What is the first thing that comes to mind when you hear “digital transformation”? Time after time, we ask participants at webinars and events to describe their idea of digital transformation, and the word “technology” inevitably tops the list. But the technological part of digital transformation is just the part that can be easily pointed to – what Protiviti Digital Leader Jonathan Wyatt has referred to as “digital veneer.” Everybody knows that organizations are primarily made of people. Yet too often, the people side of digital transformation is an afterthought.
It’s a human tendency to always be looking for a “quick fix” or “miracle cure,” be it the latest technology, or some other sure-fire solution to a complex systemic problem. And like any quick fix, most digital veneer efforts are doomed to fail, as surely as a New Year’s resolution to lose weight by buying a gym membership.
Studies of gym membership retention have shown that, in the absence of an active member engagement strategy, 63 percent of new YMCA members stop exercising within six months, and 80 percent of memberships lapse within two years. Forbes Magazine recently reported a similar failure rate for digital transformation, with 50 percent failing outright and 84 percent falling short of expectations.
As Thomas Davenport and George Westerman wrote earlier this year in Harvard Business Review, “digital” is not a thing that you can buy and plug into the organization. It is an ongoing process mixing people, machines and business processes, with all of the messiness that entails. It requires continuous monitoring and intervention from the top to ensure that both the designated digital leaders and other organizational stakeholders are aware of, engaged in and making good decisions about the transformation effort.
It is noteworthy that of the six top-line elements of digital transformation identified in Protiviti’s Digital Maturity Model only two are technology related. The rest are people related. Specifically:
- A clear digital mission, vision and strategy
- A management/employee culture that emphasizes the importance of embracing change and thinking digitally
- A relatively flat, agile organization that encourages the free flow of ideas from the top down and from the bottom up
- And lastly, a customer-centric marketing and communications strategy aligned with digital objectives.
Those four “people” elements are underpinned by technology. But technology cannot be effectively deployed or leveraged until the human elements are in place.
To a large degree, it is about alignment and collaboration. If an organization is culturally unprepared and unable to communicate effectively top to bottom and bottom to top, there is no mechanism for sharing the ideas that are going to take the company into the digital world. The operative word there is “effectively.” It is possible for companies to have so many communication channels that they’re not effectively collaborating at all.
The objective when getting the people side ready is to get everybody talking about digital initiatives, understanding the goals of the transformation, and understanding the metrics of success and why those specific metrics matter. This entails more than simple training. It may be called a mind change management, and making sure that good ideas have a way to work their way from the receptionist to the CEO, and back.
For example, if an organization is going to invest in big data analytics, it is important that leaders take the time to determine why they want it (the vision, whether it’s better customer engagement, decision making, performance, etc.), what they expect to glean from the data (the business outcomes, e.g., reaching customers on time and at key points of interaction), who has the data or needs to start collecting it (the organizational flow), etc. The leaders then need to build up the organization’s analytic capabilities to be able to extract the answers they want and act on that information. Spending millions to purchase analytics technology for a digital transformation project without taking the time to acculturate that change throughout the organization, explain its benefit and secure everyone’s participation and, more importantly, excitement about the initiative is like spending six figures on a sports car only to have it sit in the garage because you don’t know where you want to take it.
Finally, traditional organizational processes and employees’ job duties related to these processes are often disrupted during digital transformation initiatives. Employees may need to acquire new skill sets, or new talent may need to be recruited. The need for these new skills must be communicated with ample time and opportunity to adjust, and the people must be encouraged to not only re-learn processes but to embrace new, more agile ways of thinking about executing programs and projects that align with the purpose and capabilities of the new digital technology.
Protiviti has spent a lot of time examining the people side of technology and other challenges related to digital transformation. We invite you to visit the Digital Transformation and Business Transformation sections on our website, where much of this information is compiled.