Digital transformation is often looked at as an entirely technological practice. Yet, success is predicated on the humans driving and participating in technological change.
In a recent episode of the High Agency podcast, I spoke with Christian Nielsen, principal of MustBeHuman, as he went deep into the human realities of digital transformation projects. The conversation was rich with insights, touching on what digital transformation truly entails, why many companies struggle with it, and how to navigate this intricate process effectively.
Defining Digital Transformation
Digital transformation is a term that has gained immense popularity in recent years, particularly with the onset of the COVID-19 pandemic. It refers to the integration of digital technology into all areas of a business, fundamentally changing how companies operate and deliver value to customers. However, Christian argues that at its core, digital transformation is about modernization and capability building. It's not just about adopting new technologies but also about enhancing the overall capacity of a company to adapt to changes and leverage digital tools effectively.
According to Accenture: spending on digital transformation initiatives today is $880.28 billion, projected to grow to $3.4 trillion globally by 2026, with 97% of companies saying that the pandemic accelerated their approach to digital transformation. 74% of companies say digital transformation is a priority, with only 35% reporting their digital transformation efforts as being successful.
However, digital transformation isn’t undertaken only in times of crisis and, truly, digital transformation can be done profoundly well (and, of course, be handled very badly).
When digital transformation is done right, it’s like a caterpillar turning into a butterfly… but when it’s done wrong, all you have is a really fast caterpillar.
— George Westerman, Research Scientist, MIT
The Human Element in Digital Transformation
One of the key themes of the conversation was the importance of a people-centric approach to digital transformation. Christian emphasized that technology should serve to enhance human capabilities, whether it's making employees more productive or improving customer experiences. The focus should be on understanding the human element—how employees and customers interact with the technology—and ensuring that digital tools are used to meet their needs and expectations.
The Role of Culture in Digital Transformation
A significant portion of the discussion was focused on the cultural aspects of digital transformation. We both agreed that the success of digital initiatives often hinges more on cultural transformation than on the technology itself. Companies need to foster a high-trust environment where employees feel safe to voice their concerns and ideas. This cultural readiness is crucial for the successful adoption of new technologies.
Christian highlighted the concept of "social capital" within organizations—identifying and leveraging the key connectors who can influence and drive change. These individuals often hold the informal power to get things done and can be instrumental in facilitating a smooth transition during digital transformation efforts.
The Horizontal Nature of Digital Transformation
Another major theme was the horizontal nature of digital transformation. Unlike traditional IT projects that are often siloed within specific departments, digital transformation cuts across all functions of a business. It's a horizontal integration that involves marketing, operations, legal, and likely every other significant functional department. This approach requires a shift in perspective for many organizations, which are accustomed to viewing technology as a vertical function rather than a strategic, horizontal enabler.
Challenges and Best Practices
The conversation also touched on the common challenges companies face during digital transformation. Christian noted that many organizations approach digital transformation with a solution-first mindset, asking for specific tools or technologies without fully understanding the underlying business needs. This often leads to disjointed efforts that fail to deliver the expected results.
The key to overcoming these challenges lies in starting with a thorough assessment of the company's current state and understanding the "why" behind the transformation. It's essential to align digital initiatives with the overall business strategy and ensure that there is a clear, long-term vision for how technology will drive competitive advantage.
Slow and Steady Wins the Race
A recurring piece of advice from Christian was the importance of going slow to go fast. Digital transformation should not be rushed. It's a strategic process that requires careful planning and execution. Companies should focus on building a strong foundation and achieving early wins to gain momentum. This gradual approach helps in managing the cultural change and ensuring sustainable success.
The conversation with Christian on the High Agency podcast provided a comprehensive look at the multifaceted nature of digital transformation. It underscored the importance of a people-centric approach, the critical role of culture, and the necessity of viewing digital transformation as a horizontal integration across the organization. By focusing on these elements and adopting a measured, strategic approach, companies can navigate the complexities of digital transformation and achieve meaningful, lasting change.
