Digital transformation as psychological transformation – an “INside job”

Transformation processes are (also) a form of psychology

Addressing the psychological dimension of the transformation. Individual and collective mindsets as well as the continuity and change as opposite poles.

In the article “What it really takes to achieve a successful digital transformation”, we highlighted the fact that in order succeed, any digital transformation must also address the psychological and cultural elements of change. In this article, we aim to shed light on some of the relevant aspects of this less obvious dimension of the transformation process.

In an earlier times, human psychology remained largely a mystery – at best, in the wake of Freud, we could explain phenomena in terms of aberrations of the subconscious. Today, thanks to developments in the fields of cognitive neuroscience and behavioral economics, we have a much clearer view and a much better understanding of the motives, attitudes and emotional worlds that make up a human being. For instance, today we have sophisticated instruments which not only help us to understand the impact that change processes have on the people involved, but also help us to influence employees and embed the desired behaviors in the long term. For example, the Nobel prize-winning research of Daniel Kahneman, from 2002, has given us a better understanding of the two different human thought systems, or mindsets, that control our cognitive functions and that sometimes lead us to make contradictory decisions – which would previously have been dismissed as simply irrational. Kahneman named these two mindsets System 1 and System 2; he described System 1 as being quick, automatic, constantly active, emotional, susceptible to stereotypes and subconscious,  and System 2 as being slow,  laborious, rarely active, logical, calculating and conscious. In a series of experiments he and his team were able to demonstrate that, when considering our own knowledge, we are all susceptible to cognitive interference, and we have a tendency to take a simple heuristic approach and overestimate our own abilities.

In other words: our capacity for self-assessment is not well developed. In fact, we are often not really conscious of what motivates our own responses. This is because System 1, the subconscious mechanism, often kicks in automatically and takes control of our decision-making – especially when we find ourselves in a stressful situation. Accordingly, if we’re not conscious of our own conditioning and of the bias generated by this quasi-automatic system, then we’re actually flying blind. And it is precisely this subconscious mindset that needs to be addressed in the psychological dimension of a transformation – this involves transforming both individual and collective mindsets, so as to support and foster helpful attitudes and perspectives in order to achieve the desired change.

Addressing the psychological dimension of a transformation

In this context, there are three important points to cover:

  • Individual mindsets
  • Collective mindsets
  • The basic insight that change and continuity are opposite poles

Individual mindsets

The goal here is primarily to convey, or to enable individuals to discover, a more helpful fundamental perspective on life; because our basic perspective has a strong influence on how we experience life and everything that happens to us. In practice, a variety of different terms are used to describe this desired shift in internal perspective: for instance, we can talk about being “below the line” or “above the line”, being a “victim of circumstance” or an “author of your own life story”, or being “part of the effect” as opposed to “part of the cause”.  Conceptually, this kind of mindset shift is easy to understand, and people are generally quick to agree with the idea. However, as outlined above, the challenge lies in the fact that we all too often tend to operate on autopilot, making decisions at the subconscious level.

This is why, for the purposes of a successful digital transformation, we need to use valid psychological methods to create awareness of individual views and mindsets so as to foster change, while at the same time enabling employees to constantly learn and gain new insights about their own mindset. This is no small challenge, given that System 1 can only be reprogrammed or conditioned over time and through conscious repetition of the desired behaviors; this means that a transformation program needs to be designed so as to take into account a whole set of highly specific requirements.

Collective mindsets

In their book “Competing for the Future”, C.K. Prahalad and Gary Hamel use a story to explain how obstructive collective mindsets are formed: a group of  monkeys are sitting a cage and staring at a bunch of bananas far overhead which can only be reached by a set of steps. Each time that one of the monkeys attempts to climb the steps, it is squirted with a jet of cold water. After a few days of trying in vain, the monkeys conclude that it’s pointless trying to get at the “forbidden fruit”, and they give up on the project. The zookeepers remove the hose that was the instrument of the water deterrent, and at the same time one of the monkeys is replaced with a new one. As soon as the new monkey sees the bananas, it predictably tries to climb the steps – but the other monkeys stop it from carrying out its plan. The new monkey is a bit alarmed by this behavior from the other monkeys, and looks around in confusion, but then makes a renewed attempt to climb the steps – only to be pulled back yet again by the other monkeys. In the end, the new monkey accepts the group’s code of behavior, and forgets about trying to reach the bananas. In the following weeks the zookeepers replace the rest of the original monkeys one by one with monkeys that have not experienced the jet of cold water. What happens? All of the new arrivals are prevented from climbing the steps by the rest of the monkeys, and eventually give up. They have learned and internalized the unwritten (and by now pointlessly obstructive) rule: “leave the bananas alone”.

This example, which can easily be applied to people, illustrates that in social structures there are often strong, subconscious beliefs that can be obstructive to change; such beliefs need to be addressed as part of the transformation process. For example, attitudes like “We can’t afford to make any mistakes”, or “We need to excel in all areas” are beliefs that have evolved in an environment in which agility, “fast prototyping” and continuous innovation have become imperatives – but such beliefs can also be counterproductive. Our task is to make employees aware of these company-specific collective mindsets, and work with the team – sometimes using playful exercises – to foster new values that are more conducive to a disruptive, creative mindset; this involves bringing collective fears and mindsets out into the open, questioning them and addressing them.

Continuity and change as opposite poles

Many digital transformations are viewed as a problem or a challenge which needs to be tackled and solved. But what if we were to consider psychological transformation not as a problem, but as a dilemma that spans two opposing poles of human behavior? Because on the one hand, people in organizations (and also in the private sphere) strive to attain security and stability, while on the other hand they pursue change, seeking to adapt to changing external circumstances. How we actually experience both of these poles, stability and change, depends in turn on our personal upbringing, experiences and personality, as well as our collective cultural mindsets (see section above). As a result, we always react subconsciously with a certain degree of bias which reflects the conditioning of our personal preferences, as well as the collective tendency to favor one pole or the other.  From this we can conclude that the critical factor is not so much change or stability per se, but rather the underlying perceptions of change and stability held by the affected people within the organization.

While major digital transformation projects are often driven by a clear business logic, all too often not enough consideration is given to the support needed by the affected employees. Part of our task is to provide this support, which we do by firstly seeking to make people aware of the fundamental values and limiting beliefs that exist within the organization before embarking on a comprehensive digital transformation process. Those who favor continuity tend to associate it with positive values such as stability, trust and security, while they associate change with negative phenomena such as stress and uncertainty. For people who prefer change, it’s exactly the other way around: they associate change with enjoyment, and see it as a virtue which can prevent competitors from getting the upper hand – the prospect of which, in turn, engenders a fear of continuity. Both of these types exhibit limiting, often subconscious beliefs (e.g. vague fears, unhelpful assumptions) with regard to the pole that is not their preference; in turn, these fears are generally supported at the subconscious level by the positive values they have internalized (see Figure 1: Value and corresponding belief regarding the other value).

Aligned and embodied purpose and strategy
Figure 1: The polarities of continuity and change (based on Polarity Partnerships)

And now, we come to the crux of the issue that is essential for a successful transformation: if, within the organization we can make the employees aware of the polarity between stability and change, if we can foster the awareness that there is no right or wrong answer in this regard, and therefore our goal is to simply find the best solution for the given situation, then we can shift the basic perspective from an “either/or” mindset towards a “this and that” perspective. By fostering this more sophisticated understanding, and by carefully aligning employees with the strategic goals, both individually and collectively, you will consolidate their combined strengths – resulting in a comprehensive, fully integrated and ultimately successful digital transformation project.

Transformations-Programme für Menschen in Organisationen zu entwerfen und zu begleiten ist meine Leidenschaft. Seit über 30 Jahren unterstütze ich Führungspersönlichkeiten und MitarbeiterInnen dabei, ihr persönliches Potential und das Ihrer Unternehmen zu entfalten. Es begeistert und erfüllt mich jeden Tag aufs Neue, mit psychologischen Einsichten und Methoden zum Erfolg von Menschen und Organisationen beizutragen. Als Managing Partner der aergon ag – inside-out leadership, mit einem Team von 12 PsychologInnen transformieren wir Kulturen nachhaltig.

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