The term digital transformation typically refers to the adoption and integration of contemporary digital technologies in an organization to drive greater productivity, efficiency and sustainability. Indeed, the global smart manufacturing market (which incorporates technologies such as robotics and big data analytics to optimize production efficiency, sustainability and adaptability) is forecast to grow from being valued at almost 250 billion U.S. dollars in 2021 to over 650 billion by 2029.
But equally, if not more, important than cutting-edge technologies, digital transformation is a holistic approach to organizational transformation in the digital age.
Most companies’ digital transformation efforts are well underway, with almost three quarters of global organizations citing the process as their leading priority. But it’s a priority not without complex challenges – most of which are human-centered. Success significantly increases with the fundamental understanding that your digital ecosystem reflects your organizational culture, and the mutually beneficial coexistence of both determines your transformation velocity.
Due in large part to the pandemic, digital transformation has also come to represent a broad cultural shift to more agile ways of doing business including responding to changing market demands, industry trends, process inefficiencies, lack of competitive differentiation, and the need for increased speed to market for new products and services.
There is a direct correlation between exceptional employee and customer experiences with company performance, which McKinsey reports can generate a 20-30% increase in customer satisfaction and economic gains of 20-50%. And considering that:
… digital transformation combined with a resilient, growth mindset organizational culture is proving its worth in today’s VUCA (volatile, uncertain, complex, ambiguous) world.
In its research to discover which best practice characteristics make digital transformation more likely to succeed, McKinsey cites five categories: leadership, capacity building, empowering workers, upgrading tools and communication. The top people-centric success factors of these categories are detailed in Figure A.
(sidebar) Figure A
Source: McKinsey & Company
For my role at Konica Minolta, McKinsey’s success factors require important shifts in three organizational culture drivers: mindset, skillset and toolset. Here are some of the key lessons I’ve learned, internalized and remain mindful of relative to each as our company continues its digital transformation journey.
Marvelous things can happen when colleagues clearly understand what our potential new reality looks like (at various stages in the journey), why the change is necessary, how it will benefit them, and their role in helping to chart and advance our path forward. There’s a sense of shared purpose, commitment and ownership that develops when people participate in initiatives designed to benefit them. Otherwise, the resistance to change, lack of clarity and inefficient user adoption can be like moving through quicksand.
We are never too young or old to learn from or teach something new to someone younger or older or different than ourselves. Having a growth mindset – the willingness to continually learn and improve, embrace challenges and persist through setbacks – builds agility and resilience. And it’s key for enhancing performance and innovation within organizations.
While empathy and compassion are both positive emotions, I strive to lean more into compassion. Harvard Business Review differentiates the two by stating that empathy is, “I feel for you,” while compassion is, “I am here to help.” I particularly enjoy the coaching and mentorship aspects of my role and take seriously my responsibility of modeling human-centered leadership in helping colleagues with their career aspirations, connecting their work to strategic imperatives, creating momentum to change and operationalizing the power of agility.
You may be familiar with the term “fail fast”, which is an agile approach to experimenting, learning and iterating rapidly – not rushing, but aligning on a process that makes it easy to quickly learn and adapt. It means that if we’re not failing, we’re not innovating. And if we’re not mindfully failing fast, we’re not agile. According to a Forbes article, “Research has shown again and again that diverse teams tend to rank amongst the highest-performing teams and deliver innovations at a higher level, especially when they are fostered within a culture where it is safe to experiment and fail.”
When compassion and a spirit of continuous learning, innovation and collaboration is cultivated, it connects lines-of business, operations and technology teams in new and more expansive ways of thinking and working. Colleagues are encouraged, and hopefully inspired, to develop a more agile mindset to drive better experiences and business outcomes.
When the organization is aligned on mindset, then capacity building – the process of developing and strengthening the skills, abilities, processes and resources that companies need to achieve business objectives, adapt to change and thrive (particularly during challenging times) – is a natural descendant. To build capacity, we need to constantly be building capability.
Training, re-skilling, up-skilling, future-skilling or building new career tracks for your workforce to support them in becoming more agile, digitally savvy and resilient is important for building and maintaining capability. And it requires a compelling employee value proposition to attract, onboard, develop and retain talent. Talent with the capabilities to skillfully look under the hood and assess the promises and perils of the potential technology solution, including its performance and flexibility to adapt, adopt and scale.
In addition to technologies, buyer behaviors, expectations and preferences are constantly evolving, and organizations must ensure that their employees possess the skills and knowledge necessary to keep pace with and leverage these advancements – with the capability to identify potential roadblocks before they cause any disruptions in value creation. And this evolution presents wonderful opportunities for employees to innovate into the future.
One of the biggest challenges in organizational cultural shifts is the breaking down of siloes to foster cross-functional collaboration and integration of teams and technologies that enable high-speed value creation and delivery. In fact, a study by Accenture found that siloes can stall the revenue generating success of companies embarking on a transformation journey.
Culture-driving magic happens when multidisciplinary teams with multidimensional talent bring their experience, expertise and desire for operational excellence (not perfection) to a supportive and collaborative work environment. They individually contribute without losing cohesion and connection to the collective team’s mission. Open minds see a clearer view.
Arguably, toolset is the easiest of these three cultural shifts because an agile-minded, skilled and connected workforce can expertly cut through the dazzling array of options to source, assess and select flexible and scalable modern technology stacks that enable us to develop and deliver better outcomes. Empowered people are the drivers of our digital bench not the driven.
Tools and technology are simply conduits to help us meet objectives, solve customer problems and deliver value by enabling:
All of which can be a powerful competitive advantage.
Leveraging modern technologies for digital transformation render organizations more agile in responding to changing markets and enhances innovation, which also makes them more resilient. However, there are human experiences connected to the adoption of technology that impact perceptions, behaviors, decisions and outcomes. So, I can’t overstate the importance of being on purpose with its purpose.
Seize all opportunities to overcommunicate, as well as co-create and pilot the implementation of technologies with end-users to ensure that it is easily understood, accessible, embraced and championed, without hindering the adoption of new and emerging technologies. If employees don’t fully understand, trust or appreciate how the technology can help them be more productive, make better decisions, free up time to devote to other aspects of their work that they enjoy – or generally just make their lives a whole lot easier – then, “Houston, we have a problem.”
Digital transformations are human transformations
Your digital ecosystem assumes a constant flow of dynamic data from multiple internal and external sources, and the way it’s cultivated and nurtured by your colleagues can be a transformative force for the culture and future of your company.
Regardless of where you are in your transformation journey, may it be an adventure filled with curiosity, discovery and the courage to explore new possibilities with every step you take. A growth mindset with the coveted skillset to adopt the enabling digital toolset for the creation and delivery of value will help propel your business’s digital transformation on its path to game-changing destinations.