May 25 2023

Digital Transformation Success Hinges On People, Not Technology

Too many companies treat transformation as a series of deployments rather than as an organizationwide journey.

“Rubbish. It’s all about technology, or have I missed something?”

This comment was posted on LinkedIn recently in response to an article I was interviewed for, titled “Digital Transformation – It’s All About the People.” As a technology strategist and business adviser for over 23 years, I have come across similar points of view, frequently from technology leaders across industries.

Frankly, this commenter has indeed missed something — and unfortunately, it’s something many organizations miss. Digital transformation is often defined as the implementation of technology solutions to accelerate and optimize business outcomes. As a result, organizations focus only on the technology being implemented, believing it to be a singular solution for their challenges and hoping to gain a competitive advantage in the digital economy.

It’s certainly true that technology solutions offer incredible potential for growth and scale, transforming business models and creating new opportunities. We’re living in a world of unparalleled processing power, unlimited storage capacity, global connectivity, cloud computing and significantly lower hardware production costs.

At the same time, business leaders are striving to gain an advantage against not only legacy rivals but cross-industry and new digital native companies. Breakout technology solutions appear in the news almost daily.

So, it’s understandable that technology leaders often are given free rein to lead digital transformation initiatives on their own.

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Digital Transformation Needs to Be Organizationwide

Here’s the problem with this approach: It has kept digital transformation initiatives focused exclusively on technology and managed as standard implementation projects, with start and end dates for solution deployment. True digital transformation, however, is an organizationwide change that creates, delivers and captures value in the market by leveraging technology solutions.

It is an ongoing journey, using technology to fundamentally change how the business operates and delivers value to customers. Companies that undergo digital transformation can gain an edge, create superior customer experiences and increase operational efficiency. However, the success of such transformation initiatives depends heavily on the people who make it happen.

By one estimate, only about 30 percent of digital transformation initiatives meet their expected outcomes. Yet the problem is rarely the technology. Failure is often rooted in poor communication, employee resistance, and lack of engagement with or buy-in to the change. Leaders must effectively communicate the changes and address any resistance while providing the necessary resources for employees to adapt and succeed.

Digital transformation is more than just technology implementation. It requires a significant shift in processes, operations, systems, mindset, culture and work models. People are the critical factor that can make or break any strategic transformation effort in an organization. Leadership teams must strive to manage the journey of their people through the transformation to drive necessary changes and achieve transformation goals.

For example, employees may resist change, leading to delays or project failure. Employees may not have the necessary skills or knowledge to use new technologies, leading to decreased productivity and dissatisfaction. In some cases, employees may even leave the organization due to the changes, causing a loss of valuable talent and institutional knowledge.

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Involve Employees Throughout the Digital Transformation Process

Managing people effectively during digital transformation requires a human-oriented approach. It involves understanding and addressing the concerns, fears and aspirations of employees affected by changes. It also requires leadership teams to create a culture of trust, transparency and open communication where employees feel comfortable giving feedback and sharing ideas.

If some of this seems obvious, I can tell you it’s often a struggle for senior executive teams, who are accustomed to leading teams in a directive way. When I suggest instead engaging employees throughout the process, they’re often uncertain about how to do that.

It’s critical that they try, because involving employees in the transformation process builds a sense of ownership and accountability, empowers them to contribute to positive change within the organization, and fosters a culture of inclusivity and teamwork. Leadership teams can tap into their employees’ unique perspectives and skills, leading to more creative and innovative solutions.

This approach benefits the organization and creates a sense of pride and belonging among employees, ultimately resulting in higher retention rates and increased productivity.

Digital transformation can be a powerful journey to ensure organizations survive and thrive in the digital economy. To bring about lasting change, however, organizations must look beyond technology implementations alone and apply thoughtful strategies to foster teamwork and provide resources that empower people at all levels in the organization.

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