Transformation Without Technology

In our present age of digital disruption, it makes intuitive sense that companies would want to “fight fire with fire,” employing the latest and greatest technology to gain competitive advantage in a digital world. This is flawed thinking.

Indeed, just because digital technologies are causing many of the challenges companies face, it doesn’t mean that technology is necessarily the solution to those problems.

One can be forgiven for the misconception that responding to digital disruption requires implementing or utilizing technology, because it’s an assumption inherent in many definitions of digital transformation. For example, Salesforce defines digital transformation as “the process of using digital technologies to create new — or modify existing — business processes, culture, and customer experiences to meet changing business and market requirements.” Citrix defines digital transformation as “the strategic adoption of digital technologies, such as a digital workspace, to improve processes and productivity, manage business risk, and improve customer service.”

While these technology-centric definitions may make sense for the companies that created them, the most effective responses to digital disruption often don’t make use of technology at all. It’s this fundamental misunderstanding that I and my coauthors (Anh Nguyen Phillips, Jonathan R. Copulsky, and Garth R. Andrus) address in our new book, The Technology Fallacy, which summarizes five years of research conducted in conjunction with MIT Sloan Management Review and Deloitte. Where do companies focus their transformation efforts if not on technology? They focus on their most valuable assets: their people.

Consider health insurer Cigna, which recognized that its employees needed new skills to compete in a digital environment. Instead of just hiring new employees with these skills, Cigna helped its existing employees develop new skills by rethinking its traditional tuition reimbursement program. The company identified 15 strategic skill sets that the organization would need in the foreseeable future. Employees who wanted to pursue degrees in one of these 15 areas could be reimbursed at three times the rate of the standard reimbursement program. Cigna worked with the Lumina Foundation and Accenture to determine that the program more than paid for itself, increased employee retention, and raised the wages of employees who participated — in addition to the company gaining the essential talent it needed for the future.

The auto retailer CarMax is another example.