In, to or through – why HR should lead digital transformation

“As we’ve just seen with Thomas Cook, the oldest travel company in the world, the fact that you are a big name and have been around a long time is absolutely no guarantee that you are going to survive; no business has a right to survival.”

So began Michael Skapinker, Headspring Executive Editor, at a recent London roundtable of senior HR leaders gathered to discuss HR’s evolving role in digital transformation.

HR works with a wide set of stakeholders across the organisation. In a fast-paced digital world, understanding and supporting stakeholder needs is becoming more challenging. How is HR responding to digital transformation across the organisation?

In answering this question Michael was joined by a packed room of leading HR professionals and Alan Brown, Professor of Digital Economy at University of Exeter Business School and author of recently-released Delivering Digital Transformation.

Revolution or evolution?

Brown laid the context for our discussion by questioning whether the rapid digital change we are experiencing in multiple domains is evidence of evolutionary development or a full revolution.

“Everything that’s happened in the HR space amounts to tweaks and automation, not fundamental shifts.”

“I’d like to claim that we are in fact going through a digital revolution,”he said, “which means that the things we learned in the past are not necessarily very helpful for what we are going to go through in the future.”

“However,” Brown added, “many of the business support functions like HR, project management, policy management, or performance management often get short changed in this kind of revolution. And you’re often the ones left behind, then seen as the blockers instead of the enablers that you actually are.”

One of the forum participants agreed: “Everything that’s happened in the HR space amounts to tweaks and automation, not fundamental shifts.”

Is there anything HR leaders can do to change this pattern and contribute more meaningfully to digital transformation?

In, to and through

As the debate unfurled, the relationship between HR and digital transformation was seen to take three possible characters:

In – digital transformation within HR functions; To – digital transformation  taking place in the broader organisation, putting pressure on HR to change; or Through – HR leading the organisation’s digital transformation narrative and journey.

“This is a skills and people problem, not a technology problem.”

Of these three approaches it became clear that the latter was where HR’s best potential for positive impact lay. Digital has to work because of HR, not despite it.

“This is a skills and people problem, not a technology problem,” said Brown.

Others around the table agreed: “A lot of the skills we are seeing leaders need in our organisation are the same as they have always needed, but the context is changing, so the ways they use the skills are changing.”

This response to context is at the heart of the digital transformation motive (Brown argues that the digital revolution is about the search for the knowledge of context), but an uneven response creates new challenges for HR practitioners.

Participants agreed there is a difference between the internal approach to digital transformation (how it impacts the employee experience) vs the external (client experience). The latter seems to get priority most of the time while the employee experience lags behind.

There is often a bias towards investing in a better customer experience because it is easier  to generate a clear ROI, through automated CRM for example, whereas employee programme investment takes much longer to reveal dividends.

In the words of one contributor, “If you’re a CIO you’re not going to make your career designing an award-winning HR platform.”

So, what is the best digital strategy for HR leaders?

“There is no such thing as a digital strategy,” says Brown, “there is just strategy.”

“We live in a digital world.”

Digital transformation can, however, be divided into three primary elements:

1. Digital infrastructure 

The digitisation aspect of digital transformation – moving data from analog to digital, cleaning it up and using it. This element is all about improving efficiency and ROI. A lot of focus is placed on automation and, since most of the cost in most organisations is people, automation is focused on making people more cost efficient.

2. Digital services

This element is all about value: what value are we delivering to whom? In digital transformation businesses have moved from delivering products to delivering services, then access to those services, and now data about the ways in which those services are accessed. Where an organisation chooses to add value determines everything about its relationship with digital transformation.

3. Digital organisation

This element is all about outcomes – not just the business’ financial outcomes, but results for all stakeholders, including employees. Decisions in this area – such as those relating to organisational structure, working agreements, location, systems and processes – determine the broader value that any organisation can deliver.

“There is no such thing as a digital strategy, there is just strategy. We live in a digital world.”

Emerging as a clear message from the morning’s discussion, HR plays a role in all three of these domains. But it is in the third – the creation of a digital organisation – that it can have a profound and far-reaching impact.

It is for this reason that HR leadership is not just a useful ingredient in digital transformation, it is fundamental to its success.