Digital transformation means different things to different people, but most would agree that it involves some combination of process efficiency through automation, creating new digital products and services, and facilitating communication between departments, customers, and business partners electronically.
When you hear the phrases commonly associated with digital transformation, such as APIs, robotic process automation, microservices, and data management, it is natural to think of a digital transformation initiative as a technology challenge.
Whilst it is true that digital transformation inevitably requires technological change, does it mean that the biggest hurdle to successfully navigating a digital transformation is a technical one?
We interviewed industry experts that are actively engaged in digital transformation initiatives, asking them about the common challenges that organisations face when undergoing a digital transformation. Repeatedly we kept hearing the same response – it’s a people problem, not a technology one.
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Matthew Reinbold, former director of API & event streaming platform services at Capital One, was responsible for the API design and event driven architectures for platforms performing 500 million API calls and 100 billion events a day.
Reinbold explained that digital transformation is about reinventing a company’s products and
processes using technology: “To me, digital transformation is all about ‘Can you use digital technologies to create new and novel experiences and services for customers, like just doing what you already did
before?’ It may be semantics, but I call that digitisation.”
Reinbold goes further to say that whilst digital transformation has prompted enterprises to identify opportunities to streamline processes within their organisations the implementation of a digital transformation initiative requires behavioural change.
“As I’ve gone down this route, I’ve become increasingly aware of how much digital transformation is really about behaviour change within an organisation. It’s not enough to simply do what we did yesterday using new tools. It’s about changing how we behave when given certain problems or certain opportunities. And behaviour change for people is really, really hard,” Reinbold added.
Isaac Sacolick, author of ‘Driving Digital: The Leader’s Guide to Business Transformation Through Technology’, shared with us how digital transformation has changed not only the way we operate, but also how we go to market.
“It’s changing the way we’re creating products and services; straddling the boundaries of both physical and digital worlds. We’re enabling new ways for customers to interact with us – how we sell products, how we market them, how we service them, how we compete for new business,” he said.
Whilst this customer centric approach to innovation is inspiring, Sacolick adds that transformation is adding a technology layer on an organisation’s existing processes that requires employees to develop new skills and learn new processes.
“That means every company is trying to build up skills, processes, and platforms around technologies.”
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API thought leader Amancio Bouza discusses how organisations must foster a culture of collaboration to understand the needs of the customer before delivering on change: “When it comes to digital transformation, it’s really changing the behaviours, about how to use this technology, how to collaborate, how to bring developers, the IT together with the business and really understanding outside in the customer needs. That’s changing the identity – and there is no installation manual for that.”
Bouza further describes it as reinventing an organisation as if it were “going into a cocoon”, transforming their identity by learning from their customers and adapting to their changing needs.
“It’s not much about [changing] the products that you were operating or providing – it’s really about your customers, and adapting and iterating the way you solve problems. So, I think in that sense, digital transformation provides a kind of a resilience – a kind of a sustainability for organisations to adapt to changes and leverage the benefits of new technologies and improve processes to make things faster or make things simpler. ”
Shelly Kramer of Futurum Research echoes this, saying how most of the digital transformation success stories would stem from a cultural shift.
“It requires embracing a culture of data, a culture of innovation, a culture of continuous
learning, a culture of understanding the importance of change,” she said.
Understanding the landscape
A shift in organisational culture will almost always be more difficult than a change in technology.
Cultural change requires teams to coordinate and collaborate in new ways, and would also require leaders to be more intentional about said change and embracing a digital culture – all while changing legacy systems, technologies, and structures that may prevent the organisation from fully transforming.
In order to embrace change, Reinbold advises organisations to have a deep understanding of how decisions are made, who has the authority to influence these decisions, how power manifests, and what incentive structures people respond to.
He adds that these criteria aren’t universal, and may vary from company to company.
Starting with the uncontroversial stuff
Reinbold says that it is vital to “shrink the change you’re trying to accomplish” once momentum towards change has been achieved: “I’ve seen way too many efforts, declare some grandiose, ‘burn the boats’ type of initiatives like, ‘Everybody, for all time, is going to do this thing and only this thing’.
“And as you might imagine, the amount of pushback to something like that is as absolutely proportional to the size of the change that is being asked for. It might be necessary, but in order to get traction, you have to build positive momentum.”
His advice? Start with the uncontroversial stuff: “Ratify your process, whatever the means is – forgetting that thing accepted and communicated and monitored and policed – whatever that tiny thing is, have it be uncontroversial because you’re still figuring out how all of this works. ‘Who are the people at
the table? How is this going to play out?’ Once you get that decided, you will better be able to take on the bigger rocks, the harder things.”
The next step would be to script the critical moves. Your transformation efforts may make great viewing at 50,000 feet, but for employees in the trenches who might not understand where they are and where they need to be, the work they’re doing towards change could be confusing – and it might not make sense in their view.
“You have to script the critical moves. People are probably not pushing back out of malice there, but probably pushing back because they don’t know what the connecting steps are. Communicate, communicate, and communicate,” he adds.
How can tech leaders take people with them on their digital transformation journey?
Upskilling your organisation
Over the course of the last decade, we’ve witnessed how technologies advance at such a rapid pace. Amidst these advancements, we need to create a culture that is conducive to facilitating digital transformation.
Kramer shares how we should have a curious mindset: “It’s about fostering, continuous learning and upskilling. And upskilling is a tremendous part of this: looking within your organisation and how you can move people from here to having knowledge about how to use automation offerings and a data-driven, customer-centric culture. From the leadership on down, having an organisation who understands that technology is the path forward.”
The key thing is to embrace the technology, whether this be the cloud or automation, and be open to change.
Prioritising people and processes
Digital transformation is putting people and processes above the technology to create a digital culture that would allow organisations to participate in the digital economy.
Digital transformation is also about responding to the changes that technologies have caused, and will continue to cause – in our daily lives, within organisations, and across industries.
Organisations should also look into the human dimension of this change. This means continuous optimisation and upskilling, studying and focusing consumer and customer behaviour, and embracing change that happens beyond the digital context.
You’re never done
Kramer emphasised that digital transformation is an ongoing process: “Digital transformation is a journey. It is not a destination. You will never be done. Over the course of the last decade, we’ve seen such advancements in technology and coming at such a rapid pace. And what I always say is that, one thing we can promise for certain is that it won’t slow down. In fact, it’s only going to speed up.”
