We have had access to digital technology since the late 70s. Since then, there has been an exponential increase in its power and usage. Yet, 40 years of experience appear to have taught us little about how best to harness the continuously evolving power of digital technology.
During those very early years, whilst leading the design of processes and technology (in-house mainframe at that time) to automate a major European distribution center, I learned that use of digital technology typically passes through three phases:
- We make it replicate what we did manually.
- The challenge here is that virtually all manual processes are sub-optimal. They have compromised methodologies for achieving desired outcomes.
- They are formalized to enable ease of replication and compliance monitoring, not because they are ideal.
- We use it to do what its creators think it should do.
- The excitement of something new; the persuasive power of passionate innovators; and competitive demands for differentiation, all drive us to invest in this Phase.
- However, technology innovators often have little understanding of the processes they automate or of the indirect effects of what they produce.
- That does not apply merely to digital technology. History abounds with inventions of food, drugs, devices, philosophies, forms of government etc., many of which, at some time, were viewed as panacea solutions, only later to be proven to have long-term negative outcomes.
- Many digital technologies will be no different. Indeed, some social media tools are already under serious global scrutiny.
- In phase 3, we study and understand the fundamental power (including the pros and cons) of new technology. Then, we use that knowledge to devise substantially better ways of delivering what we want to be achieved.
- This is when the true power, the essence, of the technology is understood and applied specifically to achieving some higher level goal. It demands investment in learning and focusing on how things work, not merely being attracted by apparent short-term outcomes.
The digital age will be no exception. We are already part-way through the phases in terms of HR-related digital technologies. In many organizations, we are just emerging from Phase 1. In that phase, we automated manual:
- Employee records
- Goal setting
- Performance appraisals
- Feedback processes
- Reward and recognition processes
- Data collection processes
Now, most organizations have a surfeit of data, and a range of highly sophisticated digital tools, including the means of virtually instant communications across organizational boundaries, geography, time zones and even languages. So, why has productivity been stagnant for nearly a decade, employee engagement been low and declining, and the cumulative worldwide economy been faltering?
Because we are now in Phase 2. We are in the midst of deploying tools without due-diligence. We are in a race to find the “best” but without an in-depth understanding of digital technology’s behavior engineering power, predictive capabilities, or of how to integrate such tools into the wider workings of our organizations as a whole. We are allowing “best” to be defined externally, by creators and vendors, not by us.
During my early experience of automating the distribution center, I also learned that the benefits from digital technologies rarely meet initial expectations. My detailed behavioral research proved that this is usually not due to process flaws or even technology failings but due to cultural failings. The latter include lack of management commitment and discipline to fully understanding and then utilizing technology’s core power, and to promoting organization-wide learning. For example and as I said, we now have a surfeit of data but what do we know about those data? Do we understand its quality (comprehensiveness, validity, reliability, differentiation, usefulness, and defensibility)? Do we know how to analyze it to identify potential cause and effect relationships, to define predictive algorithms, to assess and quantify risks, to prioritize areas for action? Similarly, with the digital technologies used to collect such data, do we know how best to deploy it? Many of our organizations have invested heavily, based on so-called “best practices” rather than through evidence-based decision-making.
All too often, organizational goals for deployment of digital technologies have been largely outcome-focused — to achieve e.g., a single dataset, the latest and greatest software, simple performance appraisal, low cost recruitment processes etc. Indeed, many organizations argue that they have embraced digital technologies and sought to capitalize on it, so demonstrating their agility. But do such actions demonstrate agility? Doesn’t such Phase 2 activity demonstrate a reactive mindset, rather than a thoughtful and agile one?
In 1988, Dr. Carole S. Dweck and Ellen L. Leggett published a paper, “A Social-Cognitive Approach to Motivation and Personality.” This explained research into what then became known as the Growth Mindset. They identified that some individuals (at that time, children) have more Fixed Mindsets and others more Growth Mindsets. This has later been shown to apply to adults and even to groups of adults in teams, departments and even organizations as a whole.
But how do the two extremes on the Mindset continuum differ? Many of us will be familiar with individuals with Fixed Mindsets. They see talent or ability as unchangeable. So, they rarely stretch themselves to develop and they react to feedback as though it is an attack. Whilst they might not set themselves goals, they still measure success by outcomes. But, at this extreme, they ensure that any goals are easy to achieve because they see not hitting them as failure. They typically look for the quick, simple, or easy options. They minimize the effort they expend, and they view obstacles as reasons to give up. When they do not achieve their goals, they look for ways to rationalize their achievements or they find others who have achieved less, with whom they can compare themselves favorably.
The rate of evolution in the digital age will continue to increase, new and bigger opportunities will arise, competition will increase, and employee demands will rise along with those changes.
Those factors will all magnify the difference between those organizations that embrace the digital age and those that don’t. Organizations that merely react might be lucky and ride a winner, occasionally. But, more likely, they will become trapped in Phase 1 or Phase 2. They will increase their costs, do little to increase productivity or competitive advantage, and will eventually fall out of the race and disappear!
Benefits from digital technologies rarely meet initial expectations, and this is usually not due to process flaws or even technology failings but due to cultural failings
However, sustainably successful organizations will take advantage of the digital age and move swiftly to Phase 3 with each new development. Their employees and especially their managers will demonstrate a Growth Mindset. Those with a Growth Mindset focus on learning. They understand that ability is not fixed – that, with application and practice, it can be enhanced continually. Managers in these organizations will attract, select, nurture, and retain individuals who have personal goals to learn and grow, who see calculated risk-taking and occasional failure as the price to be paid for learning opportunities and growth, who see obstacles as the waypoints to be welcomed on a personal development journey and to be circumvented with agility, and who measure success themselves in terms of increased capability.
The most significant differentiator of sustainably successful organizations is the caliber of their management to compete and succeed in the digital age that demands managers who have a Growth Mindset themselves, who build teams of similarly equipped staff, and who nurture a culture focused on the agile building of capability. Such a strategic approach is the best way to produce sustainable shorter-term results. After all, we never could, still can’t, and never will be able to manage results. We can only manage behavior. Let’s each do that and ensure that our organization thrives in the digital age!