Organization development in digital transformation
“Organizational inertia is the reason digital transformation initiatives in this company is failing,” told by an executive of a local company when he shared his digital transformation journey. “Employees just say it can’t be done when I implement transformative projects,” he further said.
This is perhaps the biggest barrier to digital transformation success, that is, the tendency of mature organizations to continue its current trajectory termed as organizational inertia. I highlighted this in previous article titled “What is digital transformation?” published on January 23, 2017,wherein I said that the ultimate challenge of digital transformation in organizations is making sure employees, suppliers, and even customers adapt to the transformational changes, as they impact industry and organizational structures, reporting lines, and potentially job descriptions.
I likewise stressed that business leaders, when undergoing digital transformation, should carefully manage change and transitions among employees. This is where the role of human resources and organization development (OD) experts become critical. What is OD and what is exactly its role? Let’s first review the previous concepts I discussed.
I defined digital transformation as the “acceleration of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized way.” The four pillar activities of digital transformation are “engaging your customers, empowering your employees, optimizing your operations, and transforming your products.”
Furthermore, “digital transformation is about orchestrating and nicely weaving the acceleration of these activities through a system of intelligence from digital technologies that involve business analytics to better understand customers, collaboration tools that allow employees to engage amongst themselves, automation tools that streamline operational processes, and platforms that allow for faster time-to-market.
To ensure optimal benefits from digital transformation initiative, business leaders should create an organization-wide plan, and have roadmap for the execution of each pillar of activities. But the reason digital transformation fails is that it lacks the plan how to manage change and transitions, and sustain adoption of new processes, technologies, and tools.
This is where OD becomes critical component of the digital transformation plan at the onset. It is the process of helping organizations improve through planned and systematic change in the attitudes, beliefs, and values of the employees through creation and reinforcement of long-term programs.It starts with a careful organization-wide analysis of the current situation and of the future requirements, and employs “intervention” techniques through structured activities" such as experiential exercises, questionnaires, attitude surveys, relevant group discussions, and others.
While OD is already a mature concept and practice, the gap is in the understanding of the extent and gravity of behaviour change involved in digital transformation. This is brought about by the transformational nature of new technologies such as cloud, analytics, artificial intelligence, and Internet-ofThings that threaten to replace existing practices and processes; hence, encountering much resistance from employees.
As an example, the use of cloud technologies in digital transformation has changed the way information technology employees procure, maintain, and operate IT systems in a company in such a way that they need entirely new skills and new ways of working.
OD practitioners need understand these new ways of working because of digital transformation in order to formulate intervention programs for sustained behavior change. The bandaid approach of many is to conduct trainings to employees. I have seen this approach fail as employees revert to their old ways. OD should encompass structured activities such as enablement of adoption and behavior change on abroad scale, and promotion of good practices that reinforce the new behavior.
The success of digital transformation ultimately depends on how employees adapt to the new ways of working brought about by new technologies, and not on the choice of technology alone. The chief human resource officer should play an active role in the organization behaviour change plan alongside the digital transformation plan of the CEO.
**** The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX.The author may be emailed at reylugtu@reylugtu.com.
The author is a senior executive in an information and communications technology firm. He is the Chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University. He is also an Adjunct Faculty of the Asian Institute of Management