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Human element key for digital in small businesses

Digital transformation in small companies requires the key ingredients of people, partnerships and behavioural change.
Colin Timmis
By Colin Timmis, South Africa country manager, Xero
Johannesburg, 05 Oct 2022

We often talk about technology being the key enabler of digital transformation for small businesses, but I believe the key ingredients are people, partnerships and behavioural change.

Technology alone cannot change a business − it’s the people that make a real difference.

Recent research from Xero shows South African small businesses now depend on digital tools for survival and day-to-day tasks. But many are now ready for the next step, which is to use technology as a springboard for growth.

We know small businesses that have implemented technology are performing better than those that don’t, therefore those that don’t embrace digital transformation risk falling behind.

One of the most important elements in digital transformation is behavioural change. Successfully implementing change within a business requires an open way of thinking that is not about control, but about connecting people to a purpose that enables them to believe in the outcome you’re trying to achieve.

This isn’t easy for small businesses, but it’s critical to long-term success. Here are some insights on how to drive behavioural change and bring people on the digital transformation journey:

Digital culture

Digital culture is about being flexible and having a workforce that can respond to new challenges, especially in the post-pandemic world.

It’s also about providing supporting structures and psychological safety to sustain employee resilience and reduce added stress.

Businesses with a strong digital culture use digital tools and data-powered insights to drive decisions and customer-centricity, while innovating and collaborating across the business through communications. Clear communication is critical during a digital transformation and is a subtle part of company culture.

Digital culture is about being flexible and having a workforce that can respond to new challenges.

Through the choice of words, you can help to foster an open, collaborative culture, make people feel included and address customers effectively.

Communication also helps employees understand where the business is headed, why it is changing, and why the changes are important.

Focus on training and skills

Giving teams the skills to be confident using new technology is essential. There is no point having the technology if employees don’t know how to use it. We know from our own research that small businesses in South Africa are realising this.

Xero’s State of Small Business report shows that 85% of small businesses have invested in improving their employees' tech and cloud skills in the last year – a 35% increase from 2020. Of this group, 95% have trained their staff using online or physical courses in tech or cloud skills development.

Training might seem like an expense, but ensuring your team has the right skills to make the most of tech tools will pay off in the long run. It will help automate mundane tasks and boost efficiency so the team can focus on the most important aspects of the business.

Overcoming cultural and behavioural barriers

In a global study called One Step, Xero commissioned behavioural scientists to explore the psychology of technology adoption among small businesses. 

The research discovered two categories: technology adopters and delayers. Adopters are those who frequently invest in technology to improve their businesses and consider themselves ahead of the tech adoption curve. While delayers, on the other hand, are those who admit they are behind on the tech adoption curve.

When it comes to adopting new technology, make sure the team understands why the business is making that change from the outset. This helps employees to feel invested and see the benefits for the company.

To help do this, consider creating champions and agents of change to champion the transition and support other staff. A phased approach to adopting new technology with a clear timeline also helps.

By leveraging technology, people and partnerships − including working with an accountant or bookkeeper and working through the behavioural change required − small businesses will be set up for long-term success.