Digital Transformation: Weighing The Impact On Profit And People

Do me a favour. Open up your preferred means of consuming news – an app, website, podcast, TV or newspaper – and you will find articles around artificial intelligence, robotic process automation, retrenchments, the next Terminator movie, and all things futuristic with facts and sensationalism all mixed together. All of these big, scary buzz words induce fear and excitement at the same time.

 What does it all mean, Basil?

The inescapable business logic is that digitisation drives efficiencies, and with employees pegged as the largest cost item on the balance sheet for most organisations, the loss of jobs is, in most cases, inevitable. However, if swathes of employees across the developing world lose their jobs due to digitisation.

what will the long-term repercussions be in terms of economic impact? And how long will it take for new skills to enter the market?

Consider South Africa, a country with one of the highest unemployment rates in the world and also a range of industries, some that have already modernized or been born into this new world with the help of the latest digital tools – Discovery Bank as an example – and others still operating with older processes and systems. Organisations planning transformative technological investments should be focusing on three core responsibilities to guide them to a future that serves all stakeholders: profitability, upskilling, and social impact. It all boils down to responsible transformation. But is it that straightforward? In a discussion I had with Dr Paul Taffinder, author of ‘The Leadership Crash Course: Creating Leadership Impact in the Digital World’ he spurred some ideas.

Is there the right level of leadership? Are we as business and sectors giving the right level of focus?

As digital transformation makes waves across the world, there is increasing evidence of organisations taking ownership of people empowerment along with transformation. This trend was also evident in the 18th century. Dr Taffinder shared one such example of British multinational confectionery company Cadbury.

In the 1890’s, the organisation deployed its profits to build model villages that alleviated one of the pressing issues of the time: slum housing that forced workers and their families into cramped and unsanitary living conditions. The investment by the company served as both a civic duty and a pragmatic business plan. Because the Cadbury community was prosperous and healthy, the business boosted productivity, work commitment, and passion.

how can local organisations practice responsible digital transformation today that ensures a balance between profit, skills building, and people?

Take the banking industry, which has made 2020 all about automation. The notion of this theme, however, has already negatively impacted South African banks, with strikes opposing digitisation since mid-2019 that have resulted in closed branches and retrenched employees. However, the assumption that branches closed due to digitisation is not entirely accurate. Has digital banking made it easier for me to bank with my mobile app or go online and not need to go into a branch? Yes. So, is it the fair to say that some branches could close if digital was adequately servicing a specific area? I would think so. However, the branches that are closing are not in the locations where the majority have access to smart phones, data, and stable sources of electricity. The branches that are closing are the ones closest to the people that need them, and this is due to the increasing cost of servicing, running, and managing brick and mortar banks. What is the solution then? I don’t know, but maybe we could look at a form of informal banking by empowering street vendors?

“So Tristan, are you saying use digital mechanisms to potentially create jobs by creating the ability to bank securely with the person who I buy airtime and my magwinya from?” Ja, I guess I am. Just a thought.

These pressures underscore the need for responsible transformation that empowers all stakeholders involved. With every transformation, executives must consider a broader range of outcomes than just those that drive shareholder value. People are at the root of transformation, and this applies to all groups: shareholders, consumers, and employees. Therefore, transformation roadmaps need to find a balance between people and profit.

Knowledge, empowerment, and guidance are crucial to responsible transformation. Often, business leaders fail to communicate effectively with employees about the impact of digitisation on their work: how it directly impacts their inputs, processes, and outputs. Therefore, excellent strategy formulation coming from the top combined with people-centric HR initiatives should form part of every transformation roadmap.

Transformation, digital or otherwise, is and will always be personal. Automation that takes a process from weeks or days of manual work down to hours or even minutes, is a great example of achieving efficiencies. A real-world example is the manual capturing of information from a paper-based documents into electronic systems. Optical character recognition, or OCR, can alleviate this manual task by scanning documents and extracting, processing, managing, filing, and storing that information, helping the user get through more work in a day and assisting the organisation in servicing their customers more effectively. Has this process replaced a job? Ideally it has improved the work experience of the workers in that processing role, giving them a chance to have a tangible impact on the organization’s success.

Does digital transformation create or cut jobs?

One part of me has faith that digitisation will create many new jobs in South Africa. But another more sceptical part of me fears that it will not be fast enough, which could lead to widespread political and social disruption and, ultimately, hinder the technological advances that our country so desperately needs.

With improved education, upskilling, transparency, and processes management, resistance to transformation will decrease. Both the private and public sector need to address this trend in order to align with our government plans. We are all responsible. Ultimately, the integration of digitisation into business processes should not spur resistance, but that can only happen when all parts of society see digital transformation as a people-enabling mechanism that encourages the workforce to evolve from capture and process to analyse and advise.

Published by MSDynamicsWorld

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