The Technology Fallacy: How People Are the Real Key to Digital Transformation (Management on the Cutting Edge)

by Gerald C. Kane

Maturation is a natural process, but it will not happen automatically.

Managers must develop working knowledge of digital trends to lead their organization to adapt in the right ways.

Maturity is never complete.

The question is whether other companies are willing to attempt these changes rather than letting denial and fear of failure prevent them from taking action. It is never too late to begin becoming more digitally mature, and the process is never complete.

Digital maturity is about continually realigning your organization and updating your strategic plan to account for changes in the technological landscape that affect your business.

digital strategy is not necessarily a singular long-term plan to which the organization doggedly adheres and that it executes over a multiyear timeframe. Rather, it is a recursive process of identifying the overall goals of digital business, developing short-term initiatives that get the organization closer to the goal, and then rethinking the nature of those goals based on what the organization has learned from those short-term initiatives.

See differently. This step involves managers making sense of the actions possible in the current environment. They scan the environment for technological and organizational capabilities and determine a single action that will yield the biggest positive impact on the organization. The action with the biggest impact may be to eliminate some of the barriers to effective digital strategy. The single action that managers identify will be the strategic goal driving the next steps of the process. Think differently. The short initiative in the previous stage may or may not be successful in surfacing a single strategic goal. If it is successful, leaders should consider whether new capabilities may be possible as a result of working toward this goal. If they could not identify a strategic goal, leaders should take time to figure out why not and how those reasons might affect other efforts to develop digital strategy, repeating this step until they can identify a goal. Do differently. In this step, the organization plans a six- to eight-week initiative to make meaningful progress toward their strategic goal. Significant resources are leveraged for the organization to attempt to work differently in this short period. Repeat. The leaders take the knowledge developed in the final stage and reassess organizational opportunities in light of this new knowledge, repeating the cycle.

Other technologies—such as 3-D printing, virtual and augmented reality, the Internet of Things, blockchain, and artificial intelligence, just to name some big categories—all have a similar sort of

inevitability and may have a greater effect on your business. What are managers to do in the face of all this strategic uncertainty?

Digital strategy is about adapting the organization to a changing environment in a way that leads to a sustainable competitive advantage.

The concept of affordances was originally introduced in the psychology literature by James J. Gibson, referring to the possible ways that humans or other animals can interact with their environment.

This concept of affordances was later picked up by the fields of computer science and information systems to describe how people interact with technology. Information technology changes how people and organizations can act in a particular environment, enabling new opportunities for action that would not be possible without the technology.

More recently, this perspective has been extended to the organizational level. Technology can change the organizational environment in which they are used, enabling a new set of affordances. As companies learn and employ new digital affordances, the organizations will need to change in response.

At the most basic level, an affordances perspective suggests that merely owning and implementing technology is not enough to deliver business advantage. While

They either believe that the mere adoption of the latest technology will improve their business prospects, or they focus all their efforts on implementation, without applying the time or resources to make the types of organizational changes needed to benefit from the possibilities the technologies offer.

Likewise, it is silly to say there is only one “right” way to use certain technologies. Twitter is one example of the digital equivalent of duct tape. Companies have learned to use this platform in surprising ways, depending on their needs. Some companies—like many of the major media outlets—use Twitter as a means of broadening the reach of their content. Others, such as Delta, JetBlue, and Southwest, use Twitter as an effective customer service tool, enabling them to support customers in a fluid service environment. Still others use Twitter as a business intelligence tool. The health care company Kaiser Permanente uses data generated by customers on Twitter to identify areas of improvement in business operations.

common complaint from customers, the company used the geotag data to identify which facilities had the most significant issues. Auto manufacturer Nissan uses Twitter to help inform its marketing campaigns. The company livestreamed the presentation of its GT-R supercar using Twitter’s video streaming app Periscope at a large national auto show. Real-time feedback from fans on Twitter revealed what aspects of the new car design were of most interest, information Nissan then used to design its marketing campaign.5 The American Red Cross and the US Geological Survey use keyword monitoring to more quickly identify natural disasters than might otherwise be possible through traditional channels.

The concept of hidden affordances suggests that organizations need to grow into effective digital strategy. In our survey, the goals of digital strategy differ by maturity stage. Early stage companies focus mostly on improving customer service and engagement. In addition to these goals, developing companies tend to focus more on improving innovation and business decision making. The maturing companies, however, are most likely to add transforming the business to these strategic goals. Indeed, at the highest levels of digital maturity, all these goals come into play.

Once companies have mastered new forms of innovation and data-driven decision making, they will be ready to begin thinking about transforming their businesses.

One upscale clothing retailer invested in flashy technologies in its flagship store in Manhattan, such as digital dressing rooms, RFID-tagged clothing, and sophisticated software that allowed the systems to make recommendations for products that went with the items the customer had selected. This technology was expensive and turned out to be more of a novelty than a delivery of real value to customers. The technology ended up getting shelved when it turned out to be more trouble than it was worth. In contrast, the retailer Zara—one of the fastest growing companies in the world10—is often credited with using an IT infrastructure to deliver “fast fashion” by looking for inspiration from popular designs and getting the clothing to the marketplace in a matter of days. Yet, the IT infrastructure that drives these advantages is relatively rudimentary from a technological perspective.

Technology is secondary to the strategy it enables.

the need for an organization to use the possible actions performed by technology in a way consistent with or complementary to other users within the organization.11 Groups that tended to gravitate toward a common set of actions with a new technology performed better than groups in which individuals used the technology in divergent ways.12

The need for collective affordances raises the importance of strong communication between management and employees to effectively enact digital strategy. It is not enough to implement a new technology. Employees must also know what they are to do with it, because the possible and most valuable uses may not always be obvious. Communication involves leadership clearly and coherently communicating a vision for digital strategy to employees. It also means listening to input from those employees on how that vision is being executed in the real world and modifying that vision to account for actual ways technology is being used. Employees can also serve as effective sensors for unintended barriers to or implications of a digital strategy. They can report these difficulties, allowing the leadership team to adapt the strategy accordingly. Nonexecutive leaders can be valuable first responders to tackle unexpected problems that may occur while executing a digital strategy. As such, they should be given some latitude to act when they identify issues once the strategy has been effectively communicated to them.

In a digital environment, organizations must shift from a world of “scalable efficiency” to one of “scalable learning.” This means leadership needs to shift, too. As Hagel describes, “Leadership in the future is not about having all the answers; it’s actually around being able to frame the right questions—powerful and inspiring questions—where the leader is saying, ‘I have no clue, but this is a really important question. And if we could figure this out, we would do amazing things.’” That’s a different model of leadership—one focused on creating an environment that inspires people to learn faster and moves the group to work together to find the answers.

strong leadership is a trait that can be learned, not one an individual is born with or possesses innately. The genotype, or blueprint, for effective leadership consists of a series of characteristics, ranging from providing purpose to inspiring employees to facilitating collaboration. These traits, which have always been part and parcel of good leadership, will continue to define the blueprint for good leadership. Yet, those fundamental traits will be expressed differently in a digital environment than a more traditional one.

Direction: Providing vision and purpose. Having vision and setting direction has always been a leadership fundamental. But in a digital environment, this capability takes on new meaning. In our study, it’s cited as the most important leadership skill. With the uncertainty and undiscovered possibilities facing today’s business environment, leaders must have a transformative vision for their organizations, with both long-term and short-term outlooks. Business judgment: Making decisions in an uncertain context. Leaders have always had to demonstrate commercial acumen and wisdom through sound business decisions. In a more digital environment, decisions often must be made more quickly and with incomplete or uncertain information. Leaders may no longer be able to wait for an ROI analysis or early performance measures. Execution: Empowering people to think differently. Leaders have always had to rely on others to achieve results. To do this effectively in a digital environment, leaders must empower their people to think more creatively, work more collaboratively, adopt a more entrepreneurial mindset, and be leaders themselves. Inspirational leadership: Getting people to follow you. Digital transformation and digital maturity are huge changes. To navigate people through the change and uncertainty and get behind a vision, leaders must inspire others. People must want to follow them, not be forced to do so. Innovation: Creating the conditions for people to experiment. Innovation is ...

we discuss in later chapters, fear of failure is a huge impediment to experimentation and innovation in many organizations. Leaders must overcome this obstacle and create an environment that encourages genuine experimentation. Talent building: Supporting continuous self-development. Developing people has always been a core leadership trait. In an environment where continuous learning is critical to building capabilities, leaders must empower and enable self-development. This includes providing employees with opportunities to take on new challenges, as well as supporting self-directed learning outside the organization (see chapters 8 and 9). Influence: Persuading and influencing stakeholders. As we discuss in later chapters, hierarchical structures with solid lines on org charts will diminish. Instead, organizations will look more and more like peer-to-peer networks. Power through simple authority rarely exists. Instead, influence and persuasion become key to building support and getting things done. Collaboration: Getting people to collaborate across boundaries. As we discuss in chapter 13, collaboration is a core trait of digitally maturing organizations. Leaders must encourage and enable this collaboration internally by breaking down silos and increasing cross-functional teaming, as well as outside the organization by extending partnerships and blurring the boundaries of the organization.

First, as we previously discussed, many leaders mistakenly believe that the genotype for successful leadership fundamentally changes in digital environments, that somehow

the core of good leadership is dramatically different because of digital challenges and capabilities. This mistake can cause leaders to ignore many tried and true leadership lessons and experience in an attempt to do things entirely differently. Good leaders can make bad decisions if they ignore valid leadership instincts honed over a career simply because they were shaped in a different environment. The second mistake is the converse of the first, when leaders think that the phenotype of good leadership will somehow be unchanged in a digital environment. While good leadership remains good leadership, it will necessarily be expressed differently in a radically new environment. Just like we don’t see carbon paper, typewriters, and adding machines in today’s offices, leaders need to update approaches to leadership that may have been forged in the dot-com era. Third, many leaders mistake the outward expression of digital leadership for the phenotypic expression of good leadership in a digital environment. Doing things digitally does not automatically make one an effective leader. For example, although effective communication in a digital environment likely involves using digital platforms, simply using these platforms does not automatically result in good communication. In fact, since these platforms can facilitate the transfer of all sorts of information, they can amplify bad leadership just as easily as good leadership.

Often leaders think that once the system is implemented and in place, the investment is complete. On the contrary, management scholars have long recognized that introducing technology changes how people using those tools work together.4 If digital transformation is essentially an organizational and people issue, as we argue in this book, the real investment in digital transformation is only part technology. It will take time for people to learn to use the new technology and for the organization to adapt its work and communications processes to accommodate it.

When executives simply delegate responsibility for digital business to the technologists, it is a recipe for near-certain failure.

The good news is that it’s often much easier to teach executives what they need to know about digital business than it is to equip technologists with the leadership experience and strategic insight they would need to lead digital business efforts effectively.

Leaders must give employees opportunities to succeed.

These opportunities can come in many forms. Employees should be provided with adequate training to learn to engage the technology and associated processes effectively. Training need not take the form of traditional classes; it may simply mean ensuring that adequate resources are available online to help them learn (and ensuring that employees are aware of them). Alternatively, it may mean that employees are moved within the organization more frequently so that they can learn other ways of doing things from coworkers. Employees must be given time and space to adapt. They are likely to be good at sticking with established ways of doing things that are safe and familiar. New ways of working require adequate time and cognitive resources to explore and learn.

having vision and being forward looking.

understanding the general principles about how technology does (and does not) work enables leaders to make better, more informed decisions—all the more important in an uncertain environment.

If your organization does not have a process in place by which your leaders can update their knowledge regularly, the digital knowledge of your leadership will gradually grow obsolete.

Companies are now starting to look for a balance of hard and soft skills, technical and business skills—all in the same person. Think of this as a “stack” of skills, analogous to the stacks that many organizations try to create with various technologies.

are looking for people with a balance of technical and soft skills. Often people with deep knowledge in a certain area (e.g., technical, business) are also expected to have foundational skills such as communication, storytelling, etc. For example, data scientists need to understand the business and be able to tell the story to interpret the insights.

People with fixed mindsets believe that intelligence (along with talent, personality, and other traits and capabilities) is static: either you have it or you don’t, and you can do little to change it. Having a growth mindset begins with the core belief that intelligence (and talent, personality, capabilities) can be developed—it is not static or predetermined. For people with growth mindsets, the focus is on the process as well as the outcome. The importance of process and effort are critical, as they affect how and what is learned and the progress made. In much the same way that digital leadership is a learned skill, so is the ability of employees to work effectively in a digital organization.

Of course, no matter how much of a growth mindset you nurture, not everyone in your organization is capable of learning advanced technical skills, like Hadoop or machine learning. Yet, everyone can become more digitally literate, learn to adapt better to change, and think more critically—the skills our survey respondents identify as most important for success.

“Talent” is defined as an innate or natural aptitude or skill. The irony is that digital talent is less about individuals’ innate skills and aptitudes, or what they can do today, than about what they will be able to do tomorrow, based on their mindset and their ability to learn and grow. But this type of learning differs from institutional learning, which often takes place in classrooms and training programs. It is necessarily more self-driven and less structured. Institutional learning and formalized training alone are unable to keep up with the pace of change and technological development. A different type of learning is needed: one that is continual, experiential, and exploratory. It is about finding and seeking learning in nearly everything—being in a constant state of growth.

Younger students tend to excel

in the procedural applications of technology; that is, they are good at navigating the various apps and platforms. Older students, however, tend to be superior in the strategic applications of technology. Once they are familiar with the capabilities of technology, they tend to appreciate the business applications more quickly than do younger students.

The key takeaway here is that millennials are not inherently digital, at least not in an organizational sense. They may have adopted technology individually, but they will not instinctually know how to help your company adapt. Even if they come out of college more digitally minded than their older counterparts, that edge will atrophy quickly without continuous learning and a growth mindset, because the technology keeps changing. Neither are older workers at an unresolvable disadvantage. Older workers may not have the time or inclination to become hardcore data scientists, but they can acquire the necessary digital literacy to contribute productively to their digitally maturing organizations. Millennials certainly have much to teach about technology, b...

An interesting trend in our research is that several executives said they need to “trick” their employees into digital initiatives. If they talk about their transformation efforts in terms of digital, the fixed mindset takes over—employees don’t believe that they or their organizations can do it because they just aren’t digital people. Instead, they talk about efforts in terms of improved customer service or exploring new ways to connect, without explicitly referencing the digital aspect. The organizations

They encourage experimentation and pilot programs, and they foster creativity and innovation. Studies have linked growth-mindset organizations with increased innovation, collaboration, and risk taking.6 Characteristics of growth-mindset companies align with attributes of maturing digital organizations. Supervisors tend to rate their employees more positively, saying that they are “more innovative, collaborative, and committed to learning and growing. They are more likely to say that their employees have management potential.… At a minimum, growth-mindset firms have happier employees and a more innovative, risk-taking culture.… Growth-mindset organizations are likely to hire from within their ranks, while fixed-mindset organizations reflexively look for outsiders.

An organizational growth mindset also suggests that organizations should move beyond just training to develop the skills employees need for the future. We have found that the skills required to thrive can be learned by and taught to people of all ages. What’s more, research shows that intrinsic motivators are quite powerful, and people have a need for autonomy, growth, and meaning in their work.9 In other words, people want to learn and grow.

If the desired skills are a blend of technical and soft skills, formal training classes in topics such as coding or data analytics are unlikely to be the solution—although they may be part of one. Rather, digitally maturing organizations provide diverse environments in which these employees can develop the types of characteristics and skills they reported as being important—openness, adaptability, flexibility, agility, and innovation.

Perhaps leaders in digitally maturing organizations should consider two additions to the standard list of questions they pose to job candidates. First, what have you learned lately that makes you a more competent and capable employee in a digitally maturing organization? Second, how have you helped someone else to learn something that helps them to become a more competent and capable employee in a digital maturing organization? In today’s business environment, we can ill afford to hire individuals who can’t offer up compelling answers to both questions.