4 minute read 19 Jul 2021
Two employees discussing a project

How to navigate the people side of digital transformation

By Amy Walters

Manager, EY Lane4, EY Professional Services Limited

Specialises in human performance with a focus on applied psychology. Translates academic thinking and research into practical solutions for business. Visiting lecturer at Bath University.

Contributors
4 minute read 19 Jul 2021
Related topics Workforce

The key to making digital transformation a triumph lies in acknowledging the decisive role that people have to play.

In brief
  • COVID-19 pandemic has highlighted that getting digital transformation right can make or break organisations.
  • Leaders must acknowledge and confront the considerable barriers they will face in making digital transformation a success.
  • Leaders can set digital transformation up for success by carefully considering the mindsets and skills of the people expected to deliver it.

The COVID-19 pandemic unforgivingly catapulted many businesses into the complex world of remote work. To survive and stay relevant, organisations and their leaders had to get comfortably acquainted with large-scale digital transformation. On average, leaders have accelerated their digital transformation timelines by around six years.1 As organisations worldwide wrestle with the repercussions of such rapid change, examining the challenges of digital transformation is a timely endeavor.

Digital transformation is, as defined by MIT principal research scientist, George Westerman, a “radical rethinking of how an organisation uses technology, people and processes to fundamentally change business performance”.2 Research shows that across every industry, digitally mature firms significantly outperformed financially, with those excelling in digital transformation found to be 26% more profitable than their peers.3

However, digital transformation doesn’t come without significant hardships. In fact, only 20% of big businesses succeed in delivering the promised value and business benefits of their digital change initiatives.4 One factor which significantly influences the success of digital change is the consideration leaders give to the people who will be on the ground, putting the transformation into action. Given this, carefully addressing the needs of the digital workforce is a key way leaders can boost their chances of success.

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Barriers to success in digital change

A lack of digital leadership, insufficient skills in the workforce, or unaligned rewards and incentives can all get in the way of effective digital change.On the people side, three main factors emerge time and time again in research as most likely to trip up digital transformation:

1. Perception of digital transformation as just being IT change

A common misconception is that ‘digital transformation’ refers only to the technological side of change.2 This ignores the crucial roles of the people, places and ways of working which invariably go hand in hand with the adoption of new technology in the workplace. So, leaders should make sure they’re clear on what digital transformation means to them, and how it impacts each and every individual in the business.

2. Lack of leadership role modelling and buy-in, ‘behind closed doors’

Talking about digital transformation isn’t enough. For success, leaders and key decision-makers must understand, plan for, and action the various components and considerations of digital transformation. Failing to do so risks undermining the hard work of those pioneering the digital transformation, by giving reluctant employees an excuse to stay offboard. Senior leaders should hold themselves and others to account on authenticity by calling out when anyone falls back into outdated working habits.

3. Resistance to change

The human brain is hardwired to be cautious of change, of which digital transformation is a prime example.Whether it’s a classic fear of failure or concerns over appearing incompetent, people’s defense mechanisms are likely to hold them back.7 Leaders will have to use their negotiation skills and emotional intelligence to navigate people’s concerns with compassion whilst continuing to encourage them through the transition.

How leaders can navigate the people side of digital transformation

These barriers, although important to acknowledge, are not insurmountable. To overcome them, here are a few actions to focus on to make digital transformations a success:

1. Focus on ‘the why’ and performance impact

Don’t get caught up in the excitement and novelty of the ‘how’ of digital transformation before firmly establishing the ‘why’. Being clear on their purpose will benefit leaders when assessing which initiatives are worth the investment, and which aren’t working out.

2. Show people what the benefits are

To help people visualise the rewards of your digital transformation, use strategies such as proof of concept or sprint-based improvement.

3. Co-create the transformation with people

Getting your organisation on board with any digital transformation is likely to involve some compromise. People need easing into change, and sometimes that means sacrificing the most efficient technology for what your workforce is willing to adopt. Although it may feel frustrating, this gradual introduction and co-creation will serve to make people feel heard and therefore increase their motivation.

4. Provide a crystal-clear narrative

Once the why has been established, leaders should iteratively develop a crystal-clear story about the digital transformation. This should include why the company needs to do it, what digital transformation means for each part of the business, the benefits of data and digital solutions, and the individual contributions required from the employees. This will help engage people in the work required to achieve your end goal.

What you need from your people for digital change

Each stakeholder has a role to play in a digital transformation. Below are some of the mindsets, behaviours and skills each group of workers may need:

  • The digital leader: aspirational and grounded mindset, setting stretching goals whilst staying connected to what is achievable
  • The executive team and leaders across the business: authentic role modelling and championing of digital transformation initiatives
  • The digital workforce: adaptability in their behaviours so they can anticipate, adjust and evolve when facing the new challenges of a digital world

The digital era is well and truly in full swing, meaning that business must adapt to stay afloat, and leaders will need to acknowledge the critical role of people to accelerate new and better ways of working. 

  • Show article references#Hide article references

    1. “COVID-19 digital engagement report”, Twilio, 2020.
    2. O. Kohnke, “It’s Not Just About Technology: The People Side of Digitization”, In: G. Oswald, & M. Kleinemeier, Shaping the Digital Enterprise: Trends and Use Cases in Digital Innovation and Transformation (Springer International Publishing, 2017).
    3. T. Zomer, A. Neely, V. Martinez, “Enabling digital transformation: An analysis framework”, Working Paper (University of Cambridge, 2018).
    4. A. Issa, B. Hatiboglu, A. Bildstein, & T. Bauernhansl, “Industrie 4.0 roadmap: Framework for digital transformation based on the concepts of capability maturity and alignment”, Procedia CIRP, 2018.
    5. S, Gupta, “Organizational Barriers to Digital Transformation”, KTH Royal Institute of Technology, School of Industrial Engineering and Management Stockholm, 2018.
    6. Z. Whysall, “Managing Change: Insights from Neuropsychology”, Lane4 white paper, 2016.
    7. C.L.M. Keyes, “Subjective Change and Its Consequences for Emotional Well-Being”, Motivation and Emotion, 2000. 

Summary

Since the COVID-19 pandemic, understanding how to lead a successful digital transformation has become critical for business survival. All the evidence suggests that leaders should focus on the people side of digital change: failing to do so is like driving a sports car with no fuel. For the best chance of success, leaders will need to be crystal clear on the story behind any digital transformation, provide specific and adaptable strategies, as well as upskill and empower their people.  

About this article

By Amy Walters

Manager, EY Lane4, EY Professional Services Limited

Specialises in human performance with a focus on applied psychology. Translates academic thinking and research into practical solutions for business. Visiting lecturer at Bath University.

Contributors
Related topics Workforce