There are many definitions for digital transformation (DX), but all of them agree that digital transformation (as the name imply) is a significant change to the group who is pushing it forward. Even if the DX goal is to disrupt the market with new business processes, the first disruption will be internal to the group who wants to introduce the change to the market.
A prerequisite for a successful introduction of a new business process based on a digital solution that will disrupt the industry is a successful adoption of all the changed an organization needs to adapt to be able to introduce a new business process to the market. DX include changes in technology and processes, and therefore it is also a significant change for people.
There isn’t anyone that is working in an organization and didn’t test the sour fruits of a simple change, that is so common in organizations (like a reorganization). DX present to any group X10 more complex and complicated change.
Change is hard both from a personal and organizational point of view, although it is essential for any organization to survive. DX is taking this challenge far beyond what you experience so far. As your DX effort is more ambition, more zeros can be added after the X10 factor.
From a personal point of view, you have to remember that people too optimistic about their achievement, so they don’t see a reason for a change. If you try to explain Toys-r-us the need for a change, you’ll find out that they never thought that their business model is wrong. The economy might be challenging, management needs to be replaced, but selling goods from expansive retail stores is a great idea that might have some, but it is not wrong. This mental model is tough to break especially in organizations that were successful for a long time.
Another hard to break mental-model is the natural biased towards risk averse and loss averse. Each one of those models alone (and X100 together) prevent people from taking any risks. As we all know risks are needed to make any change. Never underestimate those two mental models. They are deeply ingrained in people mind by organizations that use to run in linear markets where you can survive just by being more efficient.
From the organization perspective, we all know that organization hierarchy favor promotion of people with experience and skill set to run the current business model, not people that like exploring and adapting. Therefore it is not surprising that even the top of the pyramid wants to introduce a change, it will fail due to the resistance and inability of his management team to make a change.
Hierarchies adopted as a management practice to helped organizations running complicated production systems and support functions in a linear environment. Linear environments where efficiency is the name of the game. Hierarchies are not a fit for a change, that required more flatten the non-hierarchial structure. Hierarchies are also struggling to keep companies in a business world that is unexpected and change rapidly.
Hierarchies are optimized to reach given goals in a linear business environment. They are not optimized to drive continuous changes to fit constant unexpected changes that firms need to deal with.
To successfully run DX effort you need not just to be aware of both the organization and personal challenges, you need to know before you starting your DX journey how to address them. There are many approaches available to deal with a change, but I’ll will argue that just a few of them will succeed in a complex business environment.