How Would Managements Overcome Digital Disruption?

Digitisation requires a lot of change on the part of the management, employees and customers. Much rethinking is needed on core roles and processes that lead to resistance from internal stakeholders.

Initially, the changeover would lead to disruption in the form of loss of efficiency or effectiveness. The pace and extent of change could unsettle staff and manifest itself in the form of resistance.

Charles Galunic, Professor of Organisational Behaviour and the Aviva Chaired Professor of Leadership and Responsibility at INSEAD, writing in the School blog says that interviews with digitizing companies revealed that resistance could be especially strong among middle managers.

Why is it so? The perceived threat of the change could be unsettling for them. According to one manager, the shift for organizations to be driven by data and analytics is perceived as a direct assault on the managers’ sense of control. It is basically like the customer assuming the role of the expert and that he or she knows what’s best. The manager’s opinion about the right type of action may not matter as much anymore. The difficulties involved in learning or adapting to new technologies may add to the manager’s burden.

“because there’s so much uncertainty, you don’t pay enough attention to your strategy, what are you really trying to achieve and how do we innovate within that.”

The second reason is the time available to learn, to set up new routines or collaborate more broadly. However, the work schedule for middle-level managers is filled with meetings, reports and those to whom they need to report on a daily basis. They are also unable to shake off the shackles of metrics and legacy incentives.

In some cases, there is also lack of incentives or a reward system. They remain focused on meeting the official targets as a time and a priority issue.

Thirdly, it is a question of value. Middle-level managers may resist changes for the simple reason that a digital idea or initiative lacks value. Organisations can certainly be swept up in what appear to be game-changing new technologies that might not become big hits.

Therefore, digital leaders need to be careful not to confuse personal threat and rigidity “resistance” with honest “questioning” of the value proposition behind a new digital initiative, says Prof Galunic.

The survey of managers also found that not all of them are “driven by purely self-protection”. Neither are they clueless about the importance of things digital. It is likely that their personal lives are filled with an abundance of digital technologies, so they understand the potential.

So what is the role of the change agents? They should, first of all, create a sense of opportunity, not only of threat. The middle-level managers expect their leaders to provide them with a clearly established sense of what they are trying to achieve”. They want clarity from their leadership to fully understand the strategy and absorb the changes to see how they can apply their skillsets or learn what needs to be learned.

According to one of the managers, what can happen within digital is that “because there’s so much uncertainty, you don’t pay enough attention to your strategy, what are you really trying to achieve and how do we innovate within that.”

The next step is to create a narrative to educate. Constant education is essential to digitization, which means digital leaders need to get into the corridors, lunch rooms, meeting areas and virtual chat rooms to engage people. After undertaking this exercise, one manager said that within a year, they achieved a lot in terms of probably 50% of the middle management accepting the new processes.

Firms should consider systematic efforts (time and resources) to help middle managers get up to speed on new digital technologies and methods. This does not mean turning him or her into an expert in data analytics, but some training in specific skills may be valuable and adequate. Unless the education sector can quickly produce an overabundance of new talent with such digital skills (which seems unlikely), some retraining may be necessary.

Finally, resistance may not fade away completely unless digitalization activities are taken seriously and allocated real power and status. “In the past, the digital leaders were not as important as the [core business] leaders and we are now better [positioned] in the structure and have more power. This is one important part,” said one interviewee.

Thus, managing digital change requires more appreciation of integration issues and internal disruption consequences and the clear building of expectations. Managers need to understand exactly why people resist (fear, but also a lack of time and recognition, and serious questions about value) and address their worries accordingly. Finally, we need to think seriously about retooling methods for middle managers, says Prof. Galunic.