11 Jun 2021

Digital transformation in
organisations and people
functions
What is digital transformation and why should it matter to people professionals?

Why digital transformation matters to people professionals

1. It’s about people, not technology. Digital transformation is more about changing
people’s mindset and organisational practices than it is about choosing specific
technology. It is about formulating a business strategy that appeals to both
employees and customers, shaping a new culture that supports agile decision-
making, and dealing with anxiety about or resistance to change.

2. It’s a critical topic impacting the current and future world of work that people
professionals have identified in the People Profession 2030 report. To thrive in 2030
and beyond, the report recommends bringing people expertise to digital
transformation to add real value in organisations.

3. Knowing how to manage it is a core knowledge of a CIPD-qualified people

professional. Business Acumen, Change, and Culture and Behaviour are three core
knowledge areas in the CIPD’s New People Profession Map that are important for
paving the path to digital transformation.

What is meant by ‘digital transformation’ and ‘digital maturity’?

Before digital transformation became a buzzword, enterprise or business transformation

was commonly used to describe a radically new way of running an organisation. As
technology increasingly disrupted the status quo, people began using digital
transformation to describe enterprise transformation in response to evolving digital
technologies. Somehow in the process, ‘enterprise’ was dropped from the terminology.

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Other flavours of digital transformation developed, focusing on radical changes within
organisational functions like finance and marketing. In this series, we delve into digital
transformation in organisations as well as people functions.

In essence, digital transformation is about an organisation and their people’s ability to

adapt to rapid changes caused by evolving digital technologies. The transformation here
is not an end state but a milestone in a continuous journey of adaptation as digital
technologies evolve. Digital transformation is about becoming more digitally mature as an
organisation.

In Technology Fallacy, Kane et al. defines digital maturity as follows:

‘aligning an organisation’s people, culture, structure, and tasks to compete effectively by

taking advantage of opportunities enabled by technological infrastructure, both inside
and outside the organisation.’

This definition builds on an established organisational theory by Nadler and Tushman

(1980) by considering the opportunities created by evolving technologies.

People, culture, structure, tasks and technology must be tightly aligned for an
organisation to achieve powerful results. As Kane et al. stated, ‘for example, a
conservative and hierarchical organisation that recruits energetic entrepreneurs won’t be
able to harness their drive and energy.’

What people professionals said about digital transformation

People professionals who contributed to the CIPD People Profession 2030 report
recognised that the profession has a significant role to play in digital transformation. For
example, in shaping the culture, engaging the workforce throughout the change and
dealing with anxiety or resistance. They debated the ongoing relationship between the
people function and IT. While some had a good business partnership with IT, others felt
they were working in siloes. In the latter case it meant that people issues might not be
considered. There was also discussion on ‘closing the skills gap around technology and
analytics’ in the workforce and within the people function. Having the technology and
analytics alone is not enough. It’s important to know how to use it.

How to do digital transformation effectively

Kane et al. outlined four steps to effective digital transformation and becoming a more
digitally mature organisation:

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 1. Assess – Survey your employees to understand where your organisation is with
respect to the 23 traits of digital maturity. Then conduct a workshop for senior
leaders to review the survey findings and have them to complete the survey
themselves.

2. Enable – Determine how digitally mature your organisation needs to become today.
Organisations that have mastered digital maturity build on existing strengths, while
more traditional organisations might want to work on minimising their weaknesses
so that they become less digitally immature. The least digitally mature part of your
organisation may be holding the entire organisation back.

3. Transform – Decide how your organisation improves on the target area and
practically moves toward digital maturity. Decide which areas to focus on by doing a
cost-benefit analysis of the 23 areas. Target three to five areas that give the best
return in terms of time, effort and resources. Develop small, six to eight-week
initiatives on the areas that you want to improve.

4. Review and repeat – Review what you have learned from the small initiatives and
whether they were successful. If so, make plans to repeat the initiative with other
small groups to drive change across the organisation. If not, learn from the
experience and try something else.

To help create an organisation that can operate effectively in a changing future of work,
they suggest focusing on initiatives such as:

redesigning work activities and processes with the best combination of automation
and human skills
delivering an integrated customer and employee experience through physical and
virtual workplaces and digital tools that drive productivity and promote
personalisation
using an insight-driven change analytics and design-thinking approach that puts the
customer at the centre and embraces iteration
being digital first and shaping the organisation through new cultural behaviours and
delivering consumer-grade employee experiences.

Interestingly, digitally mature organisations share a single set of cultural characteristics.

Organisations looking to mature digitally should aim to adopt these:

accepts risk of failure as part of experimenting with new initiatives

actively implements initiatives to increase agility in response to rapidly changing
markets

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 values and encourages experiments and testing as a way of continuous
organisational learning
recognises and rewards collaboration across teams and divisions as part of its
culture and operating model
increasingly organises projects around cross-functional teams
increasingly empowers those teams to act autonomously.

To become future-ready, an organisation needs to be skilful at both significantly

improving its customer experience and reducing cost through simplification. Many of the
organisations identified in Kane et al.’s research achieved good performance mainly
through the heroics of their people, who overcame complexities to create great customer
experiences.

Pathways to digital transformation

Stephanie Woerner identified four pathways to digital transformation that organisations

can choose from:

1. Standardise first by improving operational efficiencies. The downside is that

eliminating legacy processes and systems takes time without any improvement in
customer experience.

2. Improve customer experience first. This includes building mobile apps, improving
call centres and empowering relationship managers, with the goal of increasing
satisfaction. But this doesn’t address operational issues.

3. Take incremental steps by alternating between the first two pathways, to improve
customer experience and operational efficiency. The difference between success and
failure is having a roadmap that informs everyone’s efforts.

4. Create a new organisation that is future ready and continue improving the existing
organisation by following one of the other pathways.

One organisation that chose the fourth pathway was Axiom Telecom in the UAE. It went
through a transformation from a traditional bricks-and-mortar to a predominantly online
retailer. In the next chapter of this series, its Group People Director Dominic Keogh-
Peters discusses his experience and the role the people function played on that journey.

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