The Top 10 Risks of Digital Transformation
It’s well known that a digital transformation can save a business — but digital journeys are mountain climbs, not morning commutes. That means there are pitfalls along the way which could derail your climb, and false summits which will leave you lacking motivation. Although there are dozens of such risks, we’ve adapted this list of the top ten from “Doing digital” by i8 venture’s Raz Heiferman and Dr. Yesha Sivan.
- Digital transformation will change your business, but focusing on the right level of change is key.
The organization should look at digital technologies as enabling technologies – that is, as technologies that allow it to act efficiently and effectively, and in step with the digital age. However, the organization should not ecstatically pounce on every new technology or business idea. Some changes can generate results that are relatively short-term, while other changes are more profound. The latter demand more time and resources.
- Investing in new technology is crucial for growth, but just because the technology is new, doesn’t mean it’s right for you.
The organization should carefully consider which technologies are appropriate for its business goals and for the challenges it faces, rather than blindly chasing every new technology. On the other hand, boldness and openness are two traits the organization needs in order to wisely adopt new technologies that can potentially change the way the organization does business. Failures are sometimes unavoidable during the process of innovation. Hence, the key is to recover from failure as quickly as possible and move forward.
- Consider where your organization is on the digital transformation Journey.
It is important that the organization be aware of its state of digital maturity and the elements affecting the success of the journey, including the organizational culture, the preparedness of the management team and employees, the readiness to adopt and encourage innovation, the quality of business processes, and the readiness of the IT division. All these dimensions are no less important than the technological dimension in itself.
- Not everyone in your company will feel comfortable with the digital Transformation.
Technology changes at a faster pace than organizations. Yet, an organization’s workforce remains an important component in the change processes, and not all of the employees are eager to embrace change. The organization must not ignore this challenge. Instead, it should invest in change management as an integral part of the digital journey and mobilize employees for the transformation process as early as possible.
- It’s no good having data if you don’t know what it means.
Organizations engaged in the process of digital transformation place data at the center of their business models. Some of them are astonished to discover how inundated they are with data that does not duly serve the organization.The new tools enable an organization to draw insights and create business opportunities from its reservoir of data. From data to insights is the fuel driving the digital transformation, providing new ways for improving decision-making processes in real time, and even turning data into a new revenue source.
- Digital transformation won’t grow your profits overnight. Embrace change as part of a wider growth strategy with measurable goals.
Customer expectations are a major driving force behind investment in innovation. Nevertheless, it is important that the organization develop reasonable expectations regarding changes that are achievable in the short term; it should view these changes as part of a long journey of digital transformation, remembering that change is the only constant in the reality dictated by the current digital age.
- Digital transformation should make your business more adaptable,but it won’t make it immune to competition.-
Implementation of digital technologies enables organizations to reach a wide clientele, enter new places more easily, and respond more quickly and flexibly to customer needs. All this with a relatively low investment of resources. Ultimately, however, the organization’s managers must ensure that the potential of digital transformation is translated into an actual competitive advantage – that the digital technologies boost its business agility and enhance the way in which the organization conducts business and connects with its customers.
- It takes more than just technology to encourage collaboration across departments and divisions.
The organization must foster collaboration among its business units and leverage digital technologies to make the boundaries between departments and divisions more flexible, even if they are located in different regions or countries. Sometimes, investments made by particular units can be successful, but the success is only local. The new technologies should improve and facilitate the development of new business processes across units, cultivate a culture of collaboration, and encourage and empower knowledge workers.
- Your customers don’t think about your digital transformation, but they do expect it to happen.
Customers are rapidly and prominently adopting digital technologies in their lives. The organization should assume that customers expect it to respond accordingly, and even take the lead in introducing advanced digital technologies. Moreover, from the organizational perspective, it is important to always be cognizant of the fact that the digital transformation affects every part of the organization. Your competitors also understand this, and startups pose a threat to every organization, large or small.
- You can talk the talk, but make sure you walk the walk.
Lip service is not enough to ensure that the digital transformation will penetrate and take root in the organization. Organizations must internalize the importance of the phenomenon and be prepared to invest the necessary resources in technology and innovation to become truly digital.