People: the hardest “soft” aspect of Digital Transformation.

Selling through new channels, digitalizing the S&Op process, or implementing AI in pricing, for example, are not difficult tasks; rather, they are anticipated and logical evolutions. So why is it so hard to implement them in large companies?

Managers are quick to quash new technology rollouts when they jeopardize their autonomy over results (and, consequently, their paycheck or promotions within the company).

Digital Transformation is set up to fail when employees get a full bonus for achieving marginal performance increments (e.g. yearly targets), and risk it all if they make a mistake in the innovation process (a.k.a. being fired).

In this context, HR plays a critical role in crafting the right conditions for digital innovation. Their job ranges from organizing ideation sessions to enabling the development of new skills necessary to implement new ventures.

It's arguable that the Digital Transformation Officer should be the only one responsible for the internal transformational narrative. What area of the company is more suitable to incentivize silo-breaking actions, and gain institutional buy-in across the executive board?

Let this be a wake-up call to Human Resources Directors - compensation and merit evaluation for promotions should aid the D.T. process in 3 fundamental ways:

1. Fostering corporate experimentation.
2. Tolerating some level of failure from such experiments, and finally,
3. Aligning targets with the company's three-year transformation objectives, at least.

Tolerating failure is clearly a new corporate mindset. So, it's just fair to ask: how to promote test & learn in a responsible way?

Some organizations are already developing platforms (or labs) to accelerate innovation in highly controlled environments.

More generally, companies must selectively engage in digital transformation battles, prioritizing activities along the customer value chain* that harm NPS (net promoter score), or cause competitive drag. However, using competition as benchmarks is not enough.

Collaboration with suppliers and external consultants proves invaluable to dynamic companies, as they offer diverse perspectives to address challenges and complement in-house efforts in the process.

Historical examples of self-centered, risk-averse companies such as Avon, Nokia, and Kodak educate us on the results of living by the motto: "if it ain't broke, don't fix it" until there is no more juice to squeeze. They had the technology to reinvent their markets, and yet failed to make tough decisions needed at the time.

Digital transformation is about management choices, leadership vision, and most importantly, customer-centric adaptability.

The path to digital transformation (D.T.) is quite smooth when it comes to technology. It's we - "the people" - who keep getting in the way of change.

*See "Unlocking the Customer Value Chain" interview by Thales Teixeira, Ph.D. Link

This is the last article of the series on Digital Transformation Challenges from my personal experience perspective. I'll be glad to read your comments on all of them!