The challenges companies face during digital transformations and how to overcome them
Digital startups are among the top players when it comes to the investment world, with over $100 billion pumped into the digital reinvention industry between 2016 and 2018, according to a recent Accenture report. This survey involved executives from 1,350 global businesses representing 13 industries in 17 countries. But massive investments say nothing about the returns that the startups may or may not bring, and according to the surveyed executives, the yields they received were much poorer than they expected, with the primary reason being the startups’ inability to scale their solutions beyond the pilot stages.
Among the many examples that the executives brought up, there was one that served as the go-to of what not to do. A sportswear startup that put all of its eggs in the basket of customization spent its money heavily on machine-learning, robotics and 3D printing at its brand-new manufacturing plant. The goal was to provide customers with customized athletic footwear and to get the product out the door quickly. The management bet on success in the model, and hoped that it would serve as an example for other manufacturing locations to follow suit. However, operations and the new tech never coordinated properly and production turned out to be nowhere as fast as originally planned. This led to the company closing the factory after three years.
If one was to analyse the report and cross-examine the high returns with how well a company scales from proof-of-concept to full deployment, the results would show that less than a quarter of companies accomplish both. When diving deeper into what these startups do differently, some interesting problems and their solutions come to light.
Among the key issues that companies may face when bringing their product to the market and scaling operations can be described as an unspoken disagreement among leadership and the goals they have in mind for the company. If everyone isn’t swimming in the same direction, it becomes increasingly difficult to set priorities and measure progress. The natural solution is to coherently express not only the solution (product), but also the problem it solves and how the company will coordinate itself around the desired solution. Then it will become exponentially easier to understand whether the solution is worth investing into.
Another challenge that arises during efforts to scale solutions is a clear separation between resources and digital capabilities available to support the pilot and the capabilities that can be used to support scaling it. This challenge is one that most if not all startups will face, and if it isn’t properly addressed with a coordinated strategy, the result may lead to a choice between long delays in the expansion of production or leadership trying to make quick, awkward changes to meet their promises to investors. The solution in this case is to grow pilots internally from the very beginning, ramping up digital capabilities during the progress.
Although the offered solutions may not be the panacea to all problems that companies face during digital reinvention, they do offer an insight on what to expect. When a company can anticipate the problems that may come during a crucial stage of digital evolution, they can start developing strategies to overcome them ahead of time, as opposed to dealing with them when it’s too late.