The Human Side of Digital Transformation
The complexity of the human side of digital transformation can be illustrated with the following metaphor: Does anyone lose weight just by wearing workout clothes or acquiring fitness equipment? No.
Reaching a desired weight is more complicated than that; it requires following an exercise routine and healthy eating. Is it enough to enroll in a gym? It may help, but could someone develop the required discipline if they believed exercise was a kind of medieval torture? No.
Goals are achieved by changing beliefs and developing new behaviors. In this example, it could be useful to start by making small daily “sacrifices” for the sake of a long-term goal. This means waking up early to exercise—and avoiding the temptation of fatty meals—in the name of respecting a serious commitment to reaching a desired weight at the end of the year. Of course, as we all know, this is easy to say and hard to do.
Looking at this example, it seems obvious that wearing workout clothes is not enough to reach the goal. Yet sadly, it’s common to see executives expecting results by dressing the company in new clothes, and acquiring new systems and processes. Such is often the case with digital transformation.
But just like losing weight, the expected results do not come by acquiring technological tools or by dressing the company in new slogans. Goals are achieved by changing beliefs and developing new behaviors. Digital transformation is not something that can be acquired in boxes (or clouds).
Let’s start by considering digital transformation as the adoption of the digital technologies necessary to fundamentally change ways of working in order to improve value delivery.
It’s important to look carefully at these three aspects:
- Adopting digital technologies
- Changing ways of working
- Improving value delivery
Technology adoption has a human side. It’s not about training people to use tools, nor communicating its benefits. It might be surprising to many, but adoption is about attitude. People can be trained and overwhelmed with intensive communications. But if, at the end of the process, they answer “no” to the question “Would you recommend this?”, there is no adoption.
Adoption is when people not only understand how technology helps them, but also defend it, promote it and are even are willing to pay for it. When technology is in place but lacks adoption, resistance is strong and results are not delivered at the desired speed or quality.
That’s the perfect scenario for “paving the cow path” situations where technology is in place, but the mindset is still anchored to old ways of working. It’s not rare for organizations to “customize” new tools to make them fit the old mindset. But let’s move to the second aspect…
Changing ways of working is not just about defining new processes; it’s about the organizational culture that rules “how things are done around here.”
Innovation requires tolerance to failure as part of the learning process. What if the organization has a verticalized culture where those who incur errors are condemned? Agile execution requires empowerment, so would have no chance in a centralized organization where every single action requires approval from the CEO.
Considering these examples, does it make sense to affirm that changing processes requires changing beliefs and developing new behaviors? (Just like exercising.)
Finally, improving the value delivery is necessary not only to be clear about business goals and be conscious of the value proposition, but also (and most importantly) to be clear about the purpose.
Value delivery is about solving problems and/or offering benefits to the client. An organization could implement the most advanced and exotic systems in the back office, but if employees don’t care about solving customers problems, there will be no improvement in perception from the customers.
Why should employees should care about it? Not because they are getting paid to do so, but because they understand and buy into the purpose of doing it.
Which approach would be more appreciated by customers: explaining to the employees that the company sells stuff, or explaining to the employees that the mission is to provide a fantastic experience to the customer (which also will contribute to making the world a better place)?
This is just an example to illustrate that purpose is more than a motive; it’s a reason that makes something worth far more. Some purposes identified for consulting clients are “we want to make the citizens proud of this city hall” and “we offer an experience of connection to nature with ancestralism.”
Looking at the considerations above, it’s clear that digital transformation is not just about acquiring technologies, but promoting changes in people’s mindset and behaviors. But if implementing technologies is a hard endeavor, changing people is even harder (as difficult as putting the entire organization in workout clothes and transforming them into athletes who reach their goals faster).
In the real world, it’s even more difficult because organizations do not usually change of their own accord—they are forced to by external circumstances. That was the case of an electronics payment company in a Latin country where the regulations of the sector changed to allow more competition. This company was in a comfortable situation where it forced customers to pay high fees—and where the customer's voice had no value.
Even in the corporate culture, it was noticed that there was some sort of disdain for the customer. Suddenly, it was forced not just to offer new services, but to start caring about the customer—to seduce them before competitors took them.
Could a new customer-caring culture be developed by new systems and processes (and quickly, before competitors did so)? It’s not so easy; old habits die hard. And statistics show how is hard to get results in digital transformations. According to Deloitte, the failure rate of transformation projects has remained constant in the 60 to 70% range since the 1970s. Harvard Business Review also reports that from the $1.3 trillion spent on digital transformation in 2018, $900 billion went to waste.
That could explain some of the frustrations about digital transformation. Like most tech trends, it becomes an overused buzzword—and delivered results only confirm Solow’s IT paradox (investment in technology does not translate in improved productivity). For this discouraging scenario, there is a success case that brings hope: the transformation of IBM from a white elephant with a dubious future into a successful services company.
Making the elephant dance
In his book Who Says Elephants Can't Dance?, Louis Gerstner—the CEO responsible for the transformation of the IBM—explains that the key element in transformations is culture. But he is not the first to highlight the importance of the human side. Peter Drucker said, “Culture eats strategy for breakfast” to spotlight that culture could neutralize any management effort.
Trying to implement new digital technologies without promoting the required cultural change is like putting skates on an elephant—something quite dangerous. Leaders committed to implementing lasting transformations cannot risk ignoring the human side.
Fortunately for these professionals, there is a powerful weapon: change management methodologies. The three key aspects of digital transformation (ensuring technology adoption, promoting cultural change and aligning the value proposition of the company with a purpose) can be achieved by applying change management techniques.
Transformation means going from one stage to another. From the human perspective, it’s necessary to assess the current culture—the people’s mindset, beliefs and behaviors—as well as the readiness of people to change. Don't be fooled by apparent desires to change; at the time of action, reality is different from appearance.
From some assessments, it’s possible to ascertain that employees prefer to follow procedures, thus sacrificing customer satisfaction; there can be a lack of collaboration because nobody understands how they contribute to a common goal (which was not clear); and a tendency to preserve the status quo instead of suggesting improvement to the processes they criticize. It’ also possible to get indicators about how desirable the change is and how much the people are willing to act. That’s why a readiness assessment is essential.
Change management also helps us plan based on assessment, and implement changes in people’s mindset to adopt new behaviors—and thus sustain them in the long run. It helps to identify the vision of the desired future by identifying the purpose of such vision—and how to generate the intrinsic motivation to get everybody on board. It’s so important to apply change management principles that I advise clients to implement a change management office (CMO) to support their digital transformation initiatives.
This journey started with losing weight, paving the cow path, envisioning elephants on skates and intentionally emphasizing the need for changing beliefs and behaviors. That is what the human side of digital transformation is about.
Change management methodologies offer theoretical support and practical tools to promote these changes in mindset. Because like losing weight, that’s something that cannot be achieved just by wearing new clothes.