Many observers rightly consider the digital transformation of the business landscape and beyond to be the next industrial revolution. And like previous such revolutions, it will have far-reaching effects on how businesses operate, resulting in many new successful enterprises and an even larger number of failing ones.
In grappling with digital transformation, organizations often make the mistake of leading with technology. They believe, quite understandably, that if they only introduce the right technology or bring in the right technologists, their companies will achieve the competitive edge. Often, the results are quite disappointing.
That was the case, recently, when a financial organization recruited several experts from a leading technology giant to jumpstart its digital efforts. Within six months, the experts quit, deciding it was far easier to build a new organization from scratch. Which they did.
The takeaway is that for a company to thrive in the digital age, it must change its culture, not just its technology. A “SWAT team” of digital experts is also not enough if the rest of the company is stuck in traditional thinking. To be successful, leaders should strive to create an environment where every member of the organization, and every aspect of its operations, is steeped in a digital mindset.
Protiviti recently published a white paper, The Human(e) Side of Digital, which looks at innovation from this exact perspective. Developing a digital state of mind requires organizations to engage and educate the workforce, employ new business models and define a coherent strategy ahead of technology investments. Managing the employee experience, managing continual change and nurturing a digital culture are as important as deciding which technology to deploy. Human(e) digital transformation starts at the organization’s human core because people and culture drive at least 90% of an initiative’s success.
We have identified five key steps that can enable a firm to achieve this transformation. They are discussed briefly below, and in more detail in our white paper, which is available as a free download from our website.
In an ideal world, an organization could simply replace a significant proportion of its staff with more digital-savvy people to infuse this digital knowhow. However, given the current skill shortages, the enormous cost involved and the immense loss of workplace-specific knowledge, such a radical move would obviously not be the way forward.
A more practical approach is to enhance the digital capabilities of the current staff, to make skills training widely available, and to drive home through companywide messaging the challenge – and the excitement – of re-thinking the firm’s future in digital terms.
Additionally, all new recruits, especially those considered for leadership or managerial positions, should be evaluated on their digital proficiency and their abilities to see their functions in evolving digital terms.
Exploiting the Ecosystem
The retooling process should go beyond the boundaries of the organization. No organization can possibly create or hire all the necessary skills it needs (data analytics, artificial intelligence, statistical analysis, programming, etc.). Therefore, a mark of tomorrow’s successful company will be its ability to exploit the business and academic ecosystem, which is quite dynamic and growing by the day. This will require organizations to learn to partner effectively with other organizations, with the objective of sharing in the rewards fairly and not just maximizing the short-term rewards of the organization. This requires organizations to move away from a buyer/supplier mindset to one of true partnership. This is a fundamental mindset shift for many procurement teams that are motivated to drive down cost and retain as much value in the enterprise as possible.
It is also worth noting that today, more than a third of the U.S. workforce is made up of non-salaried employees – many of them highly skilled workers who set their own schedules and have several clients at a time. By 2027, these types of workers are expected to be the majority. Successful companies must learn to draw on this skilled workforce, often available in a managed business services (MBS) arrangement, as well as tap into university internship programs, and even bots, as rapidly improving automation tools allow valuable employees freed from manual processes to be upskilled into positions of higher value.
In a competitive recruitment market, organizations must hold onto their staff members and create an environment that will attract the best talent in the industry. A stable workforce is by and large an engaged one, and an engaged workforce is essential for an organization to be successful in digital transformation. If front-line workers, or back-office workers, don’t have a personal stake and positive attitude toward building a digital enterprise, the initiative will lose steam quickly.
And here we come to what I believe is the heart of the matter. Transforming a company is not just about creating a human digital workforce. It’s also about creating a humane one, that is, fostering a workplace that enables people to not just cope with but be excited about vastly changing requirements, the disappearance of functions and the appearance of new ones. A humane transformation enables workers to grow and adapt with changes, just as they were when computers replaced the typesetting machine, ATMs replaced bank tellers, etc. As we have seen from those earlier destabilizing technologies, humans continue to be an essential element in optimizing these advances.
For an organization to successfully transform itself, it must know where it stands overall on the scale of digital maturity. And it must benchmark itself as specifically as possible in each of the 36 areas that comprise the digital maturity matrix. These include such competencies as technology literacy, data science skills, and appreciation of digital business models. The matrix also considers lots of cultural aspects, such as innovation culture and risk culture.
There are several ways of assessing digital maturity. The most basic is simply to survey employees and get their feedback. A more effective approach would be to work with an outside party skilled in objectively determining an organization’s digital capabilities.
Once this assessment is done, the organization can then assign accountability and build plans to address the specific areas identified for improvement by the appraisal.
Changing an organization’s culture is like re-branding it from the inside. Earlier, in the section on retooling, I wrote about using effective messaging to enlist the help of staff in changing a company’s mindset. But the leadership must follow through on its messaging. If the C-suite truly believes that every employee is capable of providing ground-breaking ideas, then it might want to re-think everything that reinforces that message, from organizational charts to office layout.
Culture change is also about empowering employees, letting them float any ideas that they think can help the organization, and creating a system where “the crowd” can vote on those ideas. There are few things more empowering and inspiring than having a good idea from an unexpected source adopted throughout the enterprise.
Finally, the C-suite must establish beyond doubt that this is an enterprise that is going places. If it simply hews to its legacy systems and practices, it risks creating a vicious cycle in which the best staffers leave and promising recruits pass on the company.
By contrast, an organization willing to take on a humane transformation that leads with people, culture and skills has the best chance of instilling a digital mindset and a culture of creativity, the engines of success in this latest revolution.