The Most Commonly Overlooked Secret of Digital Transformation?
By Samantha Papadakis, Senior Engagement Manager, Digital at Prophet
The Human Side of Transformation
I’ve had the pleasure to chair several recent Future Finance events, convening top players in the banking and insurance on digital transformation. Our conversations have spanned several areas—from where to start and how to invest in transformation efforts, to the technology and automation needed, and employee engagement and upskilling.
Despite the differences across banking, insurance, B2B, and B2C, one common theme rings true among companies, markets and industries: the human side of transformation is the critical ingredient to transformation success, but unfortunately one that is most often overlooked or under-invested in.
Three conversation shifts are evident over the past few years:
- From a technology focus —> a customer focus
- From operational focus —> cultural focus
- From what to do —> how to do it
Theme 1: From a technology focus to a customer focus
When I started working in enterprise transformation, the emphasis was on technology: how to transform legacy systems, upgrade platforms, and create migration roadmaps. This tech focus remains strong —Altimeter’s latest State of Digital Transformation report shows that the primary sponsor of transformation efforts continues to be a CIO or CTO (34%) with the #1 most common DT initiative being to modernize IT infrastructure (46%) — however there have been notable shifts in the last few years towards customer-centricity.
In Prophet’s latest research, “Catalysts in Action: Cultural Levers of Transformation,” we found that 58% of companies report that their roadmaps consider both customer-facing and organisational initiatives.
It’s certainly an improvement against years past, but it underscores the important work still to be done to connect these dots for employees so they understand how the customer experience will be changing and what’s needed internally to get there.
This shift towards customer-centricity was summarised by one of the recent speakers, Arapat Sangkharat of Krung Thai Bank, who proclaimed “DX is a race without a finish line.” This resonated not because it made the task of DT seem daunting and never-ending, but because it underscored this customer-centric mindset perfectly — so long as the consumer landscape changes and evolves, so too must transformation efforts. Rather than “completing” a transformation, businesses must shift from a static strategy and roadmap to focus more on a continual, always-on understanding of evolving customer and market trends and adapt accordingly.
Theme 2: From operational focus —> cultural focus
Nearly a decade into digital transformation efforts, we’re finally hearing more about the critical role that employees play in driving the transformation. Joos Louwerier of Allianz Indonesia spoke about his recipe for success:
DT = (CX + DX) + EX
This formula highlights the critical importance of matching a customer-centric mindset (CX) with digitally-minded distributor experience (DX), combined with the right internal perspective on the employee experience (EX). This includes everything from educating employees on the transformation strategy to garner buy-in and understanding, to concretely showing employees their role in the change through “intranpreneurship.” One example model is Allianz’s Innovation Lab, which was set up to: bring the customer perspective into solution development (the “CX” ingredient); and also to train employees in new ways to show how to do things differently (the “EX” ingredient) — from agile to scrum, MVP development, user testing, and more.
What’s intriguing— almost paradoxical—when you look at the broader market is that we’re seeing an industry-wide decline in demand for HR & change related services. However, if you look closer, those services are not in low-demand, their focus has just shifted — as the demand for digital transformation has risen, more of the “change” related services are now being invested in via DT efforts. In fact, Source Global reports that the “human aspects of transformation” (e.g., behavioural change) are some of the most highly discussed elements of DT efforts.
Our research (“Cultural Growth Levers, 2019”) supports this too — last year, we interviewed 500+ senior executives globally, and found that three of the top five drivers of a transformations success involved culture: from employee engagement mechanisms (16%) to upskilling (35%) and building leadership role model structures (27%).
Theme 3: From what to do —> how to do it
Given the always-on, ever-shifting nature of transformation, several participants spoke about the need to shift from perfecting strategy to perfecting execution. Many key levers of transformation are well known businesses today — e.g., develop digitally-native products/services, evolve and enhance online touchpoints, shift to direct to consumer models— that developing a DT strategy is no longer the biggest hurdle to getting started.
Instead, the emphasis on how to execute has become the bigger and more challenging focus. Sonny George of the State Bank of India, shared insights during his presentation about SBI’s unique approaches to evolve the “how.” Firstly, SBI spun out the digital bank under a separate unit within the bank to enable a “from scratch” mindset that removed barriers of legacy systems, processes, and importantly, attitudes.
Sonny also shared a story in how SBI gamified their employee transformation.
Modelled after the cricket league, each initiative had a team logo and name, with unique competitions for multi-disciplinary teams to “face off” against each other. Face offs were rooted in customer success metrics (e.g., new product sales, conversion rate), with the winners rewarded publicly throughout the organisation.
In this way, SBI focused on innovative techniques to engage its employees in the transformation, creating tangible measures of success and new, interactive methods.
What comes next?
Creating a full change program will indeed require effort and scale. But there are some quick-win efforts that can be done in the near-term to drive impact and begin investing in the human side of transformation:
Five quick wins every organization can do right now…
1. Share success stories: have the HR and communications teams work with business unit leads to identify one key success story each week. Build a content calendar for each month and commit to sharing a success story each week – through a video, employee testimonial, show-and-tell, intranet post, town hall, etc. Make successes known, especially across silos!
2. Solicit regular employee feedback: create a convenient submission forum (e.g., box to drop paper forms, Intranet online submission) for employees to submit feedback or ideas. Each week or month (bandwidth dependent), host a town hall with leaders where employee submissions are shared.
3. Create always-on pulse checks: Swap out the annual employee survey for always-on pulse checks that allow for a more transparent and regular means for employees to share feedback with superiors and peers (pro tip! We’ve use SCARF at my firm and have had great success with it!)
4. Make it okay to fail: introduce new tools, like the “Failure Resume,” which reframes the dialogue around test & learn to encourage teams to share learnings from failures, rather than fear failure. Socialize “Failure Resumes” during town halls, alongside success stories and employee feedback.
5. Create a learning agenda: Decide on 2-3 key competencies that require upskilling (e.g., digital marketing, remote front-line customer service, UX/UI design, etc.) and build a quick learning plan to identify a pilot group of employees to test out learning resources (pro tip! There are great free online learning courses, like these! Start there before building a full-scale learning academy curriculum!)