Why a lack of ambition is holding back digital transformations

A 2021/22 report by Bak­er McKen­zie found that only 8% of busi­ness­es use dig­i­tal trans­for­ma­tion to change busi­ness mod­els, with 69% lim­it­ing it to improve process effi­cien­cy. But, done right, it can be the rock­et under your com­pa­ny. 

One year into its busi­ness, lan­guage-learn­ing app Babbel decid­ed to rewrite its free prod­uct by trans­form­ing it into a pre­mi­um ser­vice.

“The engi­neers had built a free vocab­u­lary train­er and giv­en it a user-friend­ly inter­face,” says Markus Witte, the app’s co-founder. “But that inter­face taught us two things. That you would nev­er learn a lan­guage from it. And you would nev­er make mon­ey from it. The site looked great and was tech­ni­cal­ly sound, but we soon realised we had to trans­form the prod­uct and cul­ture.”

To tru­ly bake lan­guage learn­ing into the dig­i­tal prod­uct, Babbel began an employ­ment dri­ve and hired more of those with on-the-ground expe­ri­ence in learn­ing lan­guages who could input on the dig­i­tal side. Addi­tion­al­ly, an embold­ened way of think­ing helped del­e­gate and moti­vate staff dur­ing and beyond the trans­for­ma­tion. “We banned the con­cept of ask­ing your boss because we found that stopped peo­ple from tak­ing respon­si­bil­i­ty and slowed change,” Witte says. The bold move worked, with the new ver­sion help­ing them sell more than 10 mil­lion sub­scrip­tions.

Trans­for­ma­tion is about more than apply­ing willpow­er. There are issues sur­round­ing time, mon­ey and staffing. A recent US-Euro­pean sur­vey by Couch­base point­ed to many of the hur­dles ahead for senior IT deci­sion-mak­ers look­ing to trans­form. Six­ty-one per cent of those sur­veyed said they found past tech­nol­o­gy deci­sions made new trans­for­ma­tion projects more dif­fi­cult, in par­tic­u­lar: poor cloud infra­struc­ture (48%); the com­plex­i­ty of imple­ment­ing tech­nolo­gies (expe­ri­enced by 31%), and reliance on lega­cy tech­nol­o­gy (28%).

Beyond that, the biggest block to an ambi­tious dig­i­tal trans­for­ma­tion is cul­ture. An ele­ment of dig­i­tal trans­for­ma­tion that Babbel got right – but which is often over­looked – was win­ning hearts and minds, says Mat Rule, CEO and founder of UK soft­ware com­pa­ny Toca, which solves com­plex enter­prise devel­op­ment chal­lenges for large firms. “Dig­i­tal trans­for­ma­tion projects fail because work­ers are work­ing with one hand tied behind their backs, being asked to deliv­er the impos­si­ble, with­in very tight bud­gets, while being under­staffed.

“Added to this, your tran­si­tion can be ham­pered by data silos, a short­age of skills and lega­cy tech­nolo­gies. The ini­tial vision is then com­pro­mised, delayed and ROI is deplet­ed,” he says.

Many firms also shy from dig­i­tal trans­for­ma­tion and progress in small, man­age­able parts that won’t dis­rupt the busi­ness and reduce cost and risk, says Helen Ash­ton, CEO of trans­for­ma­tion­al con­sul­tan­cy Shape Beyond and who has over­seen dig­i­tal trans­for­ma­tions at Asos and in pri­vate-equi­ty port­fo­lio busi­ness­es. 

“That way, even if it doesn’t go to plan, it will nev­er be classed as a fail­ure, just a learn­ing for next time. This busi­ness almost doesn’t recog­nise this as dig­i­tal trans­for­ma­tion, just every­day entre­pre­neur­ial growth and there­in lies its suc­cess. It’s when pro­grammes are cost­ly and nev­er-end­ing that dis­ap­point­ment is inevitable,” she says.

The final bar­ri­er is that many busi­ness­es don’t know what their trans­for­ma­tion should look like, so are per­ma­nent­ly left at base camp when it comes to pos­i­tive, ambi­tious change. WalkMe, a dig­i­tal adop­tion plat­form provider, spoke to 1,400 glob­al deci­sion-mak­ers and found that enter­pris­es wast­ed $16.6m (£12.76m) on dig­i­tal trans­for­ma­tion in 2021 because peo­ple didn’t use tech­nol­o­gy as expect­ed.

A ground-break­ing dig­i­tal trans­for­ma­tion for your firm should look to uni­fy the three key areas of user jour­neys, Rule says. These are the dig­i­tal door (where users meet your prod­uct – such as a site or app); infor­ma­tion-gath­er­ing (how your busi­ness col­lects the most use­ful data) and the con­duc­tor (how automa­tion uses this data to enhance user expe­ri­ence, for exam­ple by offer­ing rel­e­vant goods or pro­mo­tions).

Busi­ness­es don’t always have this clar­i­ty when they start on the trans­for­ma­tion jour­ney. ​​Many com­pa­nies find it dif­fi­cult to artic­u­late what it entails and where to start, Ash­ton says. But a well-exe­cut­ed trans­for­ma­tion can lead to huge wins. 

“Dig­i­tal trans­for­ma­tion shouldn’t just be about dri­ving effi­cien­cy and reduc­ing cost in a busi­ness,” she says. “It can, more excit­ing­ly, be a key lever to pro­tect and gen­er­ate rev­enue through enhanced cus­tomer expe­ri­ence and engage­ment. It can expose bot­tle­necks and show what cus­tomers want from your prod­uct.”

Sur­prise wins could include improved cus­tomer expe­ri­ence, employ­ee expe­ri­ence, cost-reduc­tion, prod­uct devel­op­ment, and speed of deliv­ery. All of these things rapid­ly deliv­er busi­ness val­ue and, if suc­cess­ful, pilot wider adop­tion. 

This breathes con­fi­dence into the busi­ness and gen­er­ates a cul­ture of brav­ery and own­er­ship, she says, as seen in Babbel’s intro­duc­tion of encour­ag­ing staff to take respon­si­bil­i­ty. 

“When we launched, we had few­er than 10 peo­ple. Now we have a staff of 750,” says Witte. “The hard part was get­ting every­one to think one way and embrace it but the mod­el we cre­at­ed endures to this day.”

The suc­cess of Babbel’s dig­i­tal trans­for­ma­tion lay in apply­ing a demo­c­ra­t­ic and trans­par­ent assess­ment of its prod­uct and sys­tems, which proved piv­otal in grow­ing the com­pa­ny glob­al­ly. Many oth­ers will look to fol­low its exam­ple.