It’s a common refrain to hear of digital transformation efforts that fail.
New research from Boston Consulting Group, however, has identified six critical success factors that, when fully applied, can reverse the odds of DX success from 30% to 80%.
With COVID-19 widely seen as a catalyst for an all-around, multi-industrial acceleration of transformation — BCG found that 80% of companies plan to accelerate their companies’ digital transformations — these findings are crucial.
Current successes
According to the research (which you can fully explore here), 30% of transformation efforts resulted in sustainable change — meeting or exceeding targets. 44% had limited long-term change. 26% had created “limited value (less than 50% of the target) and produced no sustainable change.”
“In the short term, digital technologies and ways of working offer productivity improvements and better customer experiences,” explained Patrick Forth, a BCG managing director, senior partner, and report co-author in a press release.
“In the medium term, digital opens up new growth opportunities and business model innovation. Successful transformations also set companies up for sustained success; they won’t have to digitally transform again as they master continuous innovation.”
When compared to those that created limited value, successful transformations yielded 66% more value, 82% more corporate capabilities, and met 120% more targets on time.
Factors needed
The key to flipping the success rate lies in the application of these six success factors:
- An Integrated Strategy with Clear Transformation Goals.
- Leadership Commitment from CEO Through Middle Management.
- Deploying High-Caliber Talent.
- An Agile Governance Mindset That Drives Broader Adoption.
- Effective Monitoring of Progress Toward Defined Outcomes.
- Business-Led Modular Technology and Data Platform.
Digging deeper, two conditions lie at the heart of these factors. The first is ensuring that management addresses every factor in each of the planning, preparation, and execution phases. “Most companies put effort into this, but the majority of these organizations do not address each factor sufficiently,” BCG explains.
The second condition is that all six factors need to be addressed. According to BCG, “Companies that adequately addressed only three or four failed. Of all of the possible combinations examined, none had the same impact on success as these six.”
“The positive and material impact of the six success factors can be seen across all types of digital transformation, geographies, and industries,” says Tom Reichert, BCG Chairman of Global Practices, global leader of DigitalBCG, and co-author. “That said, it is neither practical nor desirable to delay transformation in pursuit of perfection. Instead, winners will be aware of shortcomings and will put an action plan in place to address each as they proceed.”