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Don't Forget the People in Your Digital Transformation
Carolyn Moore, Global Director, Organizational and Cultural Transformation, Arcadis
Digital transformations are more than just process automation: they create fundamental shifts in organizational structures and ways of working. For these reasons, digital transformations need to be as much people and behaviourally focused as they are about application development, enterprise architecture, and process optimization.
The thing is, for many businesses bringing their people on the digital journey is viewed as a frustrating challenge that “takes too long”, “costs too much” or is “too hard”. Many companies, therefore, take the approach of establishing digital teams, labs, or studios separately from their main business. Economies are experiencing a highly accelerated war for digital talent reflecting the increasingly fast pace of digitalization across multiple sectors, as businesses scramble to bring in external digital capability to supplement—or even replace—incumbent employees. This is not a sustainable approach as the pool of suitably qualified and experienced potential employees is finite, and it will take years to bridge the gap. All businesses need to build a digital backbone, create connected ecosystems, focus on product development and service design, and failing to engage your current workforce in your digital strategy is probably the biggest mistake a business can make right now.
The thing is, most people leading digital transformations come from a tech background, and very few people within the traditional HR, people, or organizational design functions have the combination of digital expertise and capability to drive large scale transformation. So, the “people stuff” ends up in the “too hard basket”, or at best an after-thought of process-led change management.
What if there was a better way?
The good news is that there is a better way. According to Thomas H Davenport and George Westerman in their article Why so many high-profile digital transformations fail (Harvard Business Review, 09 March 2018) many businesses fail to realize that digital transformation requires a multi-faceted approach that also enables constant iteration of how the business operates; not just the development of a new digital product.
And who knows your business operations best? Your employees. And who knows your customers best? Your employees. Bringing your employees on the digital journey should not be distilled to a mere “reskilling” exercise. Building ways to engage employees in your company’s digital transformation program can generate innovations, identify digital process optimization opportunities, and can improve the engagement of your clients in your digital offerings. In other words, by combining the expertise of your current workforce with the expertise of digital natives, your business is tapping into a value-creating digital environment that connects directly to your operations and your clients. Or put more simply: bringing your employees on the digital transformation journey has no downside.
This is further supported by research by the World Economic Forum that has found that the investment in reskilling initiatives (let alone digital engagement initiatives) has a positive cost-benefit balance. Research by Gallup supports this as well demonstrating the reskilling has a more positive cost-benefit than replacing workers with more highly skilled workers external from the organization. Reskilling is important, however, what we are talking about here is digital engagement. This is about building the culture for transformation in a people-led, highly engaging way. Not only does this approach enable people to reskill, but it also creates an environment where those skills can be best deployed in a value-creating way.
What are the differences between reskilling and digital engagement? Well, it is important to note that digitalization creates a skills gap within organizations, where the amount of internal digital capability is insufficient to meet the needs of the business to digitize internally and create new digital products, services and ecosystems within their value-chain. A focus solely on reskilling means that businesses are constantly attempting to back-fill an already-existent skills gap. Engagement approaches, however, look at creating a mindset shift as well as developing new skills.
Where to start with employee engagement approaches to digital transformation? No matter what the composition of your workforce, engagement starts by having everyone talking the same language and drawing from the same lexicon of understanding when it comes to digital and your strategy. Everyone in the business, from the CEO to the receptionist needs to be provided with the opportunities to engage with your digital strategy and understand its meaning.
Having a common language is just the first step. Understanding does not equal knowledge. The approach that businesses need to take to build a culture that supports sustained and ongoing digital transformation also needs to provide targeted skills development, opportunities to apply new skills on value-creating projects, strategies that seek to partner with other businesses to co-create value, and innovation and experimentation programs that enable employees to take calculated risks.
Many businesses invest significant sums in the development of digital products to find that they aren’t taken up by consumers or clients. There is a growing list of the most notable digital fails. Digital transformation is, by its very disruptive definition, high risk and highly uncertain process. However, there is one digital investment that has been demonstrated time and again to return significantly on investment: investment in holistic people development and engagement. So, rather than bolt on some online learning to your digital strategy, start with your people at the centre of its design, engage them in co-creating your strategy and design processes, and provide them with the skills and support necessary to experiment. The research shows this approach will pay off.