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Digital Transformation in 2023: The Human Factor

digital transformation

Is your organization ready for its next push into digital transformation? If you’re shrugging your shoulders or rolling your eyes, we get it: An EY-Parthenon report uncovered 70% of digital investments don’t capture their intended value. Another study from research firm Gartner found that the majority of CEOs (59%) say digital initiatives take too long. But don’t avoid it. The pandemic pushed most businesses to “go digital” fast: 63% of organizational leaders admit it forced them to embrace digital transformation sooner than they had expected, but it caused them to make greater investments in technology as a result. Now, in 2023, these organizations are stepping up efforts to reduce friction and dial-up productivity and sales with digital transformation initiatives that better incorporate cloud, mobile, and virtual collaboration, cybersecurity, AI, and hyper-automation.

Nike is an example. The company has claimed significant business growth by embracing a digital-first, direct-to-customer (D2C) strategy beginning in 2020. By Q4 2022, Nike Brand Digital sales increased 25% while other leading global e-commerce businesses grew in single digits during that time, reports infotechlead. Company leaders stress a continued focus on digital transformation in 2023 while noting a “challenging environment and economy” as a significant reason.

Ericsson is also a good high-profile case study in digital transformation. Erik Ekudden, Chief Technology Officer at Ericsson, tells the Word Economic Forum that digital transformation is critical for manufacturing.

“Digitalization offers a chance to drive up productivity, drive down waste and bring forward novel solutions in new markets. The AI market alone is expected to reach $4.5 trillion by 2025, while the IoT market is expected to reach $15 trillion by 2025. Ericsson’s Global Lighthouse accredited 5G Smart Factory in Lewisville, Texas, demonstrates the art of the possible…Through connected exponential technologies, such as AI and IoT, this [one, individual] US factory has delivered 120% improved output per employee, is designed to reduce water usage by 75% with a comparable building and is powered entirely by renewable electricity. Imagine what we can achieve if we apply exponential technologies across all sectors, everywhere,” he explains.

But make no mistake: Industry and size don’t matter when it comes to embracing change. According to Salesforce, small businesses across a multitude of sectors that embrace digital transformation see 8x more revenue than those that don’t.

But There’s a Problem

Those who have had hang-ups and challenges in past, however, need to understand: Digital transformation has a human problem. “Automation, optimization and other software implementations are only as effective as the human strategy around them,” asserts Maria Orozova, the founder of Austin-based digital experience agency MODintelechy.

We asked Dan Jensen, a CFO/COO/Integrator and an HT Group advisor, about the human factor in enterprise digital transformation. Turns out, it is absolutely a mission-critical consideration.

“Business is done between and operated by humans, so any ‘transformation,’ no matter how big or small, is dependent on humans,” he explains, adding that the barriers can—and do—occur at every level of business. Once you throw the term “digital” into the mix, he says, the initiative can feel even more daunting. “It can be overwhelming simply in terms of the risk of leading with technology as opposed to optimizing the entire system and using technology as an enabler.”

According to Jensen, the major sticking points and challenges of digital transformation tend start with a lack of a shared vision (SV) and common mental model (CMM) for what digital transformation means and doesn’t mean across an enterprise.

“Without an SV and CMM, it’s common to lead with technology only to end up not achieving the ultimate goals of the digital transformation by missing out on the critical process and people/culture elements,” he explains. “The SV should also address the ‘what’s next’ for people and teams impacted by the digital transformation. One may have the best strategy in the world, but without buy-in and an effective change management program, there is a significantly higher risk of failure due to the ‘cultural antibodies’ that are often present.”

So where do you begin? “The best place to start is with the people most affected by the potential change, whether they are customers, partners or employees,” Jensen adds. “In highly complex digital transformation initiatives, an enterprise-wide systems strategy with an integrated roadmap supported by as-is and to-be process and impact maps are foundational elements.”

What Does 2023 Hold for Digital Transformation?

Jensen says that with hybrid/remote work here to stay, enterprises will need to continue to embrace digital transformation to ensure new and evolving outcomes-based management techniques are institutionalized while also maintaining—and, hopefully, improving—customer and employee satisfaction. 

“Current economic uncertainty will likely lead to a renewed focus on transforming and digitizing, with those who invest ahead of the curve likely to benefit the most when the economy rebounds,” he says.

Drop us a line to find out how The HT Group Advisory Services can help you formulate a plan for digital transformation that identifies and then turns human barriers into opportunities for innovation.