By Chris Cabrera, Founder and CEO, Xactly

As we enter our third year of navigating the Covid-19 pandemic, the reverberations continue to be felt amongst businesses globally. One of these is the increasing need for organisations to implement digital transformation in a sustainable and permanent way.

Restructuring an organisation’s business model to integrate digital technology into all areas is well recorded as improving efficiency and agility at every level, as well as being crucial in enabling remote working when physical office spaces are off limits. In the context of a pandemic, digital transformation became a necessity: not only does remote and hybrid working require it, but the uncertainty of the past year has proven that businesses would be wise to use data-driven tools to effectively plan for the future as much as possible.

However, many businesses have struggled to meaningfully understand the concept and implement it successfully, in a sustainable way. Whilst Gartner reported that 69% of boards of directors accelerated digital business initiatives in 2020 due to COVID-19 disruption, only 40% of companies managed to bring digital transformation initiatives to scale. McKinsey’s study from 2018 found that only 16% of digital transformations resulted in successfully improved performance.

Whilst the need and desire for digital transformation is strong, business leaders are still often attempting to make key decisions and solve challenges through intuition and gut instinct. By proceeding with this style of decision-making, rather than being guided by objective data and accurate insights, businesses are being led by ‘intuition bias’. This is a problem that is especially prevalent in the sales industry: Xactly’s recent Global Enterprise Sales Report found that doing things the way ‘they have always been done’ is the most influential factor in UK decision-making around sales planning today amongst sales leaders (31%).

However, business as usual has been an impossibility for the past two years, and thus doing things the way they’ve always been done is no longer working. Forecasting and planning has been met with an unprecedented challenge due to economic uncertainty: 50% of sales decision makers, across the U.S., Canada, UK, France, and Germany, reported that it is more difficult to forecast bookings because of the pandemic.

With the goal posts of the business game having shifted so dramatically, leaders are now under pressure to transform the way in which they make decisions, and adopt a more strategic, data-driven approach, grounded in the digital space.

Cultural resistance: the hidden challenge

Business leaders will easily be able to name the obvious obstacles in the way of scaling digital transformation: cost constraints; inflexible legacy systems; a lack of alignment amongst executive stakeholders on the plan of action. However, organisations often overlook what is perhaps the biggest challenge of all: cultural and behavioural resistance. Recent research from Capgemini found that 62% of respondents globally reported that culture is one of the top two hurdles to digital transformation.

The very nature of digital transformation, bringing nearly all operations to a new arena, requires a radical restructuring of a business’ operations. Dramatic change of any form is often met by the wider workforce with reluctance and pushback, even if the predicted benefits of such change are far-reaching. Much of this resistance can be traced back to the natural human fear of unknown and uncertain territory.

Lead with proof

In order to overcome cultural resistance to digital transformation, executives must first demonstrate to the workforce and other leaders how digital transformation will bring tangible benefits in helping enterprises grow, succeed, and increase revenue. Often leaders mistakenly take it for granted that employees understand the positive results of digital transformation.

Take, for example, digitising compensation and incentive plans. The traditional way of compensation has been paying sales reps after the sale has already been made. However, if they do not know how much they are getting paid until weeks after the sale has been made, this will not effectively drive behaviour, as they won’t know how much they stand to gain from closing a deal.

Giving sales reps instant visibility over their compensation just before the point of sale, based on real time analytics, is far more effective in encouraging successful sales. If each sales rep makes only five more deals a year due to a flexible and dynamic digital incentive scheme, the cumulative effects for the business are huge.

Optimise Covid

Whilst the turbulence and uncertainty of the past two years may have encouraged a fear of radical change, Covid has also proved the necessity of investing in digital transformation in order to be agile and responsive to change. The pandemic demonstrated the severe costs to businesses that weren’t robust and prepared for future disruption, with organisations scrambling to move resources and workplaces online. According to the same report from Xactly, only 26% of UK sales organisations were fully prepared for remote working with a full suite of digital tools when the pandemic hit, showing that there’s a long way to go until digital transformation is widespread.

Not only is digital transformation crucial for future-proofing against potential disruption, but it’s also key in ensuring the success of the new workplace. Hybrid working between home and the office is here to stay: a recent study from Microsoft found that 51% of UK respondents who had the choice to mix remote and office working would consider leaving their company if this flexibility was removed. Business leaders should leverage this point to executives to prove that an organisation must be digitised or risk losing employees amidst the Great Resignation.

Failing to effectively digitise operations in a hybrid workplace risks a fall in efficiency and productivity, especially when it comes to planning. For example, sales leaders have always been able to walk around the office and check in on sales reps. Remote working, however, means that sales leaders have lost sight of their reps, making it much more difficult to reliably forecast sales figures, therefore compromising revenue plans and predictions. Leveraging data analytics (both real-time and historical) to accurately forecast sales figures is one key example of how digital transformation is a necessity due to Covid.

Innovative players

As has been suggested, to imply that behavioural obstacles only pose a problem amongst the junior levels of the workforce, would be misleading. Often junior employees are the most fervent advocates of digital transformation and are met with resistance at the executive level.

Those who are keen to implement digital transformation but don’t have the board-level powers to lead on this, can start by assigning ‘agents of change’ at all company levels. These agents can champion digital transformation amongst their teams and colleagues, drawing on the arguments above, and demonstrating bottom-up support that leaders will notice.

When digital transformation is successfully implemented and tangible benefits are felt, these agents of change can point to their role in this, and leverage this as an innovative and forward-thinking career step.

Path to success

Data has the potential to be the most valuable and unique resource available to each business. However, this potential is only realised when a business has the digital tools to effectively utilise data. Without these, organisations are forced to make decisions based on a number of assumptions; sometimes upwards of 30.

For example, when undertaking sales planning without using data, leaders must make assumptions about how long it will take for reps to close a deal; attrition rates; the time needed to hire replacements. With the inaccuracy of each assumption being high, the cumulative room for error is enormous.

With the ability to make effective, fast and accurate decisions that are more likely to achieve the desired results within arms’ length, why should business leaders still be relying on gut instinct? Digital transformation is the best path forward for companies aiming to accelerate their revenue. Outlining the strategic reasons behind this will encourage employees and executives alike to get on board.