Digital transformation: why culture matters

The pandemic has been a big driver in the acceleration of digital transformation (DX) projects and investments across ANZ, despite lockdowns and restrictions impacting the region.

This is further corroborated by IDC’s recent report which forecasts ANZ ICT spending to reach AU$114 billion in 2021, with this growth to continue at a CAGR of 2.5% to reach AU$126 billion by 2025. In the 2020 ANZ IT Services Ecosystem survey, 69% of ANZ organisations told IDC that the pandemic had accelerated their digital transformation programs, and many agreed this investment played a major role in creating digital resilience.

With so much change happening in so little time, it’s more important than ever to have a clear path to ensure success in these endeavours.

Sadly, the rate of failure in these kinds of projects has always been high. In 2016, McKinsey estimated that no less than 70% of complex, large-scale transformation projects fall short of their goals. Two years later, McKinsey revised that estimate, reporting that only 16% of digital transformations achieved “successfully improved performance”.

Why do DX projects fail?

When trying to understand what goes wrong in DX projects, we need to look beyond the technology. For the most part the technology is mature and fundamentally works. The challenge is taking it and turning it into positive, valuable outcomes. And for that you need to bring your team along. Cultural acceptance is the key element of digital transformation.

There are many reasons why people are hesitant to use new technology. They might be threatened by it and think it’s going to negatively affect their job. Or perhaps they don’t know how to use it and aren’t successful despite wanting to be. Or simply, sometimes change is slow and people like things the way they are.

How you introduce new technology into your organisation is more important than the technology that you choose to deploy. If it’s rolled out at the wrong time, people won’t give it the attention it needs. If it’s rolled out in the wrong way, people can get a bad impression of it.

Below are three steps that can help teams overcome some of the more common obstacles and pave the way for more successful digital transformation:

1. Identify the “What” and “Who” of change

It seems simple, but knowing what you need to do before you do it is often overlooked. It’s tempting to introduce new technology and only then go in search of ‘problems’ it can solve. However, gaining an understanding of what processes or outcomes need to be addressed is the first step you need to take.

If automation is part of the plans, identifying which processes are practical to automate is also an essential part of the process. While some things are suited to automation — with tools like Robotic Process Automation (RPA) — others aren’t. It’s essential to spot the difference early.

A fundamental consideration of this pre-transformation assessment has to be who are the people that will be affected by these new processes and new tools. Cultural acceptance largely includes identifying who will be affected and what impact they will feel.

With that knowledge in hand, you can then begin to develop new processes, adapt technology to your business and roll out the changes.

2. Communicate and train

Proactively address any potential concerns about those who are going to be affected by digital transformation and the impact it will have on them. If employees are expected to use completely new tools — either new systems or simply new interfaces — then they need to have the training laid out for them so that they know what they’re doing. By doing this, you enable employees to do their jobs better and help overcome barriers.

However, if you are trying to change ways of working more fundamentally — perhaps around automation or analytics — then communication, understanding and training need to be wedded together in a more intricate way. This is the change that people more commonly resist because there is more uncertainty. Easing people into training that they can understand and that’s relevant to them will help to bring them on the transformation journey.

3. Keep evaluating success

Once you know what needs changing, you’ve changed it and you’ve taken the right steps to bring people along with you, it’s important to understand if the change is positive. Some things that you should reflect on include: Has the transformation worked as hoped? And if it hasn’t, what is the status quo? Do you need to go back to step two and re-train/re-develop your people? Or even back to step one and re-evaluate the change entirely?

A lot of projects will fail because early understanding of what was happening wasn’t gathered (or gathered properly). If something isn’t working, you have a limited time window to change it before the negative change becomes the new status quo and people either reject it or fall into a habit of doing things incorrectly.

Process management tools can help to make the assessment of whether something is working as it should be. They should be used alongside infrastructure management to assess the wider impact of technology. From a cultural change perspective, understanding whether people have embraced new ways of working is a key indicator for the long-term success of digital transformation.

The long road to transformation

The task of transformation is never finished. As things change they create new situations and challenges of their own. So being constantly in the loop of what’s going on within your business — creating a truly connected enterprise — will not only help make informed decisions, but will also help you stay close to what’s happening with all the people in the organisation. This will ultimately be the critical success factor.

Image credit: ©stock.adobe.com/au/REDPIXEL