5 reasons companies struggle with digital transformation

Why do some companies adapt to digital transformation, and why do others get left behind?

Capgemini Consulting senior vice president Didier Bonnet outlined the answers in a recent webinar hosted by MIT Sloan Management Review editor Paul Michelman. Bonnet highlighted research that builds on his bestselling 2014 book, “Leading Digital.” (The book is co-authored with MIT Sloan’s Andrew McAfee and George Westerman.)

“Only about one-third of organizations seem to be adapting their organization to a more digital culture in terms of decision-making based on data, promoting exploration and experimentation, and so on,” he said.

Bonnet said companies struggle for five key reasons:

1. Unrealistic expectations. Some organizations were likely overly optimistic in the early days of digital transformation, dazzled by technology but less equipped to adapt to it. Today, decisionmakers realize how daunting the challenge really is. “The excitement was more around the digital technology rather than the transformation itself,” he said. “Now people realize the transformation is equally important, if not more.” He noted that “digital masters” — with strong digital visions, good communication across teams, and multiple revenue-generating digital initiatives — enjoy significantly better financial performance than non-masters.
2. Underdeveloped talent. Companies suffer from talent and competency gaps, and organizations find it difficult to reskill current employees. The gap is “big, and probably getting bigger,” he warned.
3. Poor communication. Organizational silos persist between business teams and tech teams, and the chasm needs to be bridged. “We have started to break down silos but still struggle between the business and technology side,” he cautioned.
4. Lack of digital culture. Employees just aren’t engaged in digital initiatives in a deliberate way. “Employee-wide engagement is still the exception to some extent, the minority. People are finding it hard to translate what they’re doing in digital transformation to something meaningful to front-end products,” he said.
5. Constant competition. Meanwhile, customers’ digital expectations continue to rise, constantly raising the bar in real time. “Take the example of taxis: The best taxi app has become the de facto norm. You’re always measured toward the best, and the bar is being raised constantly in terms of how you deliver your customer experience,” he said.

He closed with a warning.

“Technology progress is well in advance of our ability to adapt our organizations. … My fear is that we’ll see a polarization over time between organizations that have managed to integrate technology effectively and retrain their people, and those companies really struggling. In my view, they face the danger of being left behind,” he said.

Watch the full webinar below.