Barriers to Digital Transformation: Strategies for Overcoming Resistance

March 8, 2023
Guest Post

Learn how to overcome 6 barriers to digital transformation in this guest blog post from Smart Panda Labs

For today’s blog, we’re excited to share a guest post from our newest partner, Smart Panda Labs! Smart Panda Labs provides digital transformation for marketers, helping you grow through your omni channel campaigns, personalization, and experimentation. They like to focus on what happens after the click. So many marketing departments today pour a lot of energy into optimizing their ads, but customers only spend seconds interacting with your ad. How are you nurturing the customer journey past that initial click?

In this guest post, Smart Panda Labs covers a topic essential to every business today. How do you overcome resistance to digital transformation within your company? What do you do when leadership isn’t sold on the strategy you know is best? How do you overcome employee pushback and grow their faith in this new direction you’re leading?

Let’s find out!

Barriers to Digital Transformation: Strategies for Overcoming Resistance

IDC predicts that 65% of GDP will be fully digitized by the end of 2022, driving trillions in digital transformation investment by the end of the following year. The question is: will your business join them?

Digital transformation is the most efficient way to reinvest in your business—making it more scalable, easier to manage, and faster to run. So what’s stopping businesses from jumping on board?

In this article, I’ll explore the top six barriers to digital transformation—and how to overcome them.

Table of Contents

The Problem with Shying Away From Digital Transformation

Imagine a hotel at the turn of the 21st century, still using phone-up reservations rather than online bookings. 

Slowly but steadily, the hotel notices their competitors out-booking them. A hotel down the street connects with a major booking website, and soon they’re booked out for months. 

Soon, there’s nothing left for the hotel that didn’t move with the times.

If you don’t make the necessary digital changes in your business, you’ll become one of those cautionary tales.

Today, most businesses are digital to some degree (email and a website being the most basic of business supplies). The problem is that bringing up a transformation of any kind—even a positive one—usually meets some resistance

The easy solution is to procrastinate. But the longer you wait, the bigger the transformation you’ll need to make to catch up. During that lag time, you’ll also miss out on empowering your employees, your customers, and your business with the potential benefits of digital transformation, a few of which are:

  • Innovation, like inventing new revenue streams and finding uses for new technologies
  • Expanding employee productivity through artificial intelligence (AI) insights and increased automation 
  • The potential to increase market share by being the first to create new digital offerings for customers
  • Reducing the use of less-reliable information in legacy systems, including outdated data storage
  • Saving costs for the customer

Despite the benefits, introducing digital innovation in your organization will encounter friction. You’re either going to embrace the organizational barriers to digital transformation and work to get around them, or you’re going to experience the friction that comes with being an antiquated company in a 21st-century world. 

You don’t want to be the latter. So let’s address how you can get around the main barriers to digital transformation.

Top Tip: To learn more about digital transformation and how it can help your business across the board, read our article on the ROI of digital transformation

Barrier #1: Lack of Leadership or Buy-In

The first step is operational: you have to learn how to get stakeholders to buy into the concept of digital change. With good buy-in, you can lead employees to a more efficient future. Without it, you’ll struggle to gain their trust for any new initiative.

Consider how The New York Times—a print company if there ever was one—created this buy-in.

  • Listening to the customers. First, The New York Times listened to their customers. The Times noticed the feedback of customers who were canceling their NYT subscriptions. One chief reason? These customers wanted to switch to digital news. It’s easier to create buy-in when you can demonstrate that your customers want the company to change.
  • Highlighting the benefits of digital. People are happy to buy in when they see opportunities from a digital transformation strategy. The New York Times learned that digital traffic in 2017 yielded more customer insights—where they clicked, what they read—that weren’t available before. Highlighting new digital insights into what customers were reading created an advantage that didn’t exist before.

It doesn’t have to be an “all-or-nothing” approach. If you’re struggling with creating buy-in, or don’t have the data to back up your claims, consider running pilot projects at your organization. 

Get your entire organization to dip its toes in the water. Establish the credibility and benefits of digital transformation first, then create a pitch for the full transformation based on these results.

Barrier #2: Employee Pushback

One can imagine a hotel clerk in the phone-in booking days, wondering why someone would need a website when their phone-dialing fingers worked just fine.

It’s endemic to human nature: we resist change because the dangers we know are safer. Your job in promoting digital transformation is to anticipate this employee pushback and make a persuasive case for an upgrade.

How do you get around this? Empower your employees first.

Consider how Target handled its digital transformation process with its employees. Target needed a digital transformation because it noticed its outsourced IT projects were costing too much money—and not working great.

Target brought its IT department in-house. This required new investments in wages and training for employees. Eventually, Target relied less on outsourced IT, which not only saved money but gave its employees new confidence in the other systems it could upgrade along the way.

That sounds great. But what if your employees are particularly resistant? This leads to my next barrier, which is that no one believes in what you’re doing.

Barrier #3: Lack of Faith

Before people can transform your company, they need to believe in it. To accomplish that, HBR recommends adhering to the “trust triangle” of empathy, logic, and authenticity. 

  • What does empathy mean? Listen to your employees and consider why they’re concerned. Even if you believe in the benefits of digital transformation, don’t enforce your new standards with an iron fist. People will feel bulldozed and ignored. Instead, open the process up to their feedback.
  • What does authenticity mean? Be true to your reasons. “We’re going to fall behind without these changes” is a perfectly valid reason to make a case for digital transformation. There’s no reason to hide your initiatives behind corporate speak. In fact, People will trust you more if you speak plainly about your reasons.
  • What does logic mean? Make your case for digital transformation. Just as The New York Times did, point to your current customer feedback and explain why you need your company to change if you’re going to deliver better results. While people can argue against making needless changes, it’s difficult to argue with the need to catch up with the rest of the world.

digital transformation trust graphic

Lack of faith often comes down to the absence of trust in business leaders at your organization. You’ll likely find that your team is perfectly capable of following you into unknown territory—but not if they don’t trust you first.

Let’s take Uber as an example. In 2019, new CEO Dara Khosrowshahi had to rebuild an organization that had lost a lot of internal trust due to a series of harassment and discrimination claims against the company.

Khosrowshahi knew he needed a bottom-up approach to trust if he was ever going to restore full employee buy-in with the company, so he invited employees to help write a new company policy. Every single one of Uber’s 15,000 employees provided feedback. The company published its new policy—and slowly rebuilt its relationship with its employees.

If you have a similar lack of faith issue in your digital transformation projects, remember a simple fact: people want to feel like they’re part of the solution. Don’t steamroll them with your new initiative. Build faith in the project by inviting people to provide their feedback for the best way to move forward. 

Barrier #4: Risk Aversion

Humans can be prickly at times. As we’ve said, we don’t trust change to our ecosystem, even when business transformation changes are undeniably positive.

This isn’t something unique to business change. McKinsey reports an implicit, innate bias against risk. Simply put: if you’re trying to affect change—even good change—there’s going to be some friction due to the way people are wired.

How do you get past this aversion to risk? The first step is to accept it as part of human nature. Even history’s greatest ideas are rife with doubters and naysayers. In 1985, even The New York Times asked: “Whatever happened to the laptop computer?”

(Hint: It’s alive and well here in 2022).

If an idea as good as laptops had its doubters, then even a great digital transformation journey will run into the occasional naysayer. Once you accept that fact, you’re ready to nip this risk aversion in the bud. Try a two-pronged approach:

Consider bold new projects more closely. It’s too easy to give in to naysaying and negative self-talk before you start a new initiative. Openly encourage change in your work culture to stop the mindset of avoiding new business processes and cutting fresh ideas. 

The initial stage is the most important part of an initiative—the fragile level at which an idea has the potential to fade out or grow into something transformative. Before you dismiss an idea, cultivate a new habit in your company: consider risky new initiatives with a more thorough eye.

Weigh the upsides. Admit the downsides. It’s the classic pros vs. cons list. If you can adequately express why you’re choosing a new venture, even while acknowledging the downsides, you can inspire confidence in that new venture. Remember that one of the keys to establishing trust is authenticity. 

Admit the potential downsides of new digital transformation projects. Perhaps you plan to break down departmental silos and open collaboration and communication lines between various teams. Some employees might be reluctant to lose their inner circle. But emphasize the benefits as well: that employees will appreciate additional support and feedback. 

Yes, you might remove some processes that some people previously enjoyed. Yes, you might have to change the way some peoples’ jobs work. 

Avoid papering over the downsides, and you’ll inspire confidence that your business’s leadership has indeed considered every angle.

Barrier #5: Departmental Silos

Speaking of silos, departmental silos are the bane of any well-connected business. In fact, the distance between silos might be part of the reason you’re trying to overcome these common barriers to digital transformation in the first place.

It’s easy to pick the simple solution: boost communication, get everyone on the same page. But in practice, it can feel like herding cats.

As Ron Ashkenas reports, it requires some initiative to break these silos down. 

Ashkenas tells the story of a company with experts buried in different silos. Managers who wanted to work with one of these experts would have to clear it with other managers, making any new initiative a labyrinth of bureaucracy and red tape.

The company brought in outside parties to examine their silos. An expert brought everyone into a specific project and temporarily assigned one manager to oversee the objectives. Each cross-functional team had a mandate: come up with a consensus within two days and pass it on to the temporary manager.

The temporary teams worked. By decreasing the distance between silos and focusing on objectives first, the business implemented new solutions in a hurry.

What’s the lesson here?

Make sure everyone understands that digital transformation is a company-wide proposition. Invite everyone to participate, but let the old “departments” stay the old departments for now. 

Treat digital transformation almost like you would an emergency initiative—all hands on deck, leveraging every employee’s core competencies. You don’t have to use the verbiage of an emergency initiative, of course. But if you take that approach, you’ll find ways to slice quickly through the silos and unite your team members under one banner.

Barrier #6: Company Culture

Your company culture—specifically, the culture for adaptability—is at the heart of how well positively it responds to change.

For starters, managers and employees might not be on the same page. One survey found 40% of executives believed they had a “digital” culture in place. Only 27% of employees agreed.

Additionally, 64% of CIOs see culture as a barrier to digital transformation.

The problem is that culture may predate leadership. Take the example from Uber above. Even though the previous CEO began building trust back with employees, trust wasn’t fully restored until a new CEO came in.

If your people are struggling to adapt to change despite a good level of trust, chances are the problems go back to your company culture. If this is the case, your goal should be to shake up the conversation without ruffling feathers. 

It’s a tough balance to strike, but you’ll get it if you can stick to a few principles:

  • Start with cultural changes first. Tackle culture issues before you try to tackle change management. One way is to take the approach in the previous section of disrupting silo barriers. You might also begin a digital transformation by inviting employee feedback before you implement something new. This encourages employee buy-in before you take even the first step.
  • Change the conversation without setting off alarms. Remember, human nature is resistant to change. If you start touting your digital transformation initiative as a “revolution,” all you’re going to do is set off internal alarms in your company. Don’t talk about upending the status quo. Start by taking small steps.
  • Employ incremental changes. A sweeping overhaul of your business is going to ruffle feathers no matter how smoothly you might sell it. But if you start with one incremental change and then another, your team won’t have as much internal resistance. Start with one pilot project and go from there.

Key Takeaways

You need to upgrade your business for the digital world. But before you start rolling out initiatives, remember that digital transformation can ruffle a few feathers. The more intentional you are about your approach, the easier you’ll find it to get around these barriers. 

Invite your employees into the process. Build out incremental changes at first. Don’t make sweeping promises of “digital revolutions.” 

Remember the old adage: an ounce of prevention is worth a pound of cure. Plan your digital transformation roadmap around those barriers, and keep moving forward. 

About Smart Panda Labs

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Smart Panda Labs helps marketers at enterprise companies in the early stages of digital transformation to get more done by helping you plan, build, and improve your digital experiences, from customer acquisition to retention. They help you bridge the gaps in your digital customer experience. Whether you need marketing done-with-you or done-for-you, Smart Panda Labs uses the right tools, tactics, and data to pave you a smoother path to growth.

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