In my experience, there are two serious mistakes that many business leaders make when they start thinking about digital transformation.
Firstly, believing that it’s a process that an organization begins, then goes through, and then comes out of the other side in a “digitally transformed” state. The second is that it’s all about technology.
In reality, digital transformation is an ongoing process that never truly ends. Businesses were just getting acclimatized to computers being an essential everyday tool since the 80s when the internet emerged in the nineties and forced them to rethink technology from the ground up. Then no sooner had we gotten the hang of .coms and email when social media turned everything on its head once again. Then came the mobile internet, then the cloud, then artificial intelligence (AI) …
However, technology is only ever a part of the picture. Just as important are the human issues that are central to successfully going through these processes of transformation. These include the needs and behaviors of your customers, your company culture, and the buy-in of leadership and the wider workforce. All of which play an absolutely vital part in determining the outcome of any digital transformation initiative.
Once you start to consider this, then it becomes clear that technology is only a part of the challenge. And, I would go as far as to say, due to the growing availability and accessibility of just-about-anything as-a-service, delivered through cloud platforms, it’s probably the easiest part for most businesses to solve.
Revolution Never Ends
These were some of the issues we discussed when Kamales Lardi, author of The Human Side of Digital Business Transformation, joined me for my podcast recently. In her book, Lardi tries to dispel some of these common myths around digital transformation.
She tells me, “We oftentimes think that digital transformation is something that appeared over the last couple of years, but we’ve had transformation in terms of digital applications for a long as with have technology applications in business … and we’ve gone through these cycles of implementation of new types of technology from knowledge management to social media, and currently we’re seeing a lot of emerging technologies in business applications.”
Unfortunately, this misconception can often lead to the failure of digital transformation initiatives, leading, more often than not, to wider business failure. According to research Lardi cites, 70 percent of digital transformation initiatives fall short of their intended outcome. This can happen simply because the transformation is not treated as an ongoing initiative that requires consistent application of strategy as well as financial investment.
Lardi tells me, “We’re seeing breakthrough technologies coming out almost on a daily basis – this massive trend cycle – two or three years ago it was blockchain and cryptocurrency, last year was the metaverse – and this year it’s all been about ChatGPT and generative AI.
“So there’s cycles going on, and this creates an element of confusion as well as an element of misinformation for many business leaders – where do we start? And what is the relevant technology to apply?
“These disruptive technologies can create exponential growth and scale for companies, but at the same time, where do you put your limited resources and limited investments?”
And where does the human element fit in? Well, the latest wave of digital transformation sweeping through industries is driven by AI and machine learning. We already know that there is a high level of anxiety around these particular technologies – specifically around the idea that they may lead to the loss of human jobs and widespread redundancy.
So during this current phase of digital transformation, I would argue that it’s more important than ever that we address the human issues by examining what impact it’s likely to have.
The Human Element
Part of the problem that needs addressing, Lardi suggests in her book, is that business leaders often assume that the human issues around digital transformation largely relate to change management.
“Change management does actually fall short of what is needed in digital transformation,” she tells me.
“[a company] is like a living organism … when you introduce a new change to the environment it resists – very much like when you introduce a virus to the human body it will resist.”
This can lead to pushback – from leaders as well as the wider workforce – when new ideas suggest that new ways of doing things may be more efficient and effective than the “traditional” methods.
“So the unfortunate thing within an organizational environment is sometimes this new element that’s being introduced is not a negative … it could accelerate and grow the organization … and the business environment reacts by pushing back on these new opportunities.”
This could be the cause of, for example, a workforce resisting change because it fears that jobs could be lost or that a change might require a new skillset that it doesn’t possess. From a leadership point of view, it could give rise to fears of losing control and of being required to take charge of processes and operations that it doesn’t fully understand.
Driving Positive Growth
According to Lardi, the solution lies in the careful creation of an ecosystem of stakeholders – workers, managers, business leaders, suppliers, and other external partners – that can work together to address these issues.
As well as driving an understanding and a re-evaluation of digital transformation as an ongoing process that will most likely be an important part of a business’s strategy for as long as the business is operational, it means exploring and evaluating the human changes that are likely to be necessary. Then it requires putting hard thought into the foundational values that an organization needs to apply in order to successfully navigate those changes.
“Having a strong purpose and values that you can fall back on … having this purpose that you can kind of rally your organizational members towards is so critical,” Lardi explains.
One question Lardi tells me she has frequently found useful to debate when considering this issue is what is the purpose of an organization?
“Is it really just about financial gains? Or is the purpose of an organization to create value in the market and value for its customers?
“This is something that I think is a fundamental mindset shift that needs to happen in the business landscape. Companies are not just here to make money; companies serve a purpose in the global economy – how do we identify this value and live this value?”
I predict that these are questions that more and more business leaders are likely to find themselves coming up against, as the current wave of digital transformation proves itself to be the most disruptive – and valuable, to those who get it right – so far.
Answers are most likely to be found by those that give careful thought to aligning digital transformation initiatives with business outcomes.
As Lardi puts it, “I think this is something that is not so straightforward to do … at times they are implementations that don’t have a proven track record … if you think about AI-based solutions or blockchain or even the metaverse, if you’re implementing this for a business how do you align this to a commercial outcome? What do you measure as success?”
Doing this, and being able to link initiatives to positive changes, can be key to ensuring you achieve the buy-in and human support for whatever tech-driven changes you are hoping to implement. It’s a step that’s often overlooked but one that I believe is critical in achieving the outcomes we want.
You can watch my full webinar with Kamales Lardi, member of the Forbes Business Council and author of The Human Side of Digital Business Transformation, by clicking here.
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