Why digitalizing your business is not, by itself, a useful goal

With the explosion of teleworking in the past five years, enterprises have adopted dozens of online digital tools in a desperate scramble to tightly collaborate and maintain continuity in their business operations.

As the leader of a global Value Engagement consulting team, I find this response both encouraging and worrisome. Encouraging, because the pandemic has convinced many business leaders of the urgent need to transform. Worrisome, because the ad hoc collaborative tools businesses grabbed under stress may actually work against their long-term success.

Why? Because these “solutions” have one major disadvantage: they create even more pockets of isolated information and, in turn, more blind spots inside our organizations. This “silo” effect is exactly the opposite of what businesses need. When almost every product is born at the intersection of many engineering specialties, success or failure depends on the organization’s ability to see and exploit these intersections. Instead, silos of information make them invisible.

Ironically, ad hoc collaboration tools give the illusion of breaking the silos by enabling remote work, but remote work is not digital transformation. Instead, these tools complicate the challenge of seamless information-sharing.

While the experience COVID-19 means that many business leaders now recognize the risks of failing to transform their organizations, many also will be afraid to act. As McKinsey reports, 80% of all business transformation efforts fail. That sobering statistic will leave many business leaders frozen between two bad alternatives: doing nothing, or investing significant sums in an expensive transformation with no guarantee of success.

As a former CIO and leader of dozens of major transformation projects, I know that this is a false choice. The way to avoid it, however, it is relatively simple: Don’t do what the failed transformations did. Don’t focus on what technology to buy. Instead, focus on value, the key to building a better business.

Digitalizing your business is not, by itself, a useful goal. Instead, focus on value by transforming your business to achieve new ways of working, support new business models, and solve your business challenges. True transformation achieves this by empowering your people with readily accessible, up-to-the-minute information that is consistent across all functions.

The consultants on my teams help clients succeed at transformation by working with them to identify a combination of business goals to achieve and pains to eliminate. These goals then serve as the transformation blueprint. Once the business goals are set, we then agree with the client on key process indicators (KPIs) and key value indicators (KVIs) for measuring the transformation’s progress, always based on value. The engagement ends only when the outcome is delivered.

If you wish to reduce the cost of production, make engineering and manufacturing work better together, mine the intersections between functions to identify and capture innovation, or achieve dozens of other business goals, set a numerical target. Once you have that target, then look for digital technology—preferably a comprehensive business innovation platform that sweeps away silos—to help you achieve it.

If the pandemic taught us anything, it is that the future will be different. It’s up to us to make it better than the past. Value Engagement is the process for achieving that goal, for your organization and for the world it serves.

Note: this post was originally posted in July 2020 and updated in July 2024.