Two Big Reasons That Digital Transformations Fail

Most of the leaders we surveyed reported poor returns on their digital investments. The primary reason: unsuccessful efforts to scale digital innovations beyond early pilot work.

Plenty of cash is flowing into digital initiatives at large, industrial companies. In fact, the executives we surveyed recently at 1,350 of these businesses globally reported investments in digital reinvention totaling more than $100 billion between 2016 and 2018.

The problem is that the expected results often fail to materialize. Most of the leaders we surveyed (companies representing 17 countries and 13 industries) reported poor returns on their digital investments. The primary reason: unsuccessful efforts to scale digital innovations beyond early pilot work.

What’s keeping companies from scaling pilots successfully? And what are the companies that are experiencing better returns on digital investments doing differently from the rest? Two critical challenges — and their remedies — emerged from our analysis:

UNSPOKEN DISAGREEMENT AMONG TOP MANAGERS ABOUT GOALS: If top managers aren’t on the same page, it makes it difficult for their direct reports to agree on what to prioritize and how to measure progress. The remedy: Define and articulate not only the opportunity but also the problem it solves, and how the company will build the organization around the desired solution before investing.

A DIVIDE BETWEEN THE DIGITAL CAPABILITIES SUPPORTING THE PILOT AND THE CAPABILITIES AVAILABLE TO SUPPORT SCALING IT: When this problem isn’t addressed, companies may face a choice between accepting long delays in ramping up production or attempts by leadership at rapid, unwieldy change to meet what they have promised. The remedy: Look outside to close gaps or nurture pilots internally, ramping up digital capabilities across the organization from the get-go.

When companies anticipate the challenges we’ve outlined here, they’re better positioned to make a compelling case for funding. And they’re much more likely to succeed with their innovations.

Mike Sutcliff is the group chief executive of Accenture Digital. Raghav Narsalay is a managing director at Accenture Research in Mumbai. Aarohi Sen is a manager at Accenture Research in Delhi.

Copyright 2019 Harvard Business School Publishing Corp. Distributed by The New York Times Syndicate.