Why 84% Of Companies Fail At Digital Transformation


Bruce Rogers, Forbes Staff

January 14, 2016

My conversation with Michael Gale on the trials and tribulations large companies still face on their journeys towards digital transformation. Michael is a partner at PulsePoint group. He is a recognized industry expert in integrated technology marketing, having founded Strategic Oxygen in 2001, which is widely seen as one of the technology industry’s primary data toolset for marketers. He has worked directly on over 500 global programs and campaigns for major technology brands since 2001.  He recently undertook extensive research into and analysis of the drivers of digital transformation success factors which will be published soon in a book. 

Bruce Rogers: You have done a lot of research and analysis on the topic of Digital Transformation within the Enterprise, tell us what you are seeing?

Michael Gale:   Virtually every Forbes Global 2000 company is on some sort of digital transformation journey.  Some are getting it right and others struggle.  Basically, one in eight got it right and then there were ranges of failure to really whereby more than 50 percent just didn’t go right at all. In fact their expectations were neither met nor exceeded and the gap between expectation and meeting were so enormous it was considered a failure.

Bruce Rogers:  What are the common challenges to getting it right for these companies?

Michael Gale: “One of the most basic impediment to moving forward on the road to digital transformation is whether or not enough people within the organization are aware of the challenges. Because if they’re not aware of the challenges the probable truth becomes they’re either going to trip up, fall over and be massively disappointed when it comes to doing it. Basic awareness about those challenges is probably the key indication of how well the process will be successful.

The other issue actually, is understanding the drivers of digital transformation so that organizations know where to focus their time and resources.  In our research we found working with companies like USAA, Master Card and IBM all talked about having to go through this cathartic learning process before they really talked about where they would allocate. They forced us to sort it out. And now we’ve identified the core seven driver of digital transformation and created an algorithm to help companies assess where they are in the process.

We were able to put these learnings into a best practices matrix or what we refer to as a “digital helix,” because all seven drivers are distinct, but inextricably interconnected like DNA.

Bruce Rogers:  How did you get people to talk about their failures?

Michael Gale: For most of the people we interviewed, it was easier than we thought, once we helped them understand the data from our research showing that most companies fail at it in some fashion. We know this isn’t easy. We know this isn’t perfect and more importantly if you believe in the idea of a digitally transformed world where we actually look through a digital lens to do things more immediately in a more satisfying way and cheaper you can help other people do this. And people seem to respond to that emotional appeal because they want to try and change the world.

Bruce Rogers: What surprised you? What was the unexpected that you learned from when you started the journey of talking to people?

Michael Gale: We built a set of questions about these challenges and drivers and I was really shocked to some extent how complete they were after we completed the interviews. I think we started with two or three questions but we added more and more questions about what works and what doesn’t. So what we actually got was people collaboratively building the content in the book for best practices which was really cool. So it became sort of a co-created process, much quicker than I ever would have expected which actually surprised me.

The second thing is everybody said this is a fundamental shift in how people had to think about how they interact, how they collaborate and work and if you don’t spend time changing people’s behaviors, you don’t spend time changing culture and how people make decisions, all of this falls flat. So we actually ended up writing a chapter on culture and optimal high performance because all of the winners said that was one of the underlying secrets in the success process. Understand what it took to change culture, what it took to make things more high performance and empowering people to make decisions on their own was the number one truth that people really struggled with.

Bruce Rogers: That makes sense because the world is changing fast and there will always be some new technology innovation that disrupts businesses in some fundamental way.

Michael Gale: Yeah, the underlying tonality is that you can do a strategy once, you can borrow the technology once. But if you can’t get the sum of the parts to be greater than the cost you’re going to fail and I think a large part of that 84 percent that fail it’s because they’re not prepared to change behavior. They think they can have strategy and technology and it just doesn’t get them there fast enough or in a good enough way.

Bruce Rogers:  I’m surprised we’re still talking about digital transformation. We’ve been talking about it for 15 years. Do these things take new generations of leadership to succeed?

Michael Gale: I wouldn’t say generations.  Some 40 percent of the people we talked to say they expect to be digitally transformed completely in the next three years. So that’s an issue of focus and there’s still a lot of work to do. I think the analogy we took on it, is that this is like the industrial revolution. That may have taken 85 years. This may take 15 years. It’s that dramatic.

This article was written by Bruce Rogers from Forbes and was legally licensed through the NewsCred publisher network.

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