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Companies invest billions in technology because they envision a better bottom line. They see technology as a way to transform operations, customer relationships, or build new business models.
In practice, though, digital transformation vexes companies. It’s hard to get it right the first time — and just when you have it working, everything changes again. The skills needed for automating processes aren’t the same as those needed for putting businesses on the Web, which likewise differ from those needed to make mobile business effective. It takes real investment of will to wear all these different hats simultaneously.
No wonder naysayers like Robert J. Gordon have mocked the Internet industry for the weakness of its revolution, as measured by productivity [a good, reasonably quick discussion of Gordon’s view and the counter-arguments was offered in The New Yorker last spring].
Gordon is not the first contrarian economist to bash technology; Robert Solow, the Nobel Prize-winning MIT economist, famously quipped that he could “see the computer age everywhere except in the productivity statistics.” Solow eventually came around, helped by companies actually making big productivity leaps thanks to their technology in the 15 years after the publication of this remark in his 1987 New York Times book review. Gordon may change his mind someday, too.
But there’s a lot of work to do. A recent survey by MIT Sloan Management Review and Capgemini Consulting offers an emphatic reminder that technology is complicated to manage. The survey, Embracing Digital Technology: A New Strategic Imperative,
draws on almost 1,600 responses to an online survey. The survey shows that companies often struggle to make technology investment a priority. Employees from top management down to staff recognize that new technologies matter when deployed effectively — 81% of those surveyed believed that if digital transformation were a management priority, their companies would be more competitive two years from now.
More competitive companies will presumably also be more productive. If that’s the dream, here’s what the survey says is the nightmare — the nine-headed hydra of digital transformation:
Nightmare #1 Lack of urgency.
The failure of top management to emphasize new technologies was the number one problem cited in the survey. Especially at successful organizations, the need to engage in digital transformation can seem unimportant.
Nightmare #2 Lack of vision.
Survey respondents want to see leaders develop a strong vision for how technology will be used to advance the business.
Nightmare #3 Unaligned management.
Even at companies where employees think leadership has a vision, efforts to gain technology benefits stagnate if leadership cannot spell out a road map and keep the company moving along it.
Nightmare #4: Bad attitudes.
Disregard for or distrust of emerging technologies is seen as a drag on digital transformation. Particularly where leaders are older, or the workforce is, the perception exists that technological change is a non-starter.
Nightmare #5 Old technology.
Legacy is a good thing outside of the tech world, and a bad thing inside it. Survey respondents rated current IT systems as the third biggest obstacle to getting digital transformation. It’s hard to integrate the old and the new.
Nightmare #6 The pace of change.
Young and old alike have to hustle to keep pace with all the new technology emerging. Businesses face the extra problem that new technologies often aren’t useful in their first few iterations.
Nightmare #7 Internal politics.
The survey showed that people worry about their existing fiefdoms being diminished and possibly destroyed by new technology. At the least, people fear loss of influence.
Nightmare #8 Measuring.
It’s not so much that companies can’t measure the return they get from technology, but that they don’t try. They don’t build cases for digital investments, and they don’t develop metrics to help them assess the value of the investments they do make.
Nightmare #9 Lack of incentives.
Why would a businessperson at pretty much any level of the company plunge into digital transformation if there’s no reward for doing so? Many companies fail to create incentives or even align performance reviews towards achieving digital transformation.
None of these problems is simple to solve, but all can be solved by good management, consistently executed. Companies cannot expect to find technology silver bullets; that fantasy has led many businesses to a productivity dead end.
Our survey suggests technology can transform a business if company leaders give it conscious, coordinated and consistent attention. Maybe that kind of work doesn’t sound dreamy — but who wants to get stuck in a technology nightmare?