What is the best catalyst for innovation in the face of digital disruption?

What is the greatest catalyst for innovation in the face of digital disruption?

Employee buy-in is the greatest catalyst for innovation in the face of digital disruption, according to Telstra, which said more support needs to be given to people internally to empower them to have a say in the design and implementation of organisational digital transformation projects.

As such, HR leaders have a key role to play in advocating for the critical role people play in delivering true transformation, and driving new ways of working to support them, said Chris Smith, executive director technology services for Telstra, which recently released a research report on digital disruption.

“As part of our research, we wanted to understand what is holding Australian businesses back,” he said.

The Disruptive Decision-Making research, which took in 3810 global senior decision-makers, looked at four factors of digital transformation success – people, processes, technology understanding and partnerships.

“What we found, almost ironically, is that it’s an over-reliance on technology that could be limiting success,” he said.

When asked to rate their capabilities across the four factors, Smith said understanding of technology was highest by a significant margin.

“But when we looked at these results for organisations that were most digitally advanced, they showed a greater focus on people than technology as an enabler,” he said.

“This tells us that digitally successful organisations know that their employees are driving success.

“While digital transformation is technology-enabled, it’s people-led and requires the right culture, the right people and the right processes to support workforces,” said Smith, who explained that business which get this right are upskilling their employees, adapting structures and ways of working, and creating teams that can maximise the potential of new technologies.

“When we looked at these results for organisations that were most digitally advanced, they showed a greater focus on people than technology as an enabler”

The report found that the most effective digital transformation projects are those which are driven by a clear vision, and this vision should be shared by the organisation as a whole, so that employees can understand the project’s objectives and deliverables.

This in turn helps them to adopt the right mindset, ask the right questions, and ultimately make better decisions.

Increased spend and a shift to agile working
“One of the trends we can see is not just an increased focus in digital transformation and digital initiatives, but increased investment,” said Smith.

More than a quarter of Australian organisations invested more than $1.4 million in digital transformation products and services over the past year, while more than one in 10 spent more than $7 million.

This is set to rise, with 27 per cent reporting their company’s total spend on digital transformation to increase by more than 10 per cent in the next three years.

“We can also expect to see more and more organisations moving to increasingly agile ways of working to empower their businesses to adapt quicker to change,” said Smith.

Australian leaders ranked making the organisation more agile as their 7th highest priority (out of 17).

However, this was also identified as an area where businesses struggled and this ranked last of all priorities when it came to actual performance.

“To lift this performance, we can expect to see a greater focus for organisations on new ways of working to help future proof their workforces,” said the digital disruption report, which found that innovative businesses are increasingly moving towards new ways of working that feature agile cross-functional teams.

“One of the greatest challenges for Australian businesses is simply taking the first step in their digital transformation”

These teams are empowered to drive rapid experimentation and iteration of products, services, and experiences.

Such an agile approach depends on employees being able to work collaboratively across sites and even timezones, share information fast and effectively, and test out prospective new solutions without affecting business-as-usual in the face of digital disruption.

Organisations can support these new ways of working by focusing their technology strategies on adopting tools that empower people and enable better internal processes, such as mobility, cloud, unified communications, and flexible networking, according to the report.

“There is still work to do when it comes to championing the role of employees in digital transformation,” said Smith, who cited research from MIT which found that many people don’t innately possess the skills necessary to succeed in a digital world, but they must develop them as they adapt to the new challenges brought by digital disruption.

“If organisations can empower their people to design and implement digital transformation projects more often, they can unlock the potential of their workforce and improve their business outcomes,” he said.

Where are organisations at on the transformation journey?
As digital disruption accelerates at an unprecedented rate, Smith observed that the way in which Australian businesses respond has become critical to their future.

While digital is firmly on the agenda, the research found businesses are struggling as they swim in an overload of information and technology options.

More than a third (37 per cent) of Australian organisations said they have not even started their digital transformation journey (which is behind the global average) and when it came to priorities versus performance of digital transformation programs, Smith said there was a concerning gap.

“Digital transformation must be led from the top, and this is a clear role for C-suite and senior leaders”

“Australian organisations rated their top three digital transformation priorities as protecting digital assets from cyber threats, optimising technology to move faster and delivering great, consistent customer experiences – yet decision-making outcomes around these priorities was ranked among the lowest,” he said.

“One of the greatest challenges for Australian businesses is simply taking the first step in their digital transformation.”

The digital disruption research found that having the right vision and mindset at the start of a transformation can be the hardest part of the overall journey.

In rating their decision-making ability across seven stages of the digital transformation process, businesses ranked having the right vision as last.

“This inability to have a clear foresight and strategy from the outset shows us a key opportunity for Australian leaders,” said Smith.

“Without a clear vision at the start there is no foundation for transformation teams to guide execution plans and determine success.

“Digital transformation must be led from the top, and this is a clear role for C-suite and senior leaders.”

The digital disruption research also found that companies aren’t taking a cohesive approach to digital transformation.

As many as 54 per cent of Australian organisations said they take an incremental approach, driven by individual business units, and only 30 per cent said they had an integrated, company-wide digital transformation strategy.

“This shows an opportunity to not only elevate efforts, but to integrate digital transformation across the organisation,” said Smith, who explained that businesses which take a whole-of-company approach were more likely to achieve digital success.