June 23, 2022
By: Zach Wallens
Why so many organizations still struggle with digital transformation
If your organization is more deliberate than you think ideal when adopting new technology, you can take some cold comfort in the fact that it’s hardly unique. Transitions in general—and especially those that require great investments of time, money or other resources—have been challenging for humans since, well, humans became a thing.
And that’s very much the case when technology is involved. “All too often, selling digital transformation within large organizations is an uphill battle,” wrote Ideon CEO and co-founder Michael Levin in a recent Forbes article.
The reasons for this are many, a great deal of them explored in behavioral economics. Essentially the study of human judgment and decision making, the field encompasses a deep and growing list of cognitive biases that influence decision making. Among the most powerful are aversion to loss, aversion to regret and a preference for the status quo. In short, humans are biased towards keeping things the way they’ve been (because we’ve survived so far) and are often more afraid of feeling bad about an outcome than about the bad outcome itself. That’s as true for CTOs and CFOs today as it was for hunters and gatherers of the past. For good reason, too: For most of human history, time spent on regret (say, for taking the wrong turn in a forest) meant less time to address the resultant problem (say, the bear now chasing you).
What does all this have to do with digital transformation? More than you’d think. It makes sense that companies dependent on analog processes are hesitant to embrace digital solutions. The status quo has worked, and most significant technological transformation requires significant investment, which presents the potential for significant regret if systems go south. There’s also the misunderstood but pervasive idea that technology equals layoffs, a loss most employees seek to avoid. But one need only consider the current U.S. economy to understand the complexity of this understanding. Even as technological change continues to sweep through industry, the labor market is as tight as it has been in decades.
The health insurance and employee benefits industry is one example of how technology can transform a business even as employment grows. In what was not too long ago a very manual process, consumers today routinely use digital apps and platforms to choose and manage their health insurance and voluntary benefits. These transitions are powered by APIs—including those developed by Ideon—that power data exchange between insurers, employers, brokers, and the growing ranks of insurtech companies. The overwhelming majority of that latter category didn’t even exist a decade ago. (And they’re hiring.) Not surprisingly, a look at the health insurance and employee benefits ecosystem suggests four strategies for propelling digital change:
1. Connecting digital reform to company priorities.
This increases organizational abilities and allows them to efficiently continue working toward their goals while adapting to technological developments.
2. Maximizing employee engagement.
Employees will instinctively feel more comfortable with the technology being used when they are a part of the decision-making.
3. Pump priming.
Selling a particular change for a particular organization is rarely as effective as also selling the benefits of technological change, broadly. People have a harder time resisting change when confronted by statistics, research, case studies, and other evidence proving the ROI of digital transformation in their and other industries.
4. Using cognitive biases for good.
The very biases that keep people from making change can be used to spark action if inaction is framed as the more dangerous option. When we choose not to decide we have still made a choice—and that can be a source of regret, too.
Internal evangelists selling and installing digital transformation within their organizations invariably do so through a combination of the above strategies. While rarely a simple task, if done well, it’s almost invariably rewarding.