70% of companies get stuck on digital transformation, but this tool can save you

Without a plan to integrate new technology across departments, you’re bound to run into trouble. This simple exercise will align your efforts.

Most digital transformation efforts stall after the initial project activity. Even after a successful pilot project, there can be hesitation to move forward with large scale changes that radically impact the organization. According to analyst McKinsey, 70% of organizations report that their digital transformation has stalled at some point.

Even though the rapid change in most industry sectors today is broadly understood to require a substantial response, most organizations lack the confidence to proceed. But there’s a way to get this confidence, and it’s easier than you think.

I’m here to help. As the author and instructor of the Watspeed Digital Transformation Certificate Program at the University of Waterloo, I’ve studied organizations big and small to learn what makes for a successful transformation—and how to avoid problems that lead to a digital dead end.

Digital transformation requires integrated management

The majority of successful organizations achieved their success by repeating the same processes year after year. When tweaks were made, they were within an organization that was specifically designed for reliable repeatability, not for revolutionary change. It is little surprise that most organizations now find digital transformation difficult and, as the research tells us, most fail.

The reasons for stalls are usually within the control of the organization itself. According to McKinsey, the controllable aspects are:

• Ineffective or misinformed transformation strategy
• Ineffective design of transformation
• Insufficient alignment and/or commitment across the organization
• Lack of clarity on transformation strategy
• Resourcing issues

This research indicates that effective leadership planning and coordination of digital transformation is rare. But there are ways to break through the conservatism that holds back many organizations today.

Breaking through conservatism

Most CEOs were hired to manage in a conservative way, since radical strategies with a high degree of risk could be career ending. Organization structures, practices and culture are all designed for slow change. Silos are widespread and management team collaboration is weak.

It is important to emphasize that the focus on safety and reliability that exists today has been valuable in the past and will continue to be in the future. It will still be important that organizations are effective at producing reliable, high quality goods and services at an appropriate cost. Negatively impacting this in the pursuit of transformational change would be a fatal mistake. Instead, organizations need to carefully change, maintaining operational effectiveness while more easily incorporating continuing transformation.

Silos in organizations inhibit integrated cross organizational change. They limit understanding of the impact of change in one area on another, resulting in unintended negative and positive consequences. Collaboration on changes impacting more than one department is restricted, meaning larger projects are less likely to be successful and that the organization will be less likely to undertake them. Data that may have value across the organization is not shared and processes operate in disjointed ways, and this is exacerbated when new technologies are introduced.

Organizations must change to overcome the challenges of their current structure, practices and culture. How? With a simple tool called the Digital Transformation Integration Analysis Matrix.

The Digital Transformation Integration Analysis Matrix

The Digital Transformation Integration Analysis Matrix is intended for use by a group within an organization. It should be completed collaboratively, using a flipchart, whiteboard or some other format that enables everyone to participate in the digital transformation planning. This facilitates integrating digital transformation activity across the organization.

It looks like this:

DX Integration Analysis	Finance	Human Resources	Operations and Supply Chain	Sales and Marketing	Information Technology
Finance: [Initiative]
Human Resources: [Initiative]
Operations and Supply Chain: [Initiative]
Sales and Marketing: [Initiative]
Information Technology: [Initiative]

The left column lists the digital transformation initiatives or projects the organization is engaged in. Each of the other columns represents a separate function or department. Within the matrix, the implications of each initiative for each function or department are recorded, based on the discussion within the group completing the matrix. Initiative implications may include opportunities to exploit new technology or requirements for change in processes or practices.

Take the following hypothetical example in which a canoe manufacturing company is planning to introduce new technologies. The changes planned for each organizational function are described in the left column and their main implications for each of the other functions are given in the other columns. This matrix was prepared by the management team and reflects their combined understanding of the integrated digital transformation work.

DX Integration Analysis	Finance	Human Resources	Operations and Supply Chain	Sales and Marketing	Information Technology
Finance: Manufacturing cost reporting system	Improved financial management	Better control of employee costs	Manufacturing cost control	Costing of customer quotations	Management of technology projects
Human Resources: Augmented reality training system	Training in financial systems for Finance and other employees	Improved corporate training services	Training for operators on the shop floor	Augmented information for new product understanding of retailers	Training on new systems for IT and other employees
Operations and Supply Chain: Internet of Things sensors on machines	Tracking of machine usage expenses	Increased data on machine usage and employee wellness	Management of quality and maintenance	Traceability of customer orders	Increased value of senior management reports
Sales and Marketing: Social media unit creation	Increased awareness of marketing expenditure effectiveness	Support for recruitment	Product performance intelligence for quality management	Improved customer engagement	Privacy implications of data gathered and stored
Information Technology: Data dashboard for central systems	Company expenditure data reporting	Management of employee costs	Performance management	Understanding of impact of new product initiatives	Self service data for senior team and others

Most digital transformation initiatives have substantial implications in many other areas of the organization. Failing to fully consider these will result in missed opportunities and unanticipated negative consequences.

Planning your digital transformation integration

Consider a digital change initiative in your organization. Apply the matrix to this initiative and identify its impact throughout the organization. Talk to others about their thoughts on what should be included in the matrix. Are there now areas worthy of attention that were not addressed effectively before?

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Peter Carr is the author and instructor of the University of Waterloo Watspeed Digital Transformation Certificate Program, available globally online, and focused on overcoming the challenges of successful technological change. The program is jointly offered with the Ontario Society of Professional Engineers.