Almost every large company faces tribulations on its journey towards digital transformation. The first and foremost issue of why these companies struggle is their poor strategic plan. While every company wants to go digital, there are only 10% of the major companies that are doing it right (strategically).

It is critical to have a distinct understanding of why digital strategies fail. The constant evolution of technology makes it impossible to craft a flawless digital strategy. Therefore, a professional technique to address this issue is by grasping the root cause of the failures. According to McKinsey Quarterly, there are five major pitfalls that erode the effectiveness of many digital transformation initiatives.

Misunderstanding the Term ‘Digital’:

About 50% of the executives lack a coherent definition of the term ‘digital strategy’ and consequently fail to connect it to their business. Digital strategy is not about supporting a few digital initiatives or modelling a few digital projects for your business. Instead, digital strategy is about interconnecting multiple devices, people and services on a single platform.

Misunderstanding the Economics of Digital:

It is imperative to comprehend the economic impacts of digital. However, Business Insider understands that only three major companies (Apple, Facebook and Amazon) have grasped the economic impact of digital and therefore captures the 90% of industry profits. CEOs, executives, and strategists need to learn about the modern economic realities through digitalisation or else they are bound to fail.

Overlooking Ecosystems:

Platforms and ecosystems allow digital players to move easily across industry and sector borders. The conventional textbook strategies are promptly starting to fade. Business executives currently need to strategize on a broader frame of reference or else they will not only miss opportunities but also invite threats from the competitors. For example, companies like Facebook, Google, Amazon and Alibaba are prolific ecosystem players. They have captured the market value that was difficult to imagine a decade ago mainly because of their strong ecosystems.

Underestimating Digitizing Incumbents:

While disruptions from the new entrants and fine-techs present a constant threat, often the real danger arises when an established, dominant company decides to harness the power of digitalization. Companies which only consider threats from newcomers while strategizing, digitally underrates the power of stable incumbents. Inevitably, it is incumbents’ move that disrupts the industry, and the digital strategy of these companies fail to cope with the competition.

Missing the Duality of Digital:

A misconception that digitalization is all about creating something completely new leads to failure. More often, companies ignore the need for digitizing their existing business while pursuing new business models. Understandably, that becomes the driving impetus for their digital strategy. However, incorporating a totally new business model is unwise as it contributes towards the chances of failures.

A successful digital strategy continues to be the cornerstone in the digital era. Recognizing the challenges while strategizing is a vital step for the leaders. Once recognised, the companies will be able to confront them in a profound manner which will subsequently eliminate the chances of failure in digital strategy.