Focusing on people increases the success of digital transformation

The opportunities arising from the current technological revolution are virtually limitless. The COVID-19 pandemic a few years ago underlined the need for digital transformation, but it goes far beyond organisations’ ability to enable remote working. Responding effectively to new developments requires vigilance. This means not only understanding what technology makes possible, but also being able to apply it successfully. That success is largely determined by the adaptability of the employees who need to work with it.

“Today’s revolution is increasingly one of capabilities and culture,” says Ruurd Baane, partner at Bright & Company and lecturer in Strategic Human Resource Management at Utrecht University. In his experience, it has become clearer than ever that IT cannot succeed without people. Although this has been a long-standing principle for decades – just think of the extremely costly ERP implementations that failed due to internal resistance – the belief is stronger than ever in today’s environment, where technology underpins every new innovation or process.

“One thing is becoming increasingly clear: no matter how technical the solution, its success depends on how people use it,” Baane explains. But where do things usually go wrong? “The biggest obstacles are cultural and behavioural factors. Success requires a willingness to change, adaptability, the ability to cope with unpredictability, and the accelerated development and recruitment of digital knowledge and skills,” explains the Bright & Company partner.

A frequently asked question is: ‘How does this differ from a traditional change programme?’ After all, isn’t it essentially about moving people, with or without technology, from their current situation to a new, desired future state?

Baane explains: “At a fundamental level, digital transformation is no different from a conventional change programme. Some organisations navigate these developments with ease, while others struggle to keep up. Companies with a long history and a workforce of long-serving employees, in particular, often find it difficult to embrace innovation.”

The familiar principles of change management therefore also apply to digital transformations, such as establishing a clear case for change, defining a clear and measurable goal based on a long-term vision, securing senior management commitment and ensuring clear communication. However, according to Baane and the research team that studied this phenomenon with him, there are several distinguishing characteristics and success factors that set digital transformations apart from traditional change programmes.

This is largely because digital transformation has several characteristics that, when combined, make it more complex. To begin with, Baane explains, technological developments are advancing faster than ever before, often at an exponential rate.

Moreover, it is virtually impossible for companies to avoid these developments: “Their impact extends beyond the boundaries of individual organisations.” More importantly, Baane emphasises, the combined impact of these developments can even “affect an organisation’s very reason for existing” in its current form.

Baane goes on to explain that, unlike traditional change programmes, digital transformations often have no clearly defined beginning or end. “Transitions are continuous in nature,” and the next steps cannot always be predicted in advance. Moreover, changes often affect many different aspects of an organisation.

In other words, “Digital transformations are often multidimensional.” Furthermore, “the subject matter is often abstract,” and its complexity regularly exceeds employees’ ability to fully grasp it.
At the same time, these changes have an enormous impact on employees’ working and personal lives, Baane explains. He adds that views and opinions on digitalisation within organisations are often divided, if not controversial.

Taken together, these factors mean that digital transformations require a different approach to implementation. For example, McKinsey & Company concludes in one of its research reports that companies leading the way in digital transformation invest substantially more than others.

In short, achieving genuine digital breakthroughs requires a transformation that goes beyond incremental improvements.

However, this does not mean that everything needs to happen at once. “By setting priorities and implementing changes step by step, it becomes easier for employees to adapt and embrace new processes. What matters is that the broader transformation agenda takes an integrated approach, ensuring that culture and skills are an integral part of the transformation.”

Another success factor relates to how organisations manage their change agenda. Traditionally, organisations have focused on ensuring their existing operations run smoothly and continue to grow. In today’s digital age, however, it is essential to direct efforts towards transforming the organisation – in other words, to put the change agenda at the forefront. Organisations that are able to consistently make room for transformation activities are better equipped to meet today’s challenges.

Looking back, it is easy to understand, with the knowledge we have today, why companies such as Nokia, Kodak and V&D ultimately failed. Had they followed the advice above more consistently, they might not have been overtaken or even brought down entirely by digital disruption within their respective sectors and business models.

A third factor is empowerment. Many digital transformations fail because people struggle to work with the changes or perceive them as a threat. That is why it pays to give people as many opportunities as possible to experience the future for themselves and actively contribute to shaping it.

Baane explains: “People only start to participate when they can experience the change for themselves. When they have the opportunity to experience the future and help build it, they become inspired by it.”

Success then breeds further success, he explains: “Once you get the ball rolling, change becomes contagious.”

Successfully putting this into practice is no easy task, Baane acknowledges. It requires a carefully implemented change agenda: one that is transparent and places collaboration at its heart.

The success factors originating from the IT world can also help. Over the past decade, various ‘agile’ working methods have emerged and have since become the new standard. Agility and flexibility are central to this approach, with scalability achieved through small, controlled steps.

“These methods focus on taking small but rapid steps together, driven by demand, through self-managing and multidisciplinary teams. This often involves developing prototypes, experimenting in short cycles, evaluating results, weighing up options and then continuing to develop,” Baane explains.

However, he also highlights a potential pitfall: “Although ‘agile’ is often presented as a magic solution, this way of working is not the answer for every activity. Teams should determine which implementation method is most suitable.”

Achieving all of the above requires people to develop a range of skills. Leaders, for example, need to be able to think disruptively, collaborate closely with team members and inspire others.

According to Baane, the change may be greatest for managers. “Managers involved in core business processes play a central role in making digital transformation practical and achievable. The workplace is where ideas succeed or fail.”

These managers need sufficient digital intelligence and must be able to support those who have much deeper digital expertise than they do.

They must also be skilled at encouraging and allowing experimentation involving digital technology: developing solutions together, testing them in short cycles, evaluating results, weighing up options, and then refining and rolling them out more widely across the organisation.

Finally, there are HR professionals. Above all, they need to develop new skills in strengthening employees’ ability to learn and adapt.

They must also take the initiative in embedding digitalisation into the organisational culture and establishing a mindset in which digital ways of working become second nature.

HR also has an important role in identifying emerging issues and safeguarding ethical and moral considerations in the digital age. These include social responsibility, inequality, job enrichment versus the erosion of job content, and the protection of personal data.

For more information, download the whitepaper ‘You can learn to accelerate: The human capital & change impact of digitalisation’.