5 Key Digital
Transformation
Challenges

The biggest challenge I've seen in any business moving toward a more digitally-focused culture is resistance to change within the organisation. Some people simply don't want to go through that change, or get on board with what's needed and why.

The digital world is transforming at such a rate that this becomes a secondary challenge in itself — whatever you're trying to change could easily be out of date within 18 months, making it even more important to build a culture that embraces digital transformation as an ongoing discipline rather than a one-off project.

Digital transformation, by its very nature, upsets a lot of apple carts. In my experience it can be difficult to secure genuine Board buy-in for digital projects, due to a lack of understanding, too many stakeholders involved, insufficient strong leadership, or simple apathy toward change. An initial target can also be quietly diluted further down the line so as not to threaten other parts of the business — particularly other revenue-driving channels that fear cannibalisation.

A clear vision is needed company-wide for a successful digital transformation — not just amongst digital teams, but across the whole business. Everyone needs to see the vision and understand how you'll get there. Objectives need to be set, and they need to be realistic and deliverable against that initial vision.

Companies that don't succeed have very often failed to plan this clear vision — and without it, you're setting yourself up to fail. Would you get in the car and start driving without a destination? To define the vision required, companies need to look at four things:

• Assets — what assets do you have (customers, IP, brand), and where does the company stand today, the good and the bad?
• Market — study your market thoroughly. How are competitors meeting customer needs in ways you currently aren't?
• Technology — what current and upcoming technology trends will benefit your market, and how is shifting consumer behaviour influencing it?
• Processes — how will you gather and vet the ideas needed to build your business hypotheses, align them to the vision, and test them with real customers?

Data is central to any transformation, and how you manage it should be a key organisational priority. A lot of companies still take a siloed approach to data collection and storage, and this creates real challenges in understanding customer behaviour and using that data to inform strategic decisions.

Other companies have multiple siloed data stores full of useful behavioural information, but no reliable way to bring it together. To use this data effectively, start by identifying the key customer attributes that would genuinely inform your strategy, then work out how to gather and store that data so it can actually be used.

Digital change requires continual focus on development and applying change to business processes in order to improve key metrics. To do this, businesses need a robust, committed and genuinely agile approach to development and releases.

"Test and learn" approaches are key to finding what actually works — but that means accepting failure as part of the process. In my experience, a monthly test-and-learn cadence works best, with a small number of projects (three or four) managed through to delivery at any one time.

Agile processes support even more frequent release schedules, yet I'm still surprised at how many companies plan for growth during budget season with no genuine commitment to development roadmaps or releases. This flexibility needs to extend to how the whole company approaches data usage and customer relationships. Companies trying to build flexible, elegant digital experiences on top of outdated technology stacks are tilting at windmills. You don't necessarily need to discard the mainframe — but modern businesses must make their data accessible via robust, secure APIs, independent of legacy constraints.

Some of the biggest challenges facing businesses stem from inflexible systems and years of underinvestment, resulting in a complicated data landscape that's difficult to make sense of. These legacy issues also show up in a rigid "one size fits all" approach to product development.

Consider Netflix, which shifted from DVDs to streaming, or Uber, the world's largest car service that owns no cars. These are companies that understood they had to move with the market and embrace change rather than protect the old model.

Changes to business models through digital transformation often unlock entirely new revenue streams — selling as a subscription what used to be sold à la carte, monetising through advertising what used to be paid for directly, and rethinking how value creates revenue. Driving this kind of change will produce some failures along the way — but only businesses with a genuine willingness to embrace change will find lasting success.