Why do so many digital transformation initiatives fail?

By Michael Rivera, PhD

As manufacturing firms, we have approached digital transformation initiatives with more tools, technology, and know-how than ever before. Innovations in technology and processes range from industrial IoT (IIoT) location tracking to AI-powered preventative maintenance. Those advances improve product quality, reduce material waste, and reduce production line downtime with many of the expected productivity increases and cost decreases. 

However, digital transformation initiatives often only result in incremental improvements when an organization isn’t positioned to adapt to disruptive technology. To truly attain transformative change, manufacturers must recognize and directly address the organizational obstacles that may be hidden but can sidetrack even the most well-funded digital transformation initiative.

You likely recognize familiar challenges such as responding to evolving customer preferences, overcoming employee resistance, and breaking down silos within your organization. Yet digital immaturity, an organization’s inability to adapt to disruptive technology, is a more recent shortcoming and a growing problem. Implementation of new technology across the enterprise is tricky business, particularly when manufacturers are relying on employees and technology partners to smoothly integrate old systems and workflows with new technology.

Merging new technology with legacy manufacturing equipment and workflows at scale directly affects established operational processes, products, and customer relationships as well. Failed transitions to modern manufacturing processes result in factory downtime and lost customers. Revenues are lost to more competitive firms. A Deloitte study found that companies with higher digital maturity were “about three times more likely than lower-maturity companies to report annual net revenue growth and net profit margins significantly above their industry average—a pattern that held true across industries.”

Successful digital transformation initiatives in manufacturing operations increase productivity and improve safety and morale. But they require an organization with digital maturity to attain their full potential. Manufacturing leaders can position their companies to be more digitally savvy, beat the odds and be poised for success by following these fundamentals:

  • Learn from setbacks of others 
  • Engage employees and your senior leaders.
  • Trust your team to avoid pitfalls and propel growth.