I’m a copywriter. I love synonyms. When there’s more than one way to say a thing, it gives me options to talk about the same ideas and concepts different ways without repeating myself too often.
The Digital Revolution, or the Fourth Industrial Revolution, or Industry 4.0, or The Industrial Internet of Things (IIoT) has been a boon for business copywriters. It has been less of a boon for the people responsible for effectively delivering on its promises.
Now that may seem unfair at first. Enormous corporate empires and entire professions have risen in the last few decades on the promise of Machine-to-Machine (M2M) communications. A recent analysis says $1.8 trillion USD was spent on Digital Transformation (DT or DX) in 2022, and that number is expected to grow to $2.8 trillion USD by 2025. Another study says spending on these projects has seen an annual compound growth rate of 16.7 percent with no sign of slowing down. Big Data and Data Analytics has transformed the way the world does business. Digital Twins are changing how we work with data to eliminate unscheduled downtime. AI and Machine Learning are unleashing capabilities we are only starting to grasp. The next big thing —I have been assured by people who know a lot more about it than me— is going to be about the Data Fabric, the idea that information does not just go back and forth between point A and point B, but actually weaves together from many different points in much the same way threads on a loom use warp and weft to create cloth, something far more sturdy, capable, and useful than any one thread or even series of threads in parallel could ever be.
We can do jargon for days with some terms coming into vogue (Data Fabric is on the rise, for example) and others falling out of fashion —when was the last time someone really got excited about M2M, even though everything in the Digital Revolution is built upon it? At the end of the day, what people really want is results, and while the numbers vary from study to study, very few companies really wants to put up their hand and say, “Yes, we have successfully navigated our Digital Transformation, meeting all our initial goals and demonstrating the expected ROI for the time, capital, and headcount we put into this transformation.”
I mentioned the numbers vary, and an exhaustive list is not going to make this article more persuasive, but for the sake of a sampling to illustrate my point, Boston Consulting Group says only about 30% of companies have made a successful transformation; Gartner says only 53% of companies who have committed to digital transformation are confident that the benefits will hold up to turbulent business conditions; Harvard Business Review says an average of 87.5% of companies fail to meet their original business objectives when they have finished their IIoT projects; Forrester reports that less than a quarter of companies believe they have completed their digital transformations.
These are not great numbers, especially when you remember that only 1% of companies are saying they have made no effort to modernize their systems in recent years.
So What Can Be Done About It?
I could probably write a 3,000-word column with every word being a unique URL pointing to a different article online about successful digital transformations. There is a lot of information out there, and I encourage everyone interested in this subject to read broadly and deeply, because there are amazing stories and insights being shared that can inform you on your own journey.
With that said, let’s start off by agreeing that everyone’s digital transformation is going to be their own. Every company has a different starting point. Every company is going to have different resources to bring to bear, and different objectives to meet, and different leaders and teams making it happen. What I am going to share here is a broad checklist drawn from the commonalities I have seen from many, many case studies and many, many conversations I have had over the years. (For the record, those links were just a small sample of what I’m talking about.)
- Set clear and realistic goals for what you want to do. That should honestly be the first item on just about any checklist. If you don’t have clarity on what you are trying to achieve, what hope do you have of accomplishing it?
- Assuming the goal is anything to do with a quantitative target —and a recent survey of executives said the most popular ambitions of a Digital Transformation were generating operational efficiencies, faster time to market, and improving customer satisfaction— set the metrics based on key performance indicators (KPIs) that will track your progress, allow for course corrections along the way, and determine the success or failure of the project so you can learn lessons from the experience.
- Put someone in charge of the Digital Transformation. It’s all well and good to say something is everyone’s responsibility, but when it comes to changing the way a business functions, if everyone’s in charge, than no one is in charge. One study determined that having a dedicated Chief Digital Officer or equivalent position increased the success rate of digital transformations by up to 600%. That is not a number to be sneezed at. Meanwhile, while having an invested and enthusiastic CEO can certainly be a driving force for a Digital Transformation, realistically a CEO has many roles beyond any one project, and for every CEO who claims to understand the technology and its transformative power, there are several others who may say the right things while actively getting in the way of the day-to-day activities that make a Digital Transformation work. A recent employee survey had 35% of respondees say the #1 obstacle to their companies’ DX was the CEO.
- Having chosen a dedicated leader —ideally a CDO, CTO, or CIO— give that leader the resources they need to succeed. A Deloitte study found more than half of companies’ IT spend goes towards maintenance of existing systems, with an average of only 19% being spent on new investment. A Forrester study found that the average C-suite technology executive only is free to commit 28 percent of their budget to new tools, technologies, and innovations. The issue is not always budget, either. Having committed to a digital transformation in theory, is a company willing to invest the time and headcount necessary to make the project a reality?
- We should take a moment and admit the dedicated leader who was no doubt chosen based on strong qualifications is not going to be an expert at everything, nor are they likely to invent their own solutions out of thin air. In fact, reinventing the wheel is usually a frowned upon use of limited innovation resources. The CDO, CTO, CIO, or whatever we are calling the Digital Transformation Guru, is going to need help, both internally form their existing team, and also from relevant service and solution providers who know the technologies being applied, work with them every day, and who can bring their experience and expertise to a project at crucial times that make the difference. A huge part of the leader’s role is going to be knowing when they need help, and whose help they need.
- The next ‘big thing’ the leader of the project needs to do is educate the company on what is happening, why it is a good thing, what is expected of them during the transformation, and how their company and each employee’s working life will be better on the far side. A recent McKinsey report found that a whopping 70 percent of digital transformations fail due to resistance from the workforce.
- While you might think the rank and file’s reluctance to change what they do and potentially automate themselves out of a job is what we are talking about here, it is worth adding that even management and top talent often push back against digital transformations. By one study, three quarters of executives confess they see the value they bring to their company in competition with digital projects to perform their business functions rather than in collaboration with DX. Carving out exceptions, specializations, private fiefdoms, and other ‘I will continue to do things my way, which I know works’ can mitigate as much as 64% of the expected revenue growth from digital investments.
- All of that needs to be addressed through the soft skills of change management. According to McKinsey, a persuasive 143% of expected ROI is achieved by companies with effective change management programs in place, while companies that do not embrace change management as an effective and deliberate leadership tool see only 35% of their expected ROI from Digital Transformation.
- Having set goals, chosen a leader, given them what they need to succeed, and educated the company on what is happening and why through change management principles, let’s talk about where to start. Again, we are speaking in broad hypotheticals here, but the vast majority of digital transformations do not start enterprise-wide, and the vast majority of digital transformations that do begin enterprise-wide fail. The other big mistake many companies have is to start with pilot project after pilot project without ever bringing systems together where the real value of pooling all the data together and making decisions based upon it can happen. A popular mantra that a World Economic Forum white paper supports is, “Think Big, Start Small, Scale Fast.” The objectives are set. Run that first pilot project, learn from it, and then go as wide with it as you can as fast as you can with the lessons you learned from that pilot project as your guide and the successes of that pilot project as your ambassador to win hearts and minds to your cause as the project picks up speed.
- As the systems come online and the data drains from different data lakes and data pools into one common source of truth, don’t be afraid when Digital Transformation takes you places you did not expect to go. It’s being called the Fourth Industrial Revolution for a reason. Unexpected things are happening. Having these new tools and capabilities in place is going to make things possible you had not considered when you set your initial goals and objectives. As one example, could we have transitioned into our current ‘New Normal of Work’ without the current generation of IT communications tools? Almost certainly not. What other challenges and opportunities will Industry 4.0 unlock for us? I am adding this as the final point on the checklist not as a ‘to do’ but as a head’s up. Leaders of DX can be so focused on achieving their objectives and avoiding failure that they develop tunnel vision to what they are really achieving. Part of course correcting as a project unfolds can also be moving the goal posts further back, or even acknowledging while you are making steady progress towards your first objective, other very worthy objectives are also becoming available in the sidelines or even in other fields playing other sports (to stretch a metaphor). This is to be celebrated and embraced. The final point for this checklist is to keep your eyes and ears open at all times for what else your Digital Transformation has to offer. In working to achieve one goal, you might be scoring other points all along your journey that can be followed up on and developed further. We are going through an exciting time, and it is okay to look around and see what is happening as it happens.
And that’s this week’s blog. As with so many topics, there is always something more to say here. I sometimes think talking about Digital Transformation has become my whole job, because it touches on so much of what Executive Platforms does and who we talk to and engage with on a daily basis. The rapid pace of change is happening so fast that there is always something new to talk about, and there is also always the danger of focusing on something that was important in the past while missing something else rising to prominence.
I don’t want to make every one of these articles a plug for coming to industry conferences, but I think when we talk about the Fourth Industrial Revolution, it is worth saying no one —absolutely no one— has the full and complete picture right now. You have to go out and talk to people and see what is happening for yourself. Some of it is going to be your everyday working life in just a few short years. Remember how quickly smartphones became ubiquitous? They went from science fiction to something parents give their toddlers to play with and business titans use to run international conglomerates in just a few short years. More and better is still on the way. The world is changing, and technology is changing it, and we are going to live through an epoch of enormous change.
I’m excited for it, and I look forward to writing more about it soon.
Head of Content & Research
Geoff joined the industry events business as a conference producer in 2010 after four years working in print media. He has researched, planned, organized, run, and contributed to more than a hundred events across North America and Europe for senior leaders, with special emphasis on the energy, mining, manufacturing, maintenance, supply chain, human resources, pharmaceutical, food and beverage, finance, and sustainability sectors. As part of his role as Head of Content & Research, Geoff hosts Executive Platforms’ bluEPrint Podcast series as well as a weekly blog focusing on issues relevant to Executive Platforms’ network of business leaders.
Geoff is the author of five works of historical fiction: Inca, Zulu, Beginning, Middle, and End. The New York Times and National Public Radio have interviewed him about his writing, and he wrote and narrated an animated short for Vice Media that appeared on HBO. He has a BA Honours with High Distinction from the University of Toronto specializing in Journalism with a Double Minor in History and Classical Studies, as well as Diploma in Journalism from Centennial College.