Why So Many High-Profile Digital Transformations Fail  

15 March 2018:

In 2011, GE embarked upon an ambitious attempt to digitally transform its product and service offerings. The company created impressive digital capabilities, labeling itself a “digital industrial” company, embedding sensors into many products, building a huge new software platform for the Internet of Things, and transforming business models for its industrial offerings. GE also went to work on transforming internal processes like sales and supplier relationships. Some performance indicators, including service margins, began to improve. The company received much acclaim for its transformation in the press (including some from us).

However, investors didn’t seem to acknowledge its transformation. The company’s stock price has languished for years, and CEO Jeff Immelt—a powerful advocate of the company’s digital ambitions—recently departed the company under pressure from activist investors. Other senior executives have left as well. The new CEO, John Flannery, is focused primarily on cutting costs.

GE is hardly the only company to run into performance issues and sooner-than-expected executive departures in the midst of a huge digital transformation effort. Lego recently defunded its Digital Designer virtual building program. Nike halved the size of its digital unit in 2014 by discontinuing its Nike+ Fuelband activity tracker and some other investments. Procter & Gamble wanted to become “the most digital company on the planet” in 2012, but ran into growth challenges in a difficult economy. Burberry set out to be the world’s best digital luxury brand, but performance began to suffer after initially improving.

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Source: HBR

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