How People Are the Real Key to Digital Transformation: A Q&A with the Authors of "The Technology Fallacy"

Digital technologies are disrupting organizations of every size and shape, leaving managers scrambling to find a technology fix that will help their organizations compete.  The Technology Fallacy: How People Are the Real Key to Digital Transformation by Gerald C. KaneAnh Nguyen Phillips,Jonathan R. Copulsky and Garth R. Andrus, offers managers and business leaders a guide for surviving digital disruptions—but it is not a book about technology. It is about the organizational changes required to harness the power of technology. The authors argue that digital disruption is primarily about people and that effective digital transformation involves changes to organizational dynamics and how work gets done. A focus only on selecting and implementing the right digital technologies is not likely to lead to success. The best way to respond to digital disruption is by changing the company culture to be more agile, risk tolerant, and experimental. The book is part of the Management on the Cutting Edge series in partnership with MIT Sloan Management Review.  Below is a Q&A with the authors.

The data you collected over a period of four years required surveying over 16,000 people who have experienced and responded to digital disruption. What did you learn about why some organizations are struggling to respond effectively to it?

We asked survey respondents to identify the biggest barriers to digital transformation facing their organization.  The most common response was that organizations were their own worst enemy.  Internal issues such as lack of agility, complacency, and inflexible culture were reported as the biggest barriers.  This finding aligns with the key thesis of our book that technology is not the most important nor the most difficult part of digital transformation.  Instead, the more pressing issue is how an organization adapts its culture, strategy, leadership, and talent to operate effectively in a digital world.

Your metaphor of digital disruption as the cyclone in The Wizard of Oz makes the point that organizations have essentially been thrust into a whole new environment. What skills are necessary for adapting to the future of business?

One of the most important skills that organizations and individuals need to have in today’s digitally disrupted environment is a growth mindset – to adopt a beginner’s mind and a culture of continuous learning.  Understanding the capabilities of technologies (or having technology literacy) is important, but it’s just one part of it.  To turn that mindset into value, organizations must have a vision and learn by experimenting, exploring, and taking risks and individuals need to do the same.

Borders and Blockbuster are highly recognizable examples of businesses that were unable to keep up with rapidly evolving technologies, likely because they had already lost too much ground to adapt sufficiently. When did organizations begin to seriously consider and address the impacts of digital technology?

I’m not sure we know precisely when companies began to take digital disruption as a serious threat to their business.  We can say, however, that we have seen a marked increase in both the number of companies that take it seriously and the intensity with which they take it seriously over the four years of our research.   These companies also go far beyond the “usual suspects” of technology, media, and telecommunication, and span virtually every industry.  Furthermore, we see those who have begun to respond to digital disruption increasing their investments of time, energy, and money doing so, suggesting that we will see an increasing gap between the leaders and the laggards – a gap that may eventually become unsurmountable.

What levels and parts of the organization does digital disruption impact?  What organizational shifts need to occur to enable both leaders and employees to succeed?

Digital disruption affects all levels of the organization.  Our research shows, however, that higher level leaders are generally much more optimistic about how their organization is adapting to that disruption than lower level employees.  This result suggests that leaders may be overestimating how well their organization is responding.  In the book, we provide a framework by which leaders can survey their employees to gauge how digitally mature their organization is against 23 traits, which we refer to as the organization’s digital DNA.  Digital maturity is usually unevenly distributed throughout an organization, and we encourage organizations to use this framework to assess how it is distributed so they can begin to identify and address the areas of improvement that are most likely to yield organizational benefits.

If there’s one thing organizations need to get right in order to succeed in a digitally disruptive environment, what might that be?  How can they go about it?

We found that a single set of organizational characteristics were essential for digital maturity -- accepting risk of failure as a natural part of experimenting with new initiatives, actively implementing initiatives to increase agility, valuing and encouraging experimentation and testing as a means of continuous organizational learning, recognizing and rewarding collaboration across teams and divisions, increasingly organizing around cross-functional project teams, and empowering those teams to act autonomously. Even if organizations don’t know where to start with respect to digital strategy or technology implementation, these are characteristics that all digitally mature organizations need.  Furthermore, even digitally mature organizations that already have these characteristics are seeking to further develop these characteristics, so the process is ongoing and everyone needs to work at it.

Gerald C. Kane is Professor of Information Systems at Boston College.

Anh Nguyen Phillips is Research Lead at Deloitte’s Center for Integrated Research.

Jonathan R. Copulsky, a retired Principal of Deloitte Consulting LLP, teaches marketing, branding, and marketing technology at The Medill School and Kellogg School of Management at Northwestern University.

Garth R. Andrus is a Principal at Deloitte Consulting LLP.