run from day one”.

For Chowdhury, solutions like BCGx can also help with the business case and return on investment (ROI) conversations around transformation.

Another of the pain points identified in the Mind The Tech Gap report was the complexity in managing costs and uncertainties around ROI.

Success comes from culture change

It is critical that businesses get that technology and ROI parts of the transformation right.

But BCG’s research has found that actually turning the tide, and moving from 30% to 80% digital transformation success rate, hinges on organizations getting the people dimension – the organization, the operating model, the processes and the culture – right.

Organizations need to rethink and put the majority of their effort “into weaving the work of machines and the humans together”, according to Chowdhury.

“It is important not to underestimate how much cultural change is needed to derive value from technology, versus just implementing technology.”

That cultural change success needs HR departments to become strategic partners to the rest of the business.

BCG’s advice for getting that people dimension right is multi-faceted. First, leadership (from the CEO all the way down to middle management) needs to be committed, aligned and engaged.

Research by BCG shows that just 18% of organizations have a culture that promotes innovation, and only one in three have an invested leadership team.

Another element, according to Chowdhury, is embracing new, agile ways of working, breaking down siloes between teams. This requires leaders addressing roadblocks quickly, encouraging fail fast learn behaviors and not losing sight of the main goals when troubleshooting minor bumps and blips.

Addressing talent and skills gaps

A core element of digital transformation success, according to BCG, is having the right talent and skills leading the digital transformation – currently just 25% are succeeding in this area.

It is clear that organizations are struggling with the talent side of digital transformation – this is clear in BCG’s Mind The Tech Gap 2022 report. The roles that are causing the most worry are advanced tech experts, software engineers and data scientists.

For Chowdhury, the attraction and retention piece plays into those “cultural issues in companies”. “The culture that has served them well for their core business is often not suited for the ways that top digital talent want to work”.

In addition, fixing these talent and skills challenges requires organizations to identify who should lead this digital transformation work – this must be about skills and expertise, rather than seniority.

It is important to remember that the talent you need might come from parts of the organization you wouldn’t expect. So organizations must take an open-source approach to finding talent internally, as well as upskilling existing employees in the realm of digital.

Transformation requires individuals and companies alike to commit to “skills development, continuous and lifelong learning in business, and retraining”.

For Chowdhury, the focus should be on “identifying where skills mismatches lie, understanding its root causes” and then erasing those gaps through upskilling, reskilling and continuous learning.

Of course, there may be some areas where it makes sense to look externally to fill skills gaps. This is where businesses can take advantage of the silver linings of the ‘Great Resignation’ and big tech layoffs.

According to layoffs.fyi, the tech sector has cut almost 250,000 workers since 2022; so that’s a huge pool of digitally savvy workers looking for their next opportunity.

Again, working with experts like those inside BCGx can be very useful to fill in any gaps. Their insights “can actually help overcome those skills shortages and enables employees to focus on the part of their jobs that they love”, according to Chowdhury.

Digital transformation is not easy, but “businesses shouldn’t give up on transformation as a result”. “Doing nothing is a recipe for disaster”, notes Chowdhury. Let’s leave digital transformation failure in 2022.

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