Digital Disruption Is a People Problem

Companies will effectively navigate the challenges posed by digital disruption if they look at them as organizational and managerial problems, rather than technical ones.

Many treatments of digital disruption regard the rapid pace of technological innovation as the key problem facing organizations. It’s true that technological innovation is happening at a faster rate than ever before. Computers continue to become smaller, cheaper, more powerful, better connected, and embedded everywhere. Yet while the increasing rate of technological innovation is a significant part of the digital disruption challenge facing companies, it is not the problem in and of itself. It’s not even the most important part of the problem.

The true key problem facing organizations with respect to digital disruption is people — specifically, the different rates at which people, organizations, and policy respond to technological advances. Technology changes faster than individuals can adopt it, individuals adapt more quickly to that change than organizations can, and organizations adjust more quickly than legal and societal institutions can (as depicted in the below chart from Deloitte’s 2017 Human Capital Trends study). I refer to these differing gaps respectively as adoption, adaptation, and adjustment. Each of these gaps poses a different challenge for companies with respect to digital disruption.

Adoption

Adoption describes the gap between the rate at which technology changes and the rate at which individuals make those changes a part of their daily life. In his seminal work, Everett Rogers labeled innovation adopters based on various rates and phases: innovators, early adopters, early majority, late majority, and laggards. The result is a logistic function of cumulative adoption by which innovation occurs rapidly as the early and the late majorities begin to adopt. This adoption curve is certainly still relevant to technology companies and IT functions that are trying to drive the implementation of certain types of technology by employees in the marketplace or across the enterprise.

Despite the variability, with a significant portion of individuals lagging behind, adoption is not the most critical problem most managers face with respect to digital disruption — because individuals are generally still adopting technology faster than the organization can adapt to it. As people now have easy access to robust consumer-facing technology products (versus depending on their employers for these formerly costly devices and services), they’re able to gain quicker fluency with new technologies.

Additionally, the rapid rise of consumer-facing digital platforms such as Google, Apple, Facebook, and Amazon — all currently among the top five most valuable companies in the world — is a testament to how quickly individuals have adapted to digital change. As platforms and devices gather more data from increasing levels of user interactions, they evolve in ways that speed up the adoption curve. Platforms typically engage in A/B testing to optimize every facet of platform design to make them more usable (some say, addictive).

Adoption will continue to be an issue for organizations using expensive technologies that only organizations can afford — new medical imaging systems, for example — but for most technology innovations, the problem lies elsewhere. Most organizations don’t need to drive further adoption; they need to adapt to the facility individuals have already built with these tools.

Understanding the adoption curve isn’t entirely without value, however, because it can provide important foresight for when and how certain initiatives, whether strategic (for example, when and how customers are adopting technologies) or organizational (that is, when and how employees and partners are adopting them), will be necessary in response.

Adaptation

Adaptation describes the gap between how the majority of individuals want (and expect) to use technology to engage with companies and how companies have adapted to support those digital interactions.

Companies should pay most attention to the adaptation gap with respect to customer engagement and experience. If companies don’t enable effective digital interactions with their customers, then those customers will go to competitors or startups that will. Walmart Stores Inc., for example, acknowledges that its efforts for digital transformation are being pulled by customer expectations, not driven purely by executive initiatives.


As companies embrace digital channels for reaching customers, however, this effort can also exacerbate another facet of the adaptation gap — the space between employees and the companies for which they work. Employees are also customers of other companies, and they have experienced streamlined digital interfaces for interacting for business purposes. Data from our recent report on digital business suggests that employees have become increasingly frustrated by what they are capable of accomplishing with digital tools in their personal life compared with how they are forced to work with their own company through email and nonmobile computing. Software company Adobe Systems Inc. is attempting to address this disparity by uniting customer and employee experience under a single leader.

In many instances, the key problem facing most companies is the need to adapt fast enough to address customer demands for digital interactions, while simultaneously changing the organization itself to meet those demands and the demands tech advances stimulate in employees.

Adjustment

Adjustment refers to the gap between how many organizations use digital tools and the laws and regulations that societies agree on to govern that use. Laws and regulation almost always lag behind actual use, and this poses a different set of challenges for most companies.

The gap between organizational use and regulatory frameworks is likely exacerbated for international companies that face differences in legal governance. For example, global companies have to deal with multiple legal and regulatory frameworks; policies that may work in one country may not work in another. Regulatory frameworks also vary across industries. One manager in a regulated industry actually pointed to the regulation as a benefit for the company, as it provided clear guidance for what to do and not to do across all competitors in the industry. Some companies in regulated industries have reached out to the regulators proactively to describe the innovations they hoped to enact, seeking guidance for how these initiatives should be implemented.

For most companies, waiting for the legal policymakers to catch up to practice is not an option. Organizations must adjust fast enough to accommodate customer demand while abiding by legal and regulatory agencies, an effort that will require frequent strategic planning and top-down communication. Indeed, perhaps the biggest challenges facing such rising digital stars such as Uber Technologies Inc. and Airbnb Inc. are the regulatory frameworks that are seeking to structure their behavior.

The Problem Isn’t Technology — It’s People

The rapid pace of technological innovation is not the key problem posed by digital disruption. The real challenge is the uneven rates of assimilation of these technologies into different levels of human organization. As such, companies will effectively navigate the challenges posed by digital disruption by undertaking initiatives that are far more organizational and managerial than technical.

6 Comments On: Digital Disruption Is a People Problem

  • Alok Bhatia | September 19, 2017

    Excellent article. Change initiatives often fail because of a lack of understanding that people need to change.

  • Elizabeth Valentine | September 20, 2017

    As we say here in New Zealand – he tangata, he tangata he tangata – it is people, it is people, it is people! But here’s the twist when it comes to decision quality and change.

    According to my own research digital leadership (strategy, policy, execution, risk and opportunity realisation etc) is underpinned by individual competency. Individual competency is the foundation of building team, divisional and organisational capability.

    The serious (global) challenge is the individual competency and collective capability of digital leadership from the board and c-suite down. I scanned all the major consulting firm board / exec surveys relating to things digital from 2012 – 2016, and it’s not pretty. Neither have the statistics changed significantly when it comes to perceptions of capability at the top.

    Bottom line is the very very poor to variable capability of senior leaders from non-Information and Technology backgrounds. A significant percentage lack the capability to lead, strategise and govern in a digital world, which might help things happen at pace.

    In 2016 I published the first known multi-sector validated competency set for this target audience. I regret to say my door has yet to be broken down by any rampant interest in building capability…

  • Keith D. Patch | September 24, 2017

    Hi Elizabeth–

    Your story is so sad. You certainly have a story to tell, and you should have companies beating their way to your door.

    Also, I can’t find you on Twitter, As one who is espousing the value of fluency in virtual connections, should you not have a good presence there?

    Best regards,

    –Keith
    @KeithDPatch

  • Armen Mnatsakanyan | September 26, 2017

    Very good article.
    As a management specialist, I can say that “Companies will effectively navigate the challenges posed by digital disruption if they look at …” their own Management System!
    Modern theories and modern practice pay little attention to the construction of the Management System!
    In practice, the old Taylor (engineering) approach dominates.
    He was slightly softened by economic and psychological approaches, but in principle the Taylor approach did not change.
    As before, the formula “I’m the boss – you’re a fool” dominates the management.
    We, still, are dealing with “intuitive management” (Peter Drucker).
    The crisis in the theory and practice of management is most clearly manifested in “the challenges posed by digital disruption.”
    I agree with Gerald that the problem is in the inadequate response of individuals and organizations to “the challenges posed by digital disruption.”
    The problem is very serious.
    We will have to revise the entire theory of management anew and abandon many of the usual ideas.
    A rejection of old and familiar knowledge is the most difficult thing that can ever be.
    Working now on “the General theory of management” I understand how deeply we will have to change the usual ideas about management.

  • Luigi D'Angola | September 30, 2017

    Niccolo’ Machiavelli said that “It must be remembered that there is nothing more difficult to plan, more doubtful of success, nor more dangerous to manage than a new system. For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones. ”
    Still true after 500 years.

  • Richard Parsons | October 12, 2017

    Interesting article, raising a number of critical aspects in which companies traditionally fail at managing Organizational change, and Transformation.
    I say “companies” specifically because it is too generalistic that this challenge is a people only problem, when in reality it is not, because people are actually very adept at change, adaptation, adoption, and adjustment.
    The speed of Digital Transformation is not being driven by companies, but the expectations and demands of customers who are rapidly changing already.
    10 years ago people didn’t know they needed an iPhone, yet people quickly adopted the technology, adjusted their behaviours through smartphones, and adopted new digital lifestyles; and why was this?
    Because people saw the value adopting an iPhone would bring, how it delivered a new experience, and how it could make life simpler and easier.
    Putting Digital on the front of “change” or “transformation” does not make it any different to manage, because the 3 core principles that define how to manage change, disruption and transformation remain the same, and yet companies fail so badly and so frequently at answering and managing these 3 fundamental basics of change.
    1) What is the value of this change to me?
    2) How will this change or impact my experience positively or negatively?
    3) What does my employer expect from me, and what will i receive in return?

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