You may have received the meme about digital transformation and COVID-19. It goes like this… There is a question with three possible answers. The question is, ‘Who led the digital transformation of your company?’, and the answers are ‘the CEO, ‘the CTO’ and ‘COVID-19’. COVID-19 is circled. The implication of this meme is clear – the pandemic has accelerated digital transformation.
New data from IMD’s Global Center for Digital Business Transformation supports this conclusion. It found that the prioritization of digital transformation among organizations significantly increased from before the pandemic to when it was at its peak. The data also showed that organizations that accelerated digital transformation during the crisis tended to outperform those that didn’t. This positive finding was seen across a range of outcomes, like performance versus competitors and ability to systematically respond to the impacts of the virus.
When we dug a little deeper, we discovered that a good deal of this digital transformation activity was spent enabling people to work from home (WFH) at scale. These efforts were largely successful. Many organizations went from a few per cent of their workforce WFH to a majority in a very short period of time. We heard many different versions of the following quote attributed to Microsoft CEO Satya Nadella, ‘we accomplished in 2 months what would normally take us 2 years’.
While the massive shift to Work From Home (WFH) has been remarkable in its own right, it has also been a boon for digital transformation. It has made it easier for people to appreciate the potential of digital tools and technologies to transform how we live and work. This is good news for those in the business of leading, managing, or advising digital transformations.
Yet, at the same time, it sets a dangerous precedent. Digital transformations typically do not go this smoothly. Data over the past 4 years suggests that the failure rate of digital transformation programs ranges from 50-95%, with an average across 12 studies of around 75%. Set against these findings, the relatively success of WFH programs during the pandemic might be deceptive. Indeed, the shift to WFH was accompanied by a set of circumstances that is anything but common, and unlikely to be repeated.
People were already doing it, just not as much
It is well known that it is much easier to convince someone to do more of something that they are already doing than it is to convince them to do something new. It’s not so easy to get people to use Uber for the first time, but once they have experienced it, it’s not hard to get them to use it in another country, or another service like Lyft, or indeed a complementary service like Uber Eats.
For many people, working from home wasn’t something new or strange. It just wasn’t something they did very often. Going from doing it occasionally to doing it exclusively was a big change, but not something that was foreign to them. People used laptops at work, they had virtual meetings, they connected to servers and cloud solutions; after the onset of the pandemic, they just did all these things from home. Contrast this situation with many digital transformation initiatives that require people to use new technologies in new ways. Convincing someone to convert their money into a cryptocurrency, wear virtual reality goggles, take investment advice from a machine, or be transported in a driverless car is a lot harder.
The technology was available and relatively mature
Since some people were already working from home, or remotely, the technology to support it was relatively mature and robust. Most organizations already issued laptops to allow for virtual work had set up corporate VPN networks and used video and audio conferencing tools. Certainly, there was a significant ramp-up in the usage of these tools, which wasn’t always smooth, but fundamentally, WFH didn’t require a lot of new infrastructure. The challenge was largely not in the digital technologies themselves, but in the training of individuals to use them effectively. In many digital transformation journeys, this is not the case. New technologies need to be developed, tested, and significantly customized, all of which engender significant risks before they can be rolled out for widespread use.
People didn’t have to be convinced of the need to change
Probably the most important contributor to the success of WFH initiatives was the fact that people, by and large, didn’t resist. Fear and resistance to change, rather than issues with the technologies themselves, are the largest contributors to digital transformation failure. In the case of COVID-19, fear certainly reigned, but it was focused on the virus, not the technology. Since most organizations had little choice but to compel people to WFH, the normal cacophony of change challenge was muted. People complied because a) they had little alternative, and b) it was in their best interests to do so. No one wanted to lose their jobs.
Unfortunately, the above conditions are not true in the majority of digital transformation programs; there is a lot of net-new change, the underlying technologies are not mature or well tested, and there is a significant amount of organizational and cultural resistance.
The people in charge of digital transformations deserve praise for what they achieved over the past few months. While many of us were social distancing, they were running flat out to make sure that we could continue to be productive from home. They can and should feel proud of the work they have done. However, success begets high expectations of further success and it won’t be long before many digital transformation leaders will be given more resources and executive attention to push the digital agenda forward.
While this is a good thing, they would be wise to set hopes and expectations at the appropriate level. Digital history is unlikely to repeat itself, and the next stage of transformation is not likely to be as easy as this one. By all means, proceed – digital transformation is the right course of action for many companies – but do so with caution and a realistic set of expectations!
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