Many American businesses now need to embark on major organizational transformation initiatives to embrace the benefits of digital working. Digital working can help cut costs and drive improvements in productivity, but many businesses need to carry out significant process and technology changes to embrace these benefits. If you're about to embark on a major digital transformation program, learn from the five following mistakes many of your peers and predecessors have made.

Relying solely on top-down direction setting

An effective executive sponsor should create the need for change by setting direction and articulating what success looks like for the organization. These are critical objectives of his or her role, but top-down direction setting alone will seldom get the desired results.

study of large American businesses embarking on major transformational change programs found that the most successful initiatives combined top-down direction setting with bottom-up performance improvement initiatives and cross-functional core process design.

As such, digital transformation in your business won't occur solely due to the direction you set. You will really only achieve great things when everyone throughout the company embraces the idea and works together to drive performance improvements.

Underestimating the challenge of legacy systems

Large businesses often rely on legacy computer systems that have supported the company for several decades. These systems often rely on unsupported operating systems and unwieldy processes that have developed organically over the years. Updating or replacing a legacy system is often the most difficult challenge that a digital transformation program faces, and you cannot underestimate the effort and cost this will take.

Different approaches can work. For example, some companies will simply invest in an entirely new system, to which they will slowly migrate customer and organizational data. Alternatively, some businesses adapt and update each part of the system because it is just too complex to start with something new.

Either approach can work, but the executive sponsor must agree on a single approach and stick to it. If you change the approach midway through the project, your budget and timelines will almost certainly quickly go out of control.

Implementing a waterfall approach to change

The waterfall change approach assumes that you detail everything you need at the start of the project before carrying out any of the necessary work. This traditional project management methodology is increasingly ineffective for digital transformation programs, and many executive sponsors soon discover that it's almost impossible to detail all the requirements your customers and employees will have as they move into the digital age.

Effective executive sponsors embrace and encourage more agile ways of implementing change. Small, iterative bursts of activity allow you to plan quickly and learn fast, limiting the disruption that can affect the organization. What's more, your people will see the benefits of the transformation more quickly, which, in turn, will encourage more employees to embrace the change.

Poor customer insight

You can easily spend millions of dollars on digital transformation activities that add no value to your customers' lives. For example, your customers may need to regularly fax documents, but you should focus on eliminating the need for the document, instead of investing resources in a solution that allows customers to do the same thing in a different way.

This is a common problem in digital transformation programs. In fact, one survey found that only 47 percent of companies transforming in this way have the right tools and processes to share customer insight data. If you don't truly understand what your customers need and want, you cannot effectively transform your business.

No visibility in the business

When you lead a digital transformation program, you need to make sure you fully engage with your employees. It's not enough to stand on a soapbox (digitally or otherwise) to make a big speech and then disappear. Sponsorship is an ongoing role that you must carry out throughout the transformation.

One benchmarking study found that the biggest obstacle to transformation success was ineffective change sponsorship from senior leaders. As the sponsor, you must find every way to make yourself visible and accessible throughout the program, or you could face resistance and slow progress.

Many American business leaders understand the need for digital transformation, but many executive sponsors fail in their crucial role to champion the change. Learn from the mistakes of your peers, and make sure you understand and effectively carry out your crucial sponsorship role. For more information, contact a company like X Plane.