Businesses are embracing digitalization to optimize workflows, improve productivity, and increase profitability. Digital transformation is changing how organizations are managing their internal operations, promising a number of benefits. A key area of focus for many is business process transformation.
Process transformation leverages digital solutions to cut costs, improve operational efficiency, and stay up to date with industry best practices. Yet, while organizations are investing billions in digitalization efforts, many simply aren’t seeing the returns they had expected.
The true state of digital transformation
While it’s tempting to think of digital transformation as a panacea to business woes, the truth is, it’s anything but. An oft-cited survey from McKinsey found that 70% of companies failed to reap significant benefits from their digital transformation efforts. Forbes suggests that number is closer to 84%.
So, what’s to blame?
Modern businesses are complex systems, running anywhere from dozens to hundreds of processes every day in the delivery of their goods or services. There are also several different departments and teams at play, making organization-wide transformation difficult to manage.
6 Common Business Process Transformation Pitfalls
Sometimes budget constraints or access to technology can hamstring digitalization efforts. For the most part, challenges that bring down digitalization are institutional rather than technological.
When it comes to process transformation, many of the pitfalls that plague digital transformation also apply. Here are 6 commonly faced process transformation challenges, and our recommendations for getting past them.
1. Weak Transformation Strategy
Any business process transformation must have a defined strategy and clear, communicable goals. Vaguely defined strategies and unclear goals rarely inspire confidence. Low confidence leads to poor stakeholder buy-in, reducing internal support for transformation projects.
What sets successful organizations apart, however, is the development of integrated transformation strategies. A good strategy incorporates a strong vision, clear strategic goals, and measurable business outcomes. Integrated strategies align these factors with the organization’s business strategy and its unique value proposition to generate a sustainable competitive edge.
Clear strategic goals provide transparency, and measurable outcomes provide stakeholders with metrics for tracking the results of transformation efforts.
2. Underestimating the importance of culture
Decision-makers leading the charge for digitalization often fail to understand how behavior contributes to work culture. Implementing technologies and process strategies is great, but if you don’t spend time changing employee behavior, your business transformation is likely to fail.
Preparing your company culture for change is one of the most important pieces of the digital transformation puzzle. Unsurprisingly, it’s one of the most difficult hurdles to overcome. Culture permeates every level of organizations, making multipronged approaches necessary.
Cultural change must target executives, leaders, and employees. This means improving communication, education, skill-training, inter-team collaboration, accountability, and transparency throughout the organization. The goal should be to get all your key players in the transformation process excited and enthusiastic for change.
In this regard, HR can be a huge asset. HR departments can improve internal communications by disseminating information and gathering input from employees.
3. Low stakeholder buy-in
A mistake business leaders make when preparing for process overhauls, is neglecting stakeholder buy-in. This is often caused by insufficient communication and a limited understanding of the process slated for transformation. Stakeholders in this regard exist at every level of the organization, from the C-suite to the ground level.
A strong transformation strategy requires targeted communication with stakeholders and information-gathering to understand existing pains. The last thing you want is for stakeholders to feel alienated and uninformed.
Your communication with stakeholders should do the following:
- address why your organization needs to change
- illustrate what to expect in a clear and transparent way
- detail how the transformation will be achieved
Adjusting your communication strategy to suit individual stakeholders is also a fantastic way to improve confidence and cooperation. Remember, if your stakeholders aren’t on board with transformation efforts, you’re likely to face endless delays and pushback.
4. Issues with the frozen middle
Typically, higher-level execs hand down direction for middle management to enact. When these directives are abstracted away from the day-to-day realities of business operations or the teams that are affected, there can be pushback or resistance to proceed. The so-called “frozen middle” is an issue in which directives slow down at the middle management level.
Often the frozen middle problem is caused by poor communication from the top and a lack of collaboration between executives and their middle managers. In the context of process transformation, this may be exacerbated by concerns that automation, digitalization, and improved processes could make certain roles redundant.
Sensitivity to these issues can make middle management more invested in preserving the status quo than in pursuing radical transformation.
Three ways to improve the situation are:
- including middle management in the transformation strategy and design process.
- linking performance objectives to transformation success.
- providing training and support for middle managers leading transformation efforts.
5. Poor employee engagement
Even with sufficient buy-in, transformation efforts can still fall flat. If your employees aren’t sold on the proposed changes for process transformation, your investment could end up being a waste of time and money. This makes employee engagement essential.
The fact is that most people don’t like change. Process transformation represents a change not just for the tools employees use for work, but more broadly for how they work. Educating and empowering employees are two ways to build employee engagement.
Improving engagement requires ongoing training, skill development, and support. Employees who are more confident in their abilities to keep up with new technologies are more likely to make use of it. This reduces the risk of backsliding, failure to adopt, and can ultimately help drive successful process transformation.
6. Technical skill gaps
Business process transformation can be crippled by skill deficits. This happens when companies underestimate the skills and experience needed for success. Unfortunately, this reduces productivity and process efficiency. Under-skilled teams are slow to adopt new technologies. This lengthens the transformation process, incurs added costs, and delays returns on investment.
Capable leadership at the departmental level can help drive transformation.
Building this capacity means identifying candidates within the organization with the right mix of hard and soft skills to lead transformation efforts.
Typical skills to look out for include:
- technical skills to work with proposed technologies
- learning agility
- emotional intelligence
Succeeding with Business Process Transformation
Emerging technologies are constantly creating new opportunities and new threats for businesses. The need to become more agile and more digitally integrated to avoid disruption and secure competitive advantages is only growing. While embracing technology is an important part of business transformation, true transformation depends on your people. Putting them first is the key to success.
Click here to learn more about business processes and our tips for managing them internally.