Investing in new technology requires everyone in your organization to buy in. And we mean everyone. Even the best-laid plans will fall at the first hurdle if employees aren't on board with the idea of change. They're vital to success, and that's the reason companies are beginning to take note.
According to research and advisory firm Altimeter, "There is a growing acknowledgment of the importance of human factors in digital transformation."
In short: it's not enough for leaders to direct from the top. They must also encourage employee engagement from the bottom.
Here's how:
1. Allow Experimentation
Frappuccinos used to be a summer staple for Starbucks customers, but the growing wellness trend put a dent in their sales. This year, customers are more likely to order a Cloud Macchiato instead. Don't know what that is? The new iced drink actually came about from company experimentation.
Experimentation is a "key trait of effective leadership." Yet, getting employees to work with more agility and take risks is a big challenge for companies. Business leaders must give employees the right tools and encourage positive attitudes. This can help teams keep pace with the fast-changing digital environment.
For example, business leaders can digitize communications and other processes in their organizations. This helps employees experiment more quickly. Another option is to create both virtual and physical environments where people can experiment with new ideas. Leaders can encourage this through shorter-term initiatives with a specific focus. Take six to eight weeks and focus on approaching a single challenge in a new way. Something like ideation.
2. Distribute Decision-Making
In some cases, employees are unwilling to step up and take part in experiments. That's where distributed decision-making comes in. Distributed decision-making is allowing employees closer to the action to take the lead and make the right calls. This can include which new products to launch (and when) or how best to respond to customers.
Distributed decision-making asks leaders to hand over control to their employees without giving it up altogether.
A first step would be to give cross-functional teams more autonomy. Automotive retailer CarMax Inc used this approach to develop new ways to sell cars digitally. Once given a problem, employees within the teams decided how best to solve it and measure it. The teams made decisions like how many leads a new product should generate or how many conversions it wants from prospects.
Distributed decision-making asks leaders to hand over control to their employees without giving it up altogether.
This model can be the sign of a business further along with its digital transformation. It also explains why almost 40% of executives and managers say it's happening in their organization already. But an almost equal number say it is not, which indicates some room for change.
3. Support Collaboration
Experimentation and distributed decision-making usually come together in cross-functional teams. Employees often enjoy these types of teams. It gives them the chance to work with colleagues outside their own departments and get inspired by new ideas.
However, cross-functional teams can only flourish if business leaders and other department heads encourage collaboration and get directly involved. One way to do so is to join in when teams present their work. Another is by steering committees made up of senior managers from all parts of the business.
The question for business leaders is, "Who should take part?" The traditional departments of IT and marketing are a good starting point. Although, human resources are increasingly involved. According to Altimeter, this rise is most likely driven by the growing importance of the employee experience.
A Balancing Act
Successful digital transformation starts at the top of a company through strong leadership. But it needs bottom-up interest to really fly and prevent plans from stalling.
As Altimeter notes, "For companies to truly innovate, their cultures and engagement programs must empower employees to grow." Employee engagement ensures that digitally transformed businesses gain a competitive edge. And in the world of Industry 4.0, it allows them to develop future leaders who are well-versed in new ways of doing business.
