After two decades of digital transformation, many companies still fail at it—a fact of life that’s hard to swallow in the TikTok era. A shocking 70 percent of digital transformations fail, according to McKinsey. How did it come to this? It’s a question of creating agile and flexible organizations, and for that to happen C-level management all the way down to the floor must adopt a different mindset.
Cultural transformation is do or die
Of all the challenges a company can face in its innovation journey, many come down to various cultural aspects. Innovation teams can send out tech to business units all they want, but nothing will happen without the right cultural infrastructure in these business units that can accommodate change. This is perhaps the biggest challenge in the digital transformation process, and part of the solution is to include the unit tasked with applying the cutting-edge technology in the process, from day one. A company strategy that isn't reflected in the end-user business units is doomed because real change only happens when the entire organization is aligned.
Even beer, the oldest beverage in the world, could be innovated
AB InBev, the world leader in beer, serves as the perfect example of a company that tried to innovate but was disrupted by departments with inertia, bureaucracy, and misaligned incentives. The company needed to respond to an industry that had stagnated in certain markets, and where digitization was overhauling sales and marketing channels. The CEO decided "to send a message that disruption was of central importance...going forward, even core businesses would be subject to change if needed," and appointed a Chief Disruptive Growth Officer. This is a radical shift in the top brass of a vast conglomerate. This innovation project was taken on to move the needle of growth in a company with more than $45 billion in revenue per year.
Without a strategy, ideas end up in the air
An organization without an innovative mindset can also miss out on creative solutions from the bottom up. Employees often have fabulous ideas and initiative, but because the company is not set up to embrace them or committed to transforming, the ideas come to nothing. Cool ideas from employees are great, but it needs to come within the context of a greater innovation strategy. Then the ingenuity and creativity from the floor is directed towards the organization’s greater goal.
To think through the strategy means many things, one is to reach out to the experts when possible. Companies often think they can go at it alone, which is true sometimes, but most often not. One example of a common mistake is to build in-house instead of buying. The list of companies that tried to build chat-bots internally, wasting time and resources, is long, and there is no excuse for that. The obvious answer that could yield them the needed results cost efficiently was to source and implement the technology from third party companies.
COVID's surprising boost to open innovation
For all the challenges that COVID has laid bare, it has also spurred some remarkably positive developments in the innovation space. There is now a broader focus on results-driven innovation, and CEOs are not shy about saying it. There is no budget for pie-in-the-sky pilots just for the sake of talking big on innovation. Now it's about action, and results-driven innovation is a definite improvement in many corporate mindsets. Before COVID, companies would experiment with tech, such as blockchain or quantum, just because they could. The reality today is different, and “results-driven” is the name of the game.
Measuring success is an art form. Innovation leaders in a company might be incentivized to run pilots and many demo days, forgetting the adage about quality over quantity. The innovation funnel must keep the end of the funnel in mind for the necessary results. Instead of running the same beaten path eventually ending up back at the beginning, we can now skip the same old stumbling blocks achieving the transformation we’re looking for.
Written by Uzi Scheffer, CEO of SOSA