Digital Transformation Requires More Than Technology Upgrades
In a global survey of managers and executives conducted by MIT Sloan Management Review and Deloitte, close to 90% of executives anticipated that their industries would be disrupted by digital trends to a great or moderate extent, yet only 44% said their organizations were adequately preparing for the disruptions to come. This aligns strongly with research done by the Digital Banking Report, where only 12% of banking organizations considered themselves digital transformation “leaders” and where less than 40% of organizations considered themselves prepared for consumer expectations or competitive threats.
The reason why most banks and credit unions fall short of what is needed to transform their organization is because becoming a “digital bank” is tough. Not only must legacy systems be upgraded, but business structure, operations, people, culture and leadership must all be in sync and aligned. This leaves many organizations taking on digital transformation “projects” that are limited in scope as opposed to trying to transform the entire organization.
Making matters worse, research discussed in the book, The Technology Fallacy: How People Are the Real Key to Digital Transformation, reveals that the human and organizational aspects of digital transformation are often more important than the technological ones. Instead, the book discusses how digital transformation involves:
To better understand the findings discussed in the book as it relates to financial services, I conducted an exclusive interview of Gerald C. (Jerry) Kane, Professor of Information Systems at Boston College’s Carroll School of Management and co-author of the book for my podcast, Banking Transformed. A portion of my interview is included below.
Kane: Some of the components are actually the things that we were touting as most important back in the 20th century. Instead of looking for the perfection of Six Sigma, it is important to get the appropriate risk tolerance in place. This is something that a lot of companies struggle with because digital technology is a moving target, and if you are hoping to get the answer right all the time, it’s going to be really hard to adapt and change. What companies need to do are a lot more little experiments. Figure out what works, iterate, and then build on the successes.
Kane: We say that if you’re waiting for the necessity to show up in your bottom line, it might be too late. It’s really hard to innovate from a position of weakness. Alternatively, some companies have the foresight that to realize that the environment is going to change and they’re better off trying to pivot amidst the success.
A great example here is Walmart. Despite being an older, large and established company they are doing some really remarkable things. Some of it was through acquisition, while some was just by driving that transformational mindset from the top level. The CEO made digital transformation part of annual reviews down to the line level employees.
Kane: We found that a growth mindset is perhaps the biggest difference between companies that are “getting it” and “not getting it.” With a “fixed mindset,” we hear, “We’re just not a digital company. We’re a legacy company. We can’t do these things.” In contrast, when firms can change that mindset, they can really accomplish great things.
