Managing the human element of digital transformation: overcoming cultural obstacles

Digital transformation is by no means a new concept. Restructuring an organization’s business model to integrate digital technology into all areas is well recorded as improving efficiency and agility at every level. However, despite its longevity as a goal for businesses, many struggle to understand the concept thoroughly and implement it successfully, in a sustainable way. Whilst Gartner reported that 69 percent of boards of directors accelerated digital business initiatives in 2020 due to Covid-19 disruption, McKinsey’s study from 2018 found that only 16 percent of digital transformations resulted in successfully improved performance.

As Gartner’s statistic suggests, the urgency of digital transformation has accelerated due to the pandemic. Not only does remote and hybrid working require it, but the uncertainty of the past year has proven that businesses would be wise to use data-driven tools to effectively plan for the future as far as possible.

Often business leaders attempt to make key decisions and solve challenges through intuition and gut instinct. Taking actions based on gut feeling means that rather than being guided by objective data and accurate insights, businesses are being led by ‘intuition bias’. This is a problem that is especially prevalent in the sales industry: Xactly’s recent Global Enterprise Sales Report found that doing things the way ‘they have always been done’ is the most influential factor in UK decision-making around sales planning today amongst sales leaders (31 percent).

However, the past 18 months have been far from business as usual, and thus doing things the way they’ve always been done is no longer working. Forecasting and planning has been met with an unprecedented challenge due to economic uncertainty: 50 percent of sales decision-makers, across the U.S., Canada, UK, France, and Germany, reported that it is more difficult to forecast bookings because of the pandemic. In this context business leaders can no longer afford to make decisions as they have in the past, because the goal posts of the game have dramatically shifted.

Any business attempting digital transformation projects at scale will be aware of the obvious obstacles that they may face, from cost constraints and inflexible legacy systems to a lack of alignment amongst executive stakeholders on the plan of action. However, organizations often overlook what is perhaps the biggest challenge of all: cultural and behavioral resistance.

Digital transformation is, by its very nature, a radical restructuring of a business’ operations. Dramatic change of any form is often met by the wider workforce with reluctance and pushback, even if the predicted benefits of such change are far-reaching. Much of this resistance can be traced back to the natural human fear of unknown and uncertain territory.

This instinctual reaction has only been exacerbated further by the pandemic. After 18 months of turbulence and anxiety, employees are craving comfort and security rather than radical change, even though this is when it is needed the most.

How can executives overcome these hurdles amongst the workforce to implement digital transformation sustainably and efficiently? Firstly, business leaders must demonstrate to the workforce and other executives how digital transformation will bring tangible benefits in helping enterprises grow, succeed, and increase revenue. Often leaders mistakenly take it for granted that employees understand the positive results of digital transformation.

Take the example of digitizing compensation and incentive plans. The traditional way of compensation has been paying sales reps after the sale has already been made.