At a recent Econsultancy Digital Intelligence Briefing in Singapore, Damien Cummings, CEO at Peoplewave and Econsultancy’s Entrepreneur-in-residence, argued that the best first step may, instead, be to reach out to human resources (HR) and get them on board.
The reasons why are listed below.
So why is HR critical to digital transformation?
The components of digital transformation
When companies start the digital transformation process they may come up with a strategy which typically includes buying some technology and building a team to implement it.
While these steps are indeed important, companies who do that, and that only, may be missing out on a number of things which are essential to a successful digital transformation.
At the event, Cummings argued that digital transformation actually requires five components all working together to be successful:
- Strategy: So that everyone agrees where the transformation is headed.
- Engagement: To ensure that everyone, not just the initiators, are on board.
- Innovation: Because the north star of transformation should be progress.
- Technology: To bring in advances from outside the organisation into the company.
- Data & Analytics: Feedback from data and data-driven action plans make sure that digital transformation can continue on an ongoing basis.
If any of these pieces are missing, organisations risk encountering one of the many insurmountable obstacles to transformation.
So, before starting digital transformation, it is essential to determine who can hold all of these pieces together.
The trouble with driving it from any of the C-suites is that they are either constrained with fixed budgets (CIO, CTO), are not resourced for such an undertaking (CEO, CFO) or do not typically have the clout in the organisation to ensure that all departments are engaged (CMO, Chief Data Officer or CDO).
The department to help lead the change, therefore, should be one which has:
- Flexible budgets
- A well-resourced team, and
- Existing relationships throughout the organisation.
According to Cummings, the one department which fulfills all of these criteria is human resources (HR).
HR and the start of digital transformation
One useful model to help with the digital transformation process comes from Harvard Business School professor John Kotter. In his book, Leading Change, Kotter describes the eight steps organisations must take for change to happen – and for it to stick.
For many companies, simply getting started is perhaps the most difficult hurdle to get over. Kotter recommends that those leading digital transformation start by creating a ‘climate for change’ in the organisation.
One of the best ways to create this climate is to write and communicate an emotionally compelling vision of the future which Kotter calls “The Big Opportunity.” The Big Opportunity should highlight an exciting new direction for the company which, if everyone pulls together, will place the organisation in a better, stronger position in the future.
This forward-looking vision could be initiated by the CEO, CMO, or another senior executive, but without early and total buy-in from HR it will be difficult to communicate it company-wide and ensure it is well-understood throughout the organisation.
Ongoing digital transformation with HR
In order for The Big Opportunity to remain relevant, real change needs to start happening throughout the company quickly. Kotter’s model lists several changes that matter, including:
- Forming a new, powerful coalition around the vision,
- Empowering departments to act decisively, and
- Making sure that change ‘sticks’ and becomes part of the culture.
Out of any one department in the organisation, HR has the reach and influence to make sure that each of these come to fruition.
Additionally, there is another, more significant change which Kotter claims may be necessary. In his more recent book, Accelerate, Kotter describes how the typical, management-driven hierarchies are ideal for delivering reliability and reducing risk.
But, he adds, that revolutionary change to an organisation (e.g. digital transformation), cannot happen if an organisation is focused on reducing risk.
The answer? Companies should setup a ‘dual operating system’ where the hierarchical management structure remains to run the business and a new, parallel network of employees who work outside of the normal reporting structure are responsible for innovation.
Perhaps surprisingly, this idea is not new. Xerox, the office automation supply company, has had two company cultures for decades. The hierarchical one is responsible for selling copiers and other machines and its Palo Alto Research Centre (Xerox PARC) is responsible for innovation.
As a testament to the success of the model, Xerox PARC invented and developed many of the components of the modern PC (GUI, mouse, and ethernet among them) in the 1970s, long before they were adopted by Apple and IBM.
Needless to say, for a digital transformation team to even consider a dual organisation company structure, HR must be part of the planning from the very beginning. Attempting such a radical change would be virtually impossible without the support of those who are tasked with hiring, onboarding, and, to some extent, managing employees throughout the company.
Human Resources plays an essential part in getting the the digital transformation process started (The Big Opportunity) and will also help keep it going, especially if it requires a change as fundamental to the company as implementing a ‘dual operating system’.
Apart from getting started and keeping the momentum up, though, HR can also help ensure that all of the pieces required for digital transformation become part of the culture and are well-represented by the leaders and fully-understood by the rest of the company.
So those intent on starting or being part of digital transformation should introduce themselves to their HR partners and do what they can to get them on board with the programme early and enthusiastically.
A word of thanks
Econsultancy would like to thank Damien Cummings, CEO at Peoplewave and Econsultancy’s Entrepreneur-in-residence for his presentation as well as the delegates who took time out of their busy schedules to attend.
We hope to see you all at future Singapore Econsultancy events!