Digital Transformation Success Depends on PeopleBy Kelvene Requiroso Print
Digital transformation isn't all about data and technology. Without the right people managing it, it likely won't succeed.
There’s only one constant in the world — as Heraclitus said — and that’s that everything in life is in a state of flux. Modern business and economics are no exception; it’s a reality that organizations face all the time, past, present, and future. We’ve seen businesses, industries, and economies transition from one stage to the next throughout history.
In the first industrial revolution, the power of the steam engine drove the world’s economic transformation. The discovery of electricity and its application in industries sustained the growth of global economies. But it was the use of computers and programmable logic that sparked a digital revolution. And to keep the momentum going, connectivity and data analytics are now the drivers of business and the economy. Especially now that people’s lives intertwine with the digital world.
Satisfying Customer Demands
All this development in business is driven by the need to satisfy changing and endlessly shifting customer demands. Over the years, consumer behavior changes. The most drastic change in recent memory happened during the global coronavirus pandemic. With limited movement due to strict social distancing measures, people have become reliant on the internet and mobile applications for a wide range of activities, from banking to socializing and entertainment.
Thus, to provide better customer service, undergoing a digital transformation is a necessary step for companies, not only for those in the retail sector but also in manufacturing and other industries. Adopting digital technologies helps improve efficiency and speed up processes.
Reluctance to Adopt Digital Transformation
While more companies rush the adoption of digital transformation to keep up with the trend and develop resilience in a constantly evolving business environment, others are reluctant. Perhaps it’s because of the success rate, which is relatively lower than the expectations.
With high investments at stake, transitioning into digitalization should create a meaningful impact on the business. But so far, a 37 percent average success rate is an obstacle. Such a rate gives companies reservations on digital transformation despite its potential positive impact.
Beneath the surface is a deeper problem that justifies such reluctance. Organizations are hesitant to embrace digital transformation due to: lack of strategy amidst growing unpredictability, the drive for innovation is wanting, not enough skills and competencies needed for a successful implementation, and underinvestment in management and leadership.
To sum up, the problem points to the role of change management. It could be the missing link in finding digital success.
Improving Success Rates
One difficulty in implementing digital transformation is the scaling up of a process or project. And that’s on top of aggressive security threats. But tipping the balance is all about change management, which boils down to the people running the task of digital transformation. It is not so much about technology but how the organization adapts to the changes.
Cutting efforts in one business unit or function, for instance, affects the entire project. Executing digital transformation in siloes rather than scaling it up renders the digital transformation effort not in the proper position to succeed. Failure to hit the projected ROI or to scale needs serious attention, not only on the technological capabilities but the human side of the equation too.
Investing in People
To be in a position to succeed, an organization needs digital masters. These are people with leadership capabilities to implement the ambitious but necessary task of digital transformation. It means change management, which prioritizes creating a sustainable business model and business culture that goes with it. Efficient and effective change management involves commitment, time, effort, creativity, and persistence.
Successful implementation of digital transformation requires investment in talent and time across business units and departmental functions. Any emphasis on the technology and implementation processes without giving much thought to the people carrying out the implementation causes an imbalance. But such an imbalance is rectifiable.
Digital Transformation Quadrant
An effective digital transformation program involves a balance between four key areas: leadership and management, technological savvy, business model, and a culture of collaboration and innovation.
Leadership and Management
The old saying that you cannot put new wine in an old wineskin holds. Digital stragglers cannot take leadership roles in important projects of an organization as intricate and delicate as digitalization.
Talents look up to leadership and management for guidance, vision, strategy, and overall direction of projects. An organization must implement change in leadership and management first before carrying out the task of digital transformation.
Anyone who lacks knowledge and experience in the application of technology in business and innovation should not have a primary role in a company’s transition to digitalization.
An organization must invest in hiring and training a team of talents with a wide range of skills related to technology and innovation. It is a group of people with a broader understanding of technology, from how algorithms work to developing application programming interfaces.
Flexible Business Model
As the business environment constantly changes, so must the business model. It must be agile and adaptable to provide a better customer experience.
Designing an effective business model requires a deeper understanding of the market. It must be able to identify and provide solutions to specific customer needs. Digitalization should not be for the sake of making the business trendy.
Collaborative and Innovative Culture
An organization must develop a positive culture where people are more engaged, a collaborative culture that spurs innovation, where everyone is involved in decision-making and problem-solving. It also requires an open culture that values data-based solutions rather than purely speculative ones.
Crucial to digital transformation is the people. The investment in people should be higher than the investment in technology. Digital transformation follows the basic principle that business is for and all about people. Technology is only the means to an end, not an end itself.
To be purposeful and have a clear understanding of the business value is as essential as having the right people to implement strategies. The right amount of investment in people and technology — both short-term and long-term — remains critical to digital transformation.
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