Digital transformation is all the rage these days. Those two words are on the tongues of CEOs, CIOs, academics, and even bloggers who know nothing about the topic. Organizations seem to understand they should do it, and some may even have a vague understanding of the benefits of doing so. However, many don’t know where or how to start, or – even worse – focus solely on implementing technology. A true digital transformation is about people and processes, not just fancy new tech. Applying basic change management principles and taking a holistic organizational viewpoint will help ease the digital transformation journey.
What is “Digital Transformation?”
A lot of people are talking about it, but what do we mean when we talk about digital transformation? On the surface it is about implementing a series of technologies to create a digital-first organization: cloud infrastructure, mobile devices, big data and business intelligence, enterprise social and collaboration platforms, and any number of other digital technologies fall under this umbrella term. Digital transformation is about using technology to make more accurate decisions based on larger amounts of seemingly unrelated data in near real-time. It’s about automating manual, mundane processes and removing the human margin for error so people can focus on innovation, creativity, strategy, and decision-making.
Underlying the technology, however, is a more fundamental transformation that is often overlooked: changing the way people think and approach their daily work. More than putting a tablet in someone’s hands, employees must learn to work differently, whether it’s by sharing data and being more collaborative on a global scale, working from their home or the local coffee shop, or analyzing large amounts of data to determine future strategies and even justify every decision. The very nature of the way people work is fundamentally changed in a true digital transformation.
Digital transformation goes far beyond simply implementing new technology; it is a change to the entire organizational culture and way of doing business. It is disruptive, difficult, and often painful, especially for organizations that have not yet shifted to some of the modern corporate values of collaboration, transparency, and experimentation (with the required tolerance for failure). So, why would any organization want to go through this?
What is driving Digital Transformation?
There are several factors driving this push for digital transformation. Our world is changing faster than it ever has before, partially driven by the very technology organizations are trying to adopt. A tech-savvy, digital native generation of Millennials have become the dominant section of the workforce. Digital technologies are part of their daily lives and they expect it in the workplace. They communicate through social networks and instant messaging or texts, not through antiquated email. Most of their education has been about teamwork and collaboration, so they are surprised when they enter the workforce and are expected to work in silos and measured on individual contribution rather than team performance. Technology allows them to work flexibly from anywhere in the world, yet many organizations still expect “asses in seats” regardless of the type of work. Millennials are the bulk of the workforce now, but work is still geared towards Boomers. A digital transformation can help energize the new workforce.
Alongside demographic and cultural shifts we are seeing a new ultra-competitive economy with little to no growth. Disruptive challengers are coming from all over the globe and the average lifespan of a company has dropped dramatically. Between technological innovations, globalization, and short-term focused investors, survival for even the largest, most prosperous companies is no longer guaranteed, if it ever was. Survival in this new economic paradigm depends on an organization’s ability to adapt to changes which will come from flexible, non-hierarchical organizational structures, a well-rounded workforce comfortable with change and continuous learning, and yes… technology. Business decisions must be driven by real-time data, silos must be broken down, innovation and experimentation must be encouraged, and old ways of thinking and doing business must be tossed out the window. The world is different today than it was yesterday. Those organizations that recognize and accept this fact are focusing on undertaking a massive change to help ensure their survival.
Managing Your Digital Transformation
All of this can sound overwhelming, especially if you’re organization doesn’t already value flatter structures, collaboration, innovation, and modern technology, but it doesn’t have to be if it’s approached methodically and holistically. It’s important to remember that digital transformations start and end with people. Technology is constantly changing, but people will always be there. And implementing new technology is really much easier than getting people to change. After all, your technology is not likely to resist, even though it may seem that way at times.
So, how does someone go about getting an organization to change? There are a lot of very good change management frameworks and methodologies available to guide organizations through the process, but change management is more art than science. Every organization will have to figure out what works best based on its culture and industry. Regardless of specific change management models or specific leadership styles, there are three things organizations must consider to ensure a successful digital transformation.
1. Prepare the Workforce
Launching a digital transformation initiative begins with culture change. This is a slow, tedious process that requires examining the entire organization and getting buy-in top to bottom. Effective leadership and organizational change management are key. Leaders must not only understand the reasons for needing to change but be able to tell a compelling story to the rest of the organization. They shouldn’t hide the fact that their industry is undergoing a drastic transition or that the survival of the company is at stake. If this is the case, then leaders must turn it into a story of survival and be well versed in telling that story.
Now that the workforce is convinced that there’s actually a problem and a need for change, leaders can’t just leave people quaking in fear that everything is about to go to hell. They need to outline a vision for the future. There is a way to survive and thrive, but it’s going to require a lot of tough decisions, difficult changes, and – most importantly – everyone working together to build the new company. Leaders often want to detail the plan themselves and push it down the ranks to execute, but in the 21st century organization and in effective change management, the tactics should be left to the rest of the organization with senior leaders serving as shepherds along the journey, outlining a vision and guiding as needed but mostly staying out of the way.
The ultimate goal in any change initiative is to create a desire to change and to empower the workforce to own the initiative themselves, not to just dictate the change and force people to do it. In my experience, they can’t be made to change and will find ways to sabotage any initiative they don’t believe in. It’s worth the effort to convince everyone in the organization that this change is necessary. There will always be dissenters, but an effective leader will have ways to deal with those people and shouldn’t be afraid to do so if they are putting the change in jeopardy.
2. Prepare the Organization
Holistic digital transformation and organizational change doesn’t stop at getting buy-in from people. The organization itself must be prepared and willing to change. Policies, processes, procedures, and organizational mores must be challenged as well, and this can’t be left as a mere afterthought to the change. Proactively addressing the way business and administration is done is a key factor in any organizational change. Beyond the fact that implementing new technology will force your business processes to change, it’s important to examine the full impact a focus on new technologies will have on your organization.
Recognize that implementing big data and collaboration solutions isn’t just about architecting infrastructure, setting up servers, and putting all of your data in one place. Taking advantage of these solutions requires breaking down silos in order to get to all of that valuable data in your organization and encouraging communication and collaboration on that slick new enterprise social platform. Teams and departments can be protective of their data and reluctant to share information. Organizations that are plagued by silos will have to break them down before proceeding on their digital transformation journey. The art of breaking down silos is worthy of a book in itself, so here’s one to get you started.
Once those silos are down and you have a world-class big data solution in place, you can start using all that information to become a more agile and responsive organization. By now you know that a “but” is coming, so here it is: real-time data is useless if the people closest to the data don’t have the ability to immediately act on it. A rigid command-and-control structure where every little decision must flow up and back down the chain-of-command slows everything down and limits the value of real-time information. Decision-making authority must be pushed as close to the source of data as possible to truly become an agile organization. If leadership can’t trust employees with the most immediate access to the data to make decisions, then it’s time to rethink hiring practices and the organizational structure.
Ultimately, the organization itself must develop a culture of agility, innovation, collaboration, and transparency to realize the full potential value of a digital transformation. Every industry is different and the extent to which an organization can adopt these values depends on things like the regulatory environment and the organization itself, but these values are necessary to making this transformation. Companies like GE prove that even large, industrial companies can successfully adopt them.
3. Prepare for Side Effects
You’ve prepared your organization and your workforce for your major digital transformation and you’re ready to take advantage of this newfound agility and productivity gains. Right? Well, the impacts from your digital transformation won’t all be positive and can actually be detrimental. Introducing new channels for information, collaboration, and communication means introducing new channels for distractions. Technology hasn’t really improved productivity in the United States and may actually be making it worse. Email, smartphones, and Wi-Fi in hotels and coffee shops create an overload of information to deal with and endless possibilities for distractions. However, there are some things that can be done to ensure that worker productivity doesn’t take a hit.
The simplest thing to do is create new policies around the use of technology, regardless of whether or not you’re undergoing a digital transformation. This doesn’t mean restricting access to social media or personal email. Doing so can actually hamper productivity and lower morale and employee engagement. Technology policies should instead be focused on ensuring a healthy work-life integration for employees. For example, policies limiting after-work emails prevent work from intruding on employees’ personal time which will increase productivity and engagement. People need to have space to turn off work completely. Some companies have even gone as far as shutting down email servers after 5 p.m. to ensure people disconnect. Policies obviously must take into account customer service hours and getting work done, but I seriously question anyone who thinks customers must have 24×7 access to employees and can’t wait a few hours for a response. Having more productive and engaged employees is better than having one that is angry and actively looking for a new job while interfacing with customers on a daily basis.
Even if you have sound policies around technology in place, they won’t do any good if managers and leaders set unspoken expectations through their actions. Having a policy restricting after-work emails will be useless if managers send emails over the weekend. Even if they don’t expect employees to respond right away, walking in on Monday morning and seeing that email timestamp from Saturday night gives the impression that an employee is already late responding. It won’t be long before that employee is checking email from home all weekend, losing that valuable time away from work. Leaders must set an example for the etiquette and limits on the use of technology as it encroaches more and more into our homes and workplaces.
But what about the technology?
I’ve spent a lot of time on organizational culture and worker behavior – mostly because these are overlooked in many technology implementations – but the technology itself certainly matters as well. I’m not here to walk through best practices for technology project management or argue for the benefits of Waterfall versus Agile, but I will say that digital transformations don’t happen overnight. They take time and must be approached methodically. The only piece of advice I will give on selecting or implementing technology is to find integrated solutions and try not to customize them very much.
I’ve personally dealt with several organizations that have patched together solutions from dozens of different providers and written tens of thousands of lines of codes to make them all work exactly the way they wanted. This leads to future integration issues, millions of dollars spent year after year on development, and the inability to adopt the latest technology in a timely manner. If the technology doesn’t perfectly fit business processes but is the best-in-class solution for you, then you should focus on changing the processes to fit the solution rather than writing code to fit the process. What’s the point of adopting new technology if business processes are not being streamlined? One of the key tenants to digital transformation is agility, and that is lost the moment you start hacking existing solutions.
Ease your journey
Digital transformations are difficult by their very nature. It is a “transformation” after all and if an organization isn’t already digitally focused it will be that much harder. However, by focusing on people, culture change, and change management first – before even a single new server is put in – and taking a holistic view, organizations can ensure a less turbulent digital transformation journey.