How to Fail at Digital Transformation

Opinion: There’s still time to do it right

Don't become the next Blockbuster mrtom-uk/iStock

When Blockbuster Video recently announced that it was closing one of its six remaining locations, in North Pole, Alaska, many individuals in the lower 48 states were scratching their heads. With only five stores left in the nation, most Americans had forgotten about Blockbuster.

Saddled with slow internet speeds, Alaska was the final frontier for the once-omnipresent video-rental chain. Now that the northmost state’s cellular infrastructure is being upgraded, Blockbuster’s five holdout locations are at risk of sinking into the tundra, figuratively speaking.

Blockbuster, in other words, was forced out of business by others—Netflix, Hulu and HBO—that digitally transformed. As people move more of their lives online, companies that don’t meet them there will become historical footnotes. Companies that step up to the challenge of digital transformation will continue on.

There’s a catch, though. Digital transformation is not like a new paint job or a revamped product line. The process looks different for every company. Some will have to take small steps to modernize, like supermarkets that allow customers to order online. Others will need to rethink their core business model altogether.

The struggles of legacy giants Sears, GE, Kodak and Barnes & Noble, among others, bear witness to how risky digital transformation can be.

If your own company hasn’t digitally transformed, there’s still time to do it right. To know what’s right, let’s point out how to fail first.

Failure tip No. 1: Let it happen organically

As companies rush to stay ahead of the curve and meet the changing needs of their customers, efforts to implement new technologies often take on an urgent, ad-hoc approach. Sometimes you have to race to catch up, is the rationalization.

Your own business may have seen ad-hoc digital transformation. It usually happens when someone on the ground notices an opportunity for technology to make their job or their product more efficient or effective. Maybe their idea is indeed a great one, but it can’t get traction because they don’t have the budget or the buy-in necessary to get their initiative off the ground. Or else they succeed in implementing a change in their department, but they are so siloed that other areas of the company miss out.

This is the stage at which many companies stall. One digitally transformed department is better than none at all—or is it?

As counterintuitive as it may sound, the CEO should be the one to lead the digital transformation. Applying a big-picture perspective to setting priorities and selecting areas where digital transformation can have the biggest impact will allow a strategic, organizationwide unfurling of digital transformation, rather than the scattershot, siloed approach that so often happens in practice. Coordinating systems and departments from the top down will result in an aligned approach that saves time and money.

In a word: Don’t just let digital transformation happen. Being strategic will pay off.

Failure tip No. 2: Ignore outside perspectives

If there’s one thing to be said about Facebook CEO Mark Zuckerberg, it’s that he is great at marching to his own beat. It is a double-edged sword. On the one hand, Facebook grew into one of the biggest social media networks on the planet under his leadership. On the other hand, he has refused to apologize for the Cambridge Analytica scandal or to discuss Russian operatives leveraging Facebook during the U.S. election. Perhaps the rationale is this: In today’s quick-moving business landscape, being able to slough off the onslaught of well-intentioned advice is key to staying lean and on your own mission.

The digital transformation consulting industry is worth $23 billion, and with good reason—businesses are scared to go it alone. Many businesses rationalize that before shelling out cash and turning to an outside consultant, the company should shore its strength internally.

Great leadership, even if somewhat stubborn, is key in sending a powerful signal that your company can navigate challenges with an even keel. Take another big name, Amazon’s Jeff Bezos, as a prime (pun intended) example of a steadfast leader that steers his company through a constantly shifting digital landscape to stay at the top.

In fact, there is only one Jeff Bezos in the world and one Mark Zuckerberg. Most CEOs can benefit from expert advice when it comes to finding the digital business’ sense of true north. Going it alone might fit well into the cowboy CEO narrative. But the truth is, competition is too tight, and the pace of technological growth too rapid to try to wrangle digital transformation with one executive hand. Humble yourself and consult with experts when you get stuck. This late in the game, there’s little time left for mistakes.

Failure tip No. 3: Don’t think about company culture

Let’s face it: Some company cultures aren’t geared around innovation. As analyst Brian Solis writes, “Organizational culture eats strategy for breakfast, lunch and dinner.” No matter how much the company leadership talks about the importance of digital innovation, that talk will fall flat without a company culture to match.

Giving in to the natural tendency to be risk-averse, some businesses find their digital transformation stalled while competitors conjure up products that suddenly everyone is using.

While change should be spearheaded by the CEO, everyone from designers to engineers to all kinds of different workers should be involved in discussions and experimentation. If workers are penalized for new ideas, they’ll fall silent, and so will any innovation that would have otherwise happened.

Set up a culture from which digital transformation will naturally flow: Encourage agile thinking, product development sprints and innovation. If the culture is adversarial to digital transformation, change will not come easily.

Failure tip No. 4: It’s not about the customer

Digital transformation is not about the customer: It’s about the business. Just ask BlackBerry why it was knocked out of the market by Apple and Google. Staying in business is, essentially, a never-ending business in and of itself. This isn’t to say that you must rush out and mainline all new technologies to keep your customer base happy. In fact, that would most likely do the opposite.

What you will need to do is sincerely figure out what your customer wants, and then deliver it to them in a manner that works best for them.

Digital transformation is the proactive approach to the idea that “the customer is always right.” The essential aspect of digital transformation is understanding how people want to interact with a company. Every decision should be driven by how the results will cater to your customer’s needs and desires. Learn what your customers want and find a way to deliver. Ignore your customer, and you’ll either be ignored yourself, or be at the receiving end of a #delete[yourproductname] campaign.

Digital to survive or thrive?

From Toys “R” Us to Yahoo, household names and industry leaders alike have demonstrated that no one is immune to change. Only companies that can keep up will survive.

Whether your business is a cutting-edge startup existing only as an e-commerce site or an established brick-and-mortar store, you must keep pace with how people expect to receive information and perform transactions. Digital transformation is a process, after all. Gear your business accordingly.

Chris Belli is vice president of marketing and business development at design and innovation consultancy Studio Science.