Digital has revolutionised so much of our lives, but it is yet to revolutionise most workplaces. It has had an impact, certainly, but most businesses are still lagging way behind consumers in terms of embracing what digital has to offer. That’s one of the main messages of The 2017 State of Digital Transformation, the latest and third annual report on this topic by the technology research company Altimeter.
“Hundreds of millions of people worldwide use smartphones and other digital devices to communicate, buy and sell, learn, and be entertained, but many companies still have not made critical investments to be digitally competitive and consumer response as this global shift happens,” according to the report.
Not enough is being invested in digital transformation, but the other big message is that digital is not just about technology. Digital transformation is a lot more than having the latest technology – it’s about how organisations operate and conduct business day-to-day. Altimeter’s definition of digital transformation is this: “The investment in and development of new technologies, mindsets, and business and operational models to improve work and competitiveness and deliver new and relevant value for customers and employees in an ever-evolving digital economy.”
Mindset is a huge element of digital transformation, but it is often overlooked. There is no point in throwing money at new, digital technologies if the people within the organisation don’t have a digital mindset. Companies need to open to and ready for change, they need to be agile, adaptable and innovative, which means that the individuals within those organisations also need to be open and ready for change, agile, adaptable and innovative.
That involves having the right culture and learning environment. According to a 2016 interview with Barr Seitz, an expert in digital strategy, content and social marketing at McKinsey & Company, establishing and maintaining the right culture is critically important. It is also very difficult, he said, and the hardest bit to get right. In the interview, entitled ‘Digital transformation: The three steps to success’, Seitz says “In my experience, culture is the hardest part of the organization to change. Shifting technology, finding the right talent, finding the right product set and strategy—that’s all doable, not easy, but doable. Hardest is the cultural transformation in businesses that have very deep legacy and cultural roots.”
Altimeter’s research says the same thing. After surveyed 528 senior execs involved in transformation, the report highlighted the top challenges for digital transformation initiatives. They are:
- Low digital literacy or expertise – employees and leadership (31.4%)
- Digital transformation viewed as a cost centre (30.9%)
- Company culture (30.5%)
Almost a quarter (23.7%) cited ‘human barriers’ as a top challenge. Politics, egos and fear are the main obstacles to achieving the collaboration and solidarity needed within organisations in order to deliver the digital transformation that customers want.
Employers and HR really need to focus hard on people dynamics, enabling and supporting employees to make the necessary change and to keep changing. Agile organisations have a culture of continuous change and continuous learning, so HR and L&D have a pivotal role to play here.
Altimeter claims there are six stages organisations have to go through to achieve digital transformation. They are:
- business as usual
- present and active (pockets of experimentation)
- formalized (experimentation becomes intentional and bolder)
- strategic (new strategic roadmaps that plan for digital transformation)
- converged (dedicated digital transformation team driving the right infrastructure, roles, expertise, models, systems and processes)
- innovative and adaptive (digital is how an organisation does business)
Digitally mature organisations have customers at the centre of their offerings and are very aware of the customer experience. They are also very aware of the employee experience, something that a lot of organisations need to get better at. The employee experience has become a top priority for many of the report participants because if you are going to achieve digital transformation, then you need engaged employees.
How are organisations digitally enhancing the employee experience, according to Altimeter? They are:
- rolling out new training programmes to modernize legacy or aging skillsets (62.1%)
- investing in new expertise and job creation (52.8%)
- employee recruitment of desired digital talent (50.8%)
- reverse-mentoring programmes to bridge the gap between older and younger employees (35.65)
- creating a culture of empowerment and innovation (29.2%)
- laying off or relocating employees with less desirable skillsets and no drive to learn new skills (19.5%)
Just 0.4% of companies are not addressing this right now.