Digital Transformation Supplement in the Times
Luis Caceres, Change Management trainer & consultant, discusses the human side to digital transformation and how behaviour can help or hinder the adoption of changes.
Similarly, dressing an organisation with new technologies is not enough to achieve the expected benefits. What is needed to ensure lasting results in the digital transformation? The key is on the human side.
The complexity of the human side of digital transformation can be illustrated with the following metaphor: Does anyone lose weight from wearing sportswear or buying gym equipment? No. Achieving the desired weight is more complicated than that; it requires following an exercise routine and a healthy diet. Would it be enough to enroll in a gym? It may help, but could someone develop the necessary discipline if they think exercise is a form of medieval torture? No.
Goals are achieved by changing beliefs and developing new behaviours. In this example, it can be useful to start by making small daily “sacrifices” toward a long-term goal. This means waking up early to exercise and avoiding the temptation of fatty meals, in order to respect a firm commitment to reach the desired weight at the end of the year. But we all know that this is easy to say and difficult to do.
Looking at this example, it seems obvious that wearing gym clothes is not enough to reach the goal. Unfortunately, it is common to see executives expecting results by dressing the company in new clothes or acquiring new systems and processes. This is also the case with digital transformation.
Just like weight loss, the expected results do not come from acquiring technological tools or promoting new slogans in the company. The goals are achieved by changing beliefs and developing new behaviours. Digital transformation is not something that can be bought in boxes (or clouds).
We will start our approach considering digital transformation as the adoption of digital technologies to fundamentally change the way we work to improve value delivery. It is important to look carefully at these three aspects:
The adoption of technologies has a human side. It is not about training people to use tools, nor communicating their benefits. It may be surprising to many, but adoption is an attitude. People can be trained intensively and overwhelmed with communications. But, if at the end of the process, they answer “no” to the question “Would you recommend this?”, that means no adoption.
Adoption is when people not only understand how technology helps them, but they defend it, promote it, and even are willing to pay for it. When technology is implemented, but there is no adoption, resistance is strong and results are not delivered at the desired speed or quality. This is the perfect scenario for situations where you have the technology, but the mentality is still anchored in the old ways of working. In such cases and when we quote the old IT joke: “pave the way for cows”. It’s not uncommon for organisations to “customise” new tools to fit the old mentality. But let’s move on to the second aspect.
Innovation requires tolerance for failure as part of the learning process. What if the organisation has a vertical culture in which those who make mistakes are condemned? Agile execution requires empowerment, does it stand a chance in a centralised organisation where every action requires CEO approval and a Pope blessing?
Considering these examples, does it make sense to state that changing processes requires changing beliefs and developing new behaviours? (Just like losing weight.)
To improve value delivery it’s not only necessary to be clear about the business goals and be aware of the value proposition, but also – and most importantly – to be clear about the purpose.
Value delivery is about solving problems and/or providing benefits to the customer. An organisation 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 their perception. Why should employees care about this? It’s not because they are being paid to do it, but because they understand and accept the purpose of doing it.
Which approach would be most appreciated by customers: explaining to employees that the company sells things, or explaining to employees that the goal is to offer a fantastic customer experience, which would also contribute to making the world a better place?
This is just one example to illustrate that purpose is more than a reason; it is a reason that makes it worthwhile. Among some purposes identified for some consulting clients are: “we want this city to be the pride of its citizens” or “in this tourist destination we offer an experience of connection with nature and ancestry”.
But if implementing technologies is an arduous task, changing people is even more difficult. As difficult as putting the whole organisation into gym clothes and turning them into athletes who achieve their goals more quickly. In the real world, it’s even harder because organisations don’t usually change on their own – they’re forced by external circumstances.
This was the case with an electronic payments company in a Latin American country where regulations in the sector were changed to allow more competition. This company was in a comfortable situation, forcing customers to pay high fees – and where the customer’s voice had no value. Even in the corporate culture, it was perceived that there was some kind of disdain for the customer. Suddenly, it was forced not only to offer new services, but to start worrying about the customer – and enticing them before the competitors won them over.
Could a new customer-focused culture be developed by new systems and processes? And quickly, before the competitors? Not so easily; old habits die hard. And statistics show how hard it is to get results in digital transformations.
According to Deloitte, the failure rate in transformation projects has remained constant at 60 to 70 percent since the 1970s. Harvard Business Review reports that of the $1.3 trillion spent on digital transformation in 2018, $900 billion was wasted. This could explain some of the frustrations about digital transformation. Like most technology trends, it becomes a fashion term, overused, but where the results obtained only confirm Solow’s IT paradox (investment in technology does not translate into improved productivity). For this discouraging scenario, there is a case of success that lights up where to look for hope: IBM’s transformation from a white elephant with a dubious future into a successful service company.
In his book “Who says elephants can’t dance?” Louis Gerstner – the CEO responsible for IBM’s transformation – explains that the key element in transformation is culture. But he is not the first to highlight the importance of the human side. Peter Drucker said, “Culture swallows strategy for breakfast,” to stress that culture can neutralise any management effort.
Trying to implement new digital technologies without promoting the necessary cultural change is like putting skates on an elephant – something quite dangerous. Leaders committed to implementing lasting change cannot risk ignoring the human side. Fortunately for these professionals there is a powerful weapon: change management methodologies. The three main aspects of digital transformation (ensuring the adoption of technologies, promoting cultural change and aligning the company’s value proposition with a purpose) can be achieved by applying change management techniques.
From the human perspective, it is necessary to evaluate the current culture, its beliefs and behaviours, as well as assess people’s willingness to change. Don’t be fooled by apparent desires for change! At the moment of action, reality is different from appearance.
From some evaluations, it is possible to verify if employees prefer to follow the procedures – sacrificing customer satisfaction; it is possible to identify a lack of collaboration between employees because they do not understand how they contribute to a common goal (which is not clear); or it is possible to identify a tendency to preserve the status quo instead of suggesting process improvements. It is also possible to obtain indicators on how desirable change is and how willing people are to act. This is why an assessment of preparedness for change and culture is essential at the beginning of the process.
Change management also helps us plan on the basis of assessment and implement changes in people’s mindsets to adopt new behaviours – and thus sustain them in the long term. It helps to identify the desired vision of the future, identifying the purpose of that vision – and how to generate the intrinsic motivation to engage everyone. It is so important to apply change management principles that I advise clients to implement a change management office (CMO) to support their digital transformation initiatives.
It also intentionally emphasised the need to change beliefs and behaviours as this is what the human side of digital transformation is all about. Change management methodologies provide theoretical support and practical tools to promote these changes.
Because, just like losing weight, this is something you can’t achieve just by wearing new clothes.
Originally posted here