- February 27, 2024
The overall goal of any digital transformation project is a more adaptive and resilient organisation. Although project goals may vary based on industry and company size, common objectives in the finance sector include:
- Cutting down costs
- Improving response times
- Reducing friction between buyers and sellers
- Streamlining internal and external operations
- Increasing profitability by reaching new customers
Financial services firms’ heavy investment in new technologies is a response to the challenges they face and the opportunities these new technologies can bring. According to one KPMG study, 47% of financial services providers expect a significant digital transformation at their companies within the next three years. While benefits exist in AI, cloud computing, and IoT technologies, successful digital transformations depend on getting the basics right.
Why do most digital transformation projects fail?
While choosing the right technology for your needs and implementing it correctly is certainly important, ultimately, employees are the ones who drive the adoption of the technology and its success. The likelihood of failure increases if employees are not on board with the digital transformation.
According to leading consulting firms, the failure rate for digital transformation is estimated to be between 70% and 95%. In financial services, this number is also very high. Only 30 per cent of banks that have undergone a digital transformation report successfully implementing their digital strategy, with the majority falling short of their stated objectives. So, why is this the case? A key contributing factor is employee resistance or lack of behavioural change.
What is active management?
This brings us to ‘active management’ – a managerial approach emphasising proactivity and forward-thinking.
- Proactive Problem-Solving: Actively addressing challenges upfront, dealing with issues before they escalate into problems.
- Using Team Skills: Making the most of each team member’s strengths to contribute effectively to digital transformations.
- Keeping Focus on KPIs: Maintaining a focus on measurable goals and performance indicators to ensure objectives are met.
- Regular Team Check-ins: Especially crucial in fast-paced digital transformations, active managers regularly touch base with teams to make sure everything is on track.
- Encouraging Ideas: Creating an environment where team members feel comfortable sharing ideas.
On the other hand, passive managers adopt a ‘no news is good news’ attitude, neglecting feedback opportunities and often reacting instead of leading proactively.
In the context of digital transformations, active management becomes even more essential, requiring a hands-on approach to keep teams on track, solve issues, and encourage people to share ideas so the project succeeds.
In many cases, managers are passive through no fault of their own. Many managers, promoted based on past performance, may lack the necessary skills for their current role and often receive no additional training. This becomes even more problematic during digital transformation without the technical expertise and know-how.
So, what’s the solution? Give those managers a helping hand with coaching and upskilling in the art of active management. With this new managerial approach and skill set, they can effectively guide their teams through the complexities of digital transformation, bridging the gap between technical advancements and business goals.
At Managementors, we believe transformation needs to go beyond systems and platforms to focus on the most valuable asset: its people.