Lack of leadership a reason for digital transformation failure in local firms: experts

11-Jul-2020 Intellasia | The Saigon Times | 6:02 AM Print This Post

With most companies in Vietnam reporting a digital transformation failure rate ranging between 60 and 80%, experts from audit, tax and advisory services provider KPMG Vietnam and RMIT University Vietnam have identified five common reasons why digital transformation remains a distant dream for most Vietnamese businesses.

The lack of leadership ability to drive innovation is one of the main reasons why the vast majority of digital transformation projects fail, according to Dr Nguyen Quang Trung, Department of Management Head of RMIT Vietnam’s School of Business and Management, and Nguyen Tuan Hong Phuc, Partner of Customer and Operations, Digital Consulting at KPMG Vietnam.

Digital transformation is not just a single change but a complete transformation, which requires leaders capable of promoting innovation.

However, the joint research between RMIT University and KPMG Vietnam revealed that many businesses leave it entirely to their information technology (IT) department to explore and make changes involving technology. While the leaders of such businesses see digital transformation as part of the IT department’s responsibility, many IT department heads think they can carry out transformation without much input from the leadership.

Another reason is the missing or weak dynamic capability within the organisation. Dynamic capabilities are those needed to integrate, build and restructure the internal and external competencies of a business to adapt promptly to the rapidly changing environment. The three main types of dynamic capabilities are sensing capability, seizing capability and transforming capability.

Successful businesses are strong across all three dynamic capabilities, while failing businesses often partly or completely lack such capabilities, among other factors.

Vietnamese businesses also lack an appropriate corporate culture as a foundation, which plays a major role in promoting creativity and innovation and is considered a determining factor for the success of digital transformation.

In many small Vietnamese businesses, building a corporate culture is not yet big on the leadership agenda. The research indicated that because of limited resources, company leaders are afraid of failure and even punish mistakes. In addition, it is very common for the leadership to adopt a culture of blame, while employees are reluctant to change and step out of their comfort zones, making the execution of the digital transformation strategy even more difficult.

The fourth cause is the misconception about digital capabilities, which comprise not only information and communication technologies (ICT) infrastructure but also a combination of many competencies. These comprise technology infrastructure, the data collection and management process, data analytics, the ability to offer solutions based on data analysis and technology and security capabilities.

The research found that many businesses misunderstood or did not fully grasp what digital capabilities were. Those businesses focused solely on ICT infrastructure, so they invested in high-cost technology projects but the solutions provided did not meet the expectations of their customers and employees due to the other capabilities being weak.

Last, but not least, mistakes in the digital transformation strategy have led to transformation failure.

Businesses often become overly technology-oriented and forget that the people employees, shareholders, customers and suppliers are the true owners of the transformation.

They are also overly delusional about the potentially great success of digital transformation and set unrealistic goals against a short execution timeline.

Other mistakes include becoming overly cautious and trying to be perfect in deployment and the lack of focus, preparation and dedicated resources for digital transformation.


Category: Business, Vietnam

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