Digital Economy Dispatch #07513th February 2022

A Foundation for a People First Perspective on Your Digital Future

Almost exactly 20 years I joined IBM when the company I worked for, Rational Software Corporation, was acquired for just over $2B. I have to say, it was a bit of a shock. In the previous 3 or 4 years I had gone from working in a Silicon Valley startup that had grown to a 100+ employees and was just gaining its first customers (Catapulse) to be acquired into a larger company with several hundred employees and a core set of well-established products in use by a wide customer base (Rational). No sooner had I started to find my way around when along came IBM. At the time it had a payroll of almost 350,000 people and a revenue stream of $2B per week!

How does a company operate at that scale and generate such large amounts of money? Of course, there are many components to this. A strong set of products. An enviable record in research and development resulting in a large patent portfolio. A wide network of suppliers, partners, and sales outlets across the globe. Yet it also, inevitably, requires strong discipline, rigorous focus on performance, and a culture that demands a lot of its people. At times this could feel relentless. Perhaps even a little soulless. When I finally left IBM some years later, people would ask me what I was now doing. My usual answer was terse: “I’m in recovery”. It was perhaps a slightly facetious response. Nevertheless, it was also pretty accurate.

So, it is no great surprise to me that the current pandemic-fuelled crisis has created a wave of restlessness expressed by many people about their work life and to hear the questions they are asking about what they want for the future. The “great shift” of consumer patterns, new ways of working, and an accompanying “great resignation” rebalancing the workforce may well be described as the consequence of many factors. But to me the underlying message is clear: If you want to make sense of a digitally disrupted world struggling to cope with the volatility and uncertainty of a global pandemic, then you must focus on the people first.

Making People Matter

It has long been highlighted that having the right people is essential to the success of every business venture. All companies seek to develop motivated individuals and organize them into teams with inspiring leaders who set directions to achieve the overall aims of the business. Despite this however, employees often feel that their needs and aspirations are poorly understood and inadequately addressed.

According to Hay Group’s “What’s My Motivation?” report from 2015, just 15% of UK workers considered themselves ‘highly motivated’, with almost 24% admitting to ‘coasting’ and a further 8% being ‘completely demotivated’. More worrying is that poor staff motivation has been reducing productivity by close to 50%, with just 21% of British workers considering themselves ‘very effective’ in their current job role. These figures are similar to those from the USA, where a 2017 Gallup report on the state of the American workplace found that over 51% of the US workforce was not engaged with their work, and only 22% believed that their company has leadership with a clear direction.

Over the past 2 years these challenges are increasing. The “great resignation” being experienced in many sectors highlights that workers are increasingly concerned about how they view their contribution to an organization’s success, the role their employer plays in facing up to the societal challenges we now face, and the imbalance their experience across reward systems for the contribution they make to their employer’s success.

Given this data, it is more important than ever that we consider the human dimensions of the digital transformation taking place in organizations and the important implications for their individuals, teams, and the organization itself.

Toward the Digital Human

The goal to put people first is particularly challenging because digital technologies are frequently viewed as de-humanizing the workplace through automation of routine tasks, replacement of face-to-face activities with online alternatives, and eradication of human judgement in favour of data-driven algorithmic decision-making. Although intended to support human creativity and value, unchecked, the pressures from these changes may further diminish employee engagement and job satisfaction. What some digital technology enthusiasts see as automated support for human endeavour can easily be viewed by others as a replacement for their judgement and experience that leads to the diminishing of personal self-worth.

At its best, digital transformation provides an opportunity to engage employees by addressing key areas essential for motivating individuals: Mastery, Autonomy, and Purpose. Workers in an organization are empowered when digital technologies bring greater access to data and more tightly connect them to others within and outside the organization. Unfortunately, a key lesson from the acceleration of digital transformation during the pandemic is that digital connectivity is a two-edged sword. This more digitized environment can be difficult to navigate for some employees and adds to the pressures on individuals and teams.

Such reflection has given rise to two major concerns. The first is that the introduction of digital technologies can be both disorienting and drive unhealthy behaviour for many individuals. For example, recent surveys indicate that employee burnout and stress may well be at an all-time high.

Second, the rapid shift to digital ways of working is outpacing the supply of workers skilled in appropriate digital techniques. Not only is retraining existing employees found to be more expensive and difficult than anticipated, but there is also an insufficient pool of digitally-savvy people joining the workforce. This is being made worse by the continued disruptions in secondary, further, and higher education.

Finding the Path

It is essential for all organizations undergoing digital transformation to accept that a people first approach is the foundation for success. The key dilemma here is how to deploy digital technologies to support individual workers and teams while avoiding the challenges of disorientation and burnout that come with the pervasive access and always-on connectivity this infrastructure dictates.

Consequently, organizations must invest in people first and address several key questions, including: How do will evolve digital skills across the workforce at the right pace? Where does digitization appropriately complement or replace human activity? How does digital transformation support us to enhance creativity and accelerate innovation within the organization? Where do digital technologies promote engagement for employees and reduce their mental stress in an increasingly volatile working environment?

Despite the costs and challenges involved, answering these questions is a priority that cannot be ignored. In digital transformation the age old saying remains as true as ever: I you think the cost of educating your people is expensive, just wait until you have to cope with the costs of leaving them ignorant.

Digital Economy Tidbits

The Most Influential and Innovative Articles from Harvard Business Review's First Century. Link.

Interesting to see what HBR have selected as the most influential articles from their 100 year history. How many have you read? Did they change your views of the world?

With an introduction written by editor in chief Adi Ignatius, HBR at 100 features business publishing’s most influential voices on innovative topics, including:

• Michael E. Porter on competitive strategy

• Clayton M. Christensen on disruptive innovation

• Tim Brown on design thinking

• Linda A. Hill on being a first-time manager

• Daniel Goleman on emotional intelligence

• Erik Brynjolfsson and Andrew McAfee on artificial intelligence

• Robert Livingston on racial equity at work

• Amy C. Edmondson and Mark Mortensen on psychological safety

• Robert B. Cialdini on the science of persuasion

• W. Chan Kim and Renée Mauborgne on blue ocean strategy

• Gary Hamel and C.K. Prahalad on strategic intent

• Peter F. Drucker on managing yourself