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The Digital Transformation Experiment: Office-bound, Hybrid or Remote

Feb. 18, 2022
If work-from-home predictions hit the mark, an important implication will be that leadership teams will also need to reimagine their operating models.

At a Glance:

  • The unique dynamics of remote work is a case study in change management that lends insight into digital transformation.
  • The next generation of employees will demand a new style of leadership.
  • The role of trust in the leader-employee relationship is “probably the most unrecognized aspect that we’ve seen through the pandemic,” said Trent Salvaggio, executive director of IoT Talent Consortium.

The radical shift to normalize work from home (WFH) during the pandemic demonstrated just how quickly organizations can implement the technologies they need to foster virtual workforce channels and keep their businesses running.

Analysts report that the share of new patent applications that advance WFH technologies had doubled from January to September of 2020. Last year, the average employee reported an investment of 15 hours and spent $561 on at-home equipment that enable WFH, according to data from the U.S. National Bureau of Economic Research.

WFH analysts argue that these trends helped raise the quality and efficiency of remote work and support the notion that distributed teams are here to stay. If WFH predictions hit their mark, an important implication will be that leadership teams will not only be required to overturn a traditional view that there can be no substitute for in-person, face-to-face interaction, but they will also need to reimagine their operating models, suggested Trent Salvaggio, a change management consultant and executive director of IoT Talent Consortium.

“The accelerated uptake of technologies suggests to me the ease of having an in-person workforce, and that WFH was not implemented before because it just doesn’t forecast well,” said Salvaggio. “It’s a social construct that we have to be in the office. And the fear of technology is really a leadership issue pushed out to everybody else, because when we were forced to do it, we did. And we see now that workers are even more productive than they were in the office.”

In a recent paper, “Why Working From Home Will Stick,” an international team of economists describe how the pandemic sidestepped “inertial forces related to experimentation costs, biased expectations and co-ordination within networks” that had previously deterred remote work.

They estimated that WFH will account for nearly 28% of full paid working days after the end of the pandemic (up from 20% at the start of 2021). The two key reasons cited for this shift are the productivity gains from re-optimizing working arrangements and investments made in physical and human capital are destigmatizing traditional perceptions. 

Viewed from an organizational lens, the underlying drivers for resistance to switching work arrangements can be tied to long-held ideas and a simplistic or generalizable change approach. Dealing with change at the organizational level is a complex process, and Salvaggio maintained that this reality often stumps leaders when they apply a one-size-fits-all model for change.

“Experience over the past two years has shown how the traditional approach to change management has been short-sighted,” he said. “The model is not nearly as flexible and generalizable as we thought.”

What’s unique about the pandemic is that the speed and scale of change across industries laid bare the multi-dimensional nature of implementing change. Successful change strategies require acceptance of change from all levels of the organization—including across divisions and groups, and extend to the individual level. “The leader coming in and trying to implement the process is one dimension,” said Salvaggio. “But there’s also the person going through the change. This is vital; if individuals are unable to see how this change can have an impact on their work and on the end results, they’re going to be more reluctant to accept it.”  

A Culture-Conscious Approach

A PTC survey of 1,500 digital transformation projects straddling manufacturing, engineering and service functions, underscore Salvaggio’s cross-organizational view for driving change. Despite differences in goals and challenges, three key pillars emerged as fundamental to success:

  • Digital technology must bridge the gaps and reduce friction across siloes;
  • Executive leadership must redefine boundaries; and
  • Culture change must be driven with a mix of top-down and bottom-up approaches.

“It’s not just good enough to have a high-level vision,” explained Catherine Kniker, chief strategy officer, PTC. “Companies need to really get stuck in and understand what needs to change, know the cross-functional boundaries and understand the behaviors that you want to drive as a company.”

She pointed to Volvo CE as an example. The construction equipment maker had outgrown a legacy system that could no longer support the needs of its global team. PTC’s product lifecycle management solution (Windchill) was implemented to provide the end-to-end, concurrent product development process based on a single source of data.

Because the implementation signalled a significant change for employees, Volvo held innovation workshops that brought together the people laid out the change, including strategists, systems architects and operational leaders, said Kniker. This was a “pull” mechanism that allowed employees to brainstorm ideas and decide on the best process to accelerate the transformation. With 3,000 users across 15 sites, all using a common architecture, and a common facility for sharing data, the project is considered “a great success,” she said.

Trust Needs Touch

Neither should the role of trust in the leader-employee relationship be underestimated in managing change. “It is probably the most unrecognized aspect that we’ve seen through the pandemic,” said Salvaggio, whose Ph.D. thesis in 2014 unpacked the effects of the virtual environment on the relationship between leadership style and outcomes of leader-member exchange (LMX) relationships. 

In the early 2000s the idea of remote work would have been dismissed. Back then, said Savaggio, the tagline “trust needs touch” would be brandished because the time employees spend together was regarded as integral to building organizational culture. “The norm was that in order to build strong, trusting bonds, we needed to face-to-face time together, and the idea of working virtually, without a measure of in-person interface, would be frowned upon,” explained Salvaggio.

The health crisis and Volvo CE examples undermine those assumptions. “Technology has evolved to a place where time spent in virtual space does not have nearly as much [influence] in building that trust,” said Salvaggio. “Being able to see things in rich environments—be it virtual reality or co-working spaces—allows people to be involved at a whole new level with each other. I think those are all big ideas that curb the need for face-to-face time every single week in order to build strong, trusting bonds.”

The amount of time we once thought we needed to form trusting bonds in a relationship has been debunked. “The reality is that we can build a trusting relationship by meeting face-to-face just one time,” Salvaggio said. The theory behind this is that even if a person can read body language when they see a person on screen, they still have the experience that there’s a moderator (technology) between them. Just one in-person meeting between a leader and employee can trigger the quality of trust needed to fuel the relationship. Moreover, after the initial meeting, the speed at which trust is built tends to be similar in virtual environments relative to what it would be with in-person interactions.

The onboarding process is a case in point. Managers may require a new hire to be in the office for the first few days. The amount of time can be arbitrary, but the time spent together initially allows them to make the mental connection that they are dealing with a real person, explained Salvaggio.

A New Generation of Power Dynamics

While distributed teams may be here to stay, the redirection of technology and proof of productivity that reinforce the shift to WFH is merely part of the equation. Over the long haul, Salvaggio estimated organizations that lean in to remote or distributed work arrangements will do so less because of the technology, and more so due to changing demographics.

“Within the next five years, the Boomer generation will be completely replaced with Gen X, who came up with technology and are willing to accept technology as part of their daily lives,” said Salvaggio. “They have now been exposed to a lot more risk and a lot more change by the very nature of different combinations of accessibility and widespread use of digital technologies. They will have a huge impact in the way we come back from the pandemic, and for the future of work into the foreseeable future.”

Still, with new technology comes new challenges. Researchers will have a field day unpacking the demographic and psychographic complexities of exactly who stands to gain or lose from new digital work arrangements. One strand stemming from the digital transformation journey will be teaching leaders how to lead in a new world, said Salvaggio.

“Just 10 years ago, a big portion of leadership was about command and control; it was about deciding the best thing to do and making sure people were doing it,” he said. “Today’s workforce demands the flexibility to do things differently. And what they’re looking for in that best-in-class boss is not control, but somebody who can enable them, somebody who is there as a resource. The leader’s job is to ensure that everybody has access to everything they need to do their very best every single day…The leader is an enabler now, and that’s completely different.”


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