By Janaka Ediriweera
Dr. Corrie Block, an Organizational Behavior Expert and a business coach in the UAE, asks, ‘If you were to go in for heart surgery, buy a new car, or say your wedding vows to someone knowing that there was an 84% chance of failure…would you even bother?’
He uses this metaphor to drive home the unbelievably high rate of failure in digital transformation (DX), said to be between 70 to 95% according to sources like Forbes, McKinsey, BCG, KPMG, and Bain & Company.
But only 20% of these failures can be attributed to technological issues. The rest is all human doing or non-doing.
My experience in financial services shows that shaping human change is the biggest DX challenge a CTO will face. The human mind is predisposed to resist change. If you are a CTO tasked with driving transformation in a bank, I urge you to read on and explore how you can ensure successful DX by nurturing the right mental environment, going beyond traditional CTO responsibilities to become an organizational psychologist.
I’ve drawn on a Deloitte Insights article titled Humanizing change to supplement what my practical experience indicates, showing successful DX primarily requires a strong understanding of human psychology, to ensure cognitive dissonance and resultant stress do not hinder DX adoption.
The first step in the humanized DX process is to understand current beliefs and what will motivate people to change.
First identify current thoughts, beliefs and values of the bank
When you ask your bank’s employees to change, you are asking them to challenge their existing belief systems, and questions like the following will come up.
This is how things are done at our bank, why change?
Will I be able to use this system - will it make me redundant?
I know what is not working with our process, but will the experts involved even address those issues with the system they are building? They could even be outright conclusions! Some will be shared beliefs, some individual:
This solution is going to replace us.
This means I need to spend more time learning how to use this; therefore, I will work more not less.
The Deloitte article highlights how just giving a rational, incentive-based argument for change like ‘if you do this, we will give you X’, doesn’t help with some kinds of long-term behavioral change. It can make performance worse over time.
On the flip side, giving employees all the information and helping them challenge their current beliefs while seeing the proposed change in a new light, encourages deep thought. This will get employees to consider different perspectives and nurture a more receptive mindset to change.
Becoming your bank’s psychologist (going beyond traditional CTO
The sooner you understand this, the deeper digital can take root organization wide! When faced with new information, we often look at things through colored mentalframes, and rely on our System 1 thinking, which operates on assumptions and mental models created by past experiences, culture, and other influences.
It helps us make quick decisions but can lead to errors in judgment by not considering new information and not deliberating. For example, our reflexes react automatically to a hotplate or a snake, but sometimes we misinterpret the situation, like mistaking a harmless induction
hotplate or a garden hose for danger.
Asking employees to embrace change and challenging their existing belief systems requires System 2 thinking, which is slower, rational and involves engaging in thoughtful deliberation. It is often associated with conscious awareness and effort.
People use it when they carefully think about something, such as when trying to solve a math problem or make a decision about what to wear for an interview.
But CTOs must know change is unpleasant and stressful for the human mind, often creating cognitive dissonance, a state of discomfort created when new information contradicts existing practices and beliefs.
Therefore, to help employees engage in System 2 thinking, you must understand the current thoughts, beliefs and values of the people who need to embrace the change and provide support so they can transform.
Look deeper for change triggers when attempting to make digital
Now that we know the critical role you play as CTO in helping employees embrace digital change successfully, let’s look at some problems with the usual implementation approach which involves top-down communication and crowded PowerPoint presentations.
The previously referenced Deloitte article too points to their inefficiencies as they don’t serve the employees’ psychological needs. So, what’s the alternative?
There are some core triggers that we respond to as humans, as behavioral economics research also suggests, and they hold the answer.
Autonomy and Freedom: The need to operate autonomously and to make decisions at work is fundamentally a human one. So, by empowering employees to take ownership of their tasks and contribute their expertise from the onset of a DX project, you give them a sense of control over their future rather than making them feel anxious about it.
By helping them see the change doesn’t threaten their role's autonomy but rather enhances it, you encourage employee engagement during DX.
Growth vs Stagnation: Without mental stimulation or tasks to challenge an employee, they will feel bored and practice only System 1 thinking. Conversely, dopamine is released when learning, which is why it improves our mood and makes work more interesting. So, by including a plan for individuals to improve their skills and acquire new knowledge, they will support and adopt digital change better.
Purpose and Meaning: The value of work today may be confusing, as for many it doesn’t involve physical labour, craft, or the like, at least in the traditional sense. If the perceived transformation is seen to add value to their lives, their work, the company, or to customers, then they’ll support it fully.
As a modern-day CTO, being the organizational psychologist is a key part of your role, to ensure digital transformation can take root properly.
Putting effort into understanding how your employees think currently, you can help them, see the aspired change rationally. Thereafter, create an environment containing the elements that motivate them, so that successful digital transformation is the natural result.
Janaka Ediriweera, the writer of this column is Co-Founder and Principal Product Consultant at Beta Launch, a Melbourne and Colombo-based Product Management and Customer Experience consultancy.
The writer can be contacted on email@example.com