To say we live in a digital world might be stating the obvious. We buy groceries and gifts from mobile devices, manage home security systems via the web and use virtual private networks to log into corporate servers when we’re out of the office.
There’s barely a facet of our personal lives that hasn’t been improved by digital technologies, yet many organizations are still playing catch-up when it comes to investing in new technology, business models and processes that drive value for customers and employees.
Digital transformation — the integration of digital technology across all areas of an organization to deliver better value to internal and external stakeholders — is a big concept, and at its root is the desire to survive and thrive in a changing economy.
It’s not only for retail brands. Businesses in every industry need to consider how they can use digital advancement to gain a competitive advantage and offer better services, products and experiences.
Transform or perish
In 2016, industry analyst IDC predicted that one-third of the top 20 firms in industry segments would be disrupted by new competitors within five years. Now in the thick of this prediction, businesses are faced with a stark choice: transform or perish.
Beyond the survival of their companies, CIOs should also take note that their competitors are already embracing digital transformation. According to another report from Forrester Research, executives also expected that nearly half of their revenue would be driven by digital by the year 2020. Two years away from this timeline, it seems the predictions are turning out to be quite accurate.
Begin at…the beginning
Where do organizations begin with such a massive initiative? Many experts suggest that a good starting point is taking a critical view of your business and assessing what needs to change— both from a technology standpoint and, perhaps more importantly, from a culture perspective.
Digital transformation is tied to your brand, which means it’s important that people inside the organization understand both the need for the change and how they will be affected by it, says Dr. Gareth Doherty, president of Ottawa-based think/able Solutions. Without that, he says, all efforts to transform could be in vain.
“The number one mistake organizations make is insufficient engagement with ground-level employees. Any large-scale transformation is a change. There’s opportunity and risk in implementing it in terms of how the change process is managed. Poorly managed change will have people rebelling,” Doherty says.
Change is scary
For example, a project designed to automate processes at a bank that were previously done manually may be a smart move for the financial institution, but that’s going to have a significant impact on employees, he explains.
“That’s a change that will result in losing people. How do you manage that? How do you prepare people, and what does it say about an organization’s values?”
Revamping a business process with the introduction of a large new piece of software represents a major shift for people. It also requires them to move out of their comfort zones and adopt a new way of working, Doherty says.
“It’s seen as a threat,” he says. “They know how they’re performed historically, but introducing a new way of doing things makes them question how they will able to function in their new role and even if their jobs may be at risk.”
Manage for success
Traditionally, companies have managed major change through a top-down, command-and-control approach. With competitors nipping at their heels, there’s a march against time, but larger organizations would do well to take a page from the playbook of smaller companies, Doherty points out.
“You’re seeing a great deal of innovation with SMEs (small-and-medium enterprises),” he says. “There’s a new cohort of managers with fresh ideas about how to effectively manage people. Leaders that are aware of new management science are better positioned to lead change.”
A better way of effecting change is to address it using a bottom-up approach, which empowers ground-floor employees, their managers and everyone up the chain, Doherty says.
“It’s important that employees are both aware of the change and feel they have some control and input into it,” he says, adding that if they understand the end game, they’re more likely to get on board.
“In the end, it doesn’t take more time, but senior leaders have less control. They have to listen to people,” he says.
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