The Psychology of Change in Digital Transformation

In this article, we use the insights of behavioural economics to research the psychology behind these responses to change. In the first part of this two-part blogseries, we focus on the different forms of resistance and how to identify them in employees. In the next part, we will delve into the use of interventions to address these forms of resistance.

Before we deep dive into our analysis on resistance, let us first lay down our foundation and start with definitions: what do we mean by ‘resistance’? In this article, we look at resistance from the perspective of an employee facing organizational change due to digital transformation. 

Resistance refers to the natural response that individuals or groups within an organization show to oppose change. This resistance can stem from various sources, such as fear of the unknown or concerns about loss of power or control. The result of resistance is that the change process can be severely impeded. People do not like to change; this is intuitive and quite normal. However, organizations must move with digital developments to respond to new customer needs, technological advances, new laws and regulations, and a changing ecosystem. Resistance is not a new phenomenon, yet we still find it difficult to handle resistance well.  

Digital transformation brings big changes. One example of a big change related to digital transformations which many organizations have undergone is the transition from paper-based document management to a digital document management system, such as SharePoint. There are many aspects involved here, such as digitizing existing (paper) documents, structuring the new environment and maintaining the new system. 

Resistance stems from the so-called ‘approach-avoidance conflict’. This conflict can be described as follows: in our goals and ambitions, we are pulled towards positivity by our desires, but also pushed to negativity by our fears. When approaching a change, an employee's uncertainty suddenly skyrockets, creating a tendency to avoid the change. After avoiding the change, however, the desire for the positive consequences of the change revives.

In this context, the theory of behavioural economics speaks of alpha (motivation) and omega (resistance). The omega perspective distinguishes three different forms of resistance: inertia, scepticism, and reactance.

Inertia is a form of resistance that sits between showing resistance and showing willingness to change. Inertia implies a passive attitude toward change, where one is okay with everything as it is now. In practice, inertia can manifest itself in a variety of ways. One example is where existing practices and processes change, however, employees are so used to the current setup that they do not see the need for a new, improved way of working. Employees with inertia do not change with the organization, but also do not show active resistance to change. 

The organization can identify inertia by observing how employees react to change initiatives. Examples of inertia are employees who neither participate in the change process nor take the initiative to share new ideas. These employees try to be as uninvolved in the change process as possible. 

With scepticism, employees show more active resistance to change relative to inertia. They are critical of the arguments in favour of change and bring in counterarguments. In digital transformation, scepticism can stem from several sources, including uncertainty and worry. Take implementing a new system as an example, employees fear it will increase their workload or impact their privacy.  

It is often easier to identify sceptical employees than employees who exhibit inertia. Sceptics tend to be open about their stance on new changes within the organization. When discussing change initiatives, sceptics will often present arguments as to why they believe these initiatives do not contribute to or even harm the organization. 

The last form of resistance is reactance. Reactance is the strongest form of resistance, where employees show a negative reaction. This has several reasons including the fear that the change will take autonomy and decision-making away from them. This perception leads to a strong resistance to change that is often accompanied by a negative reaction such as anger, frustration or defensive behaviour. Examples of change that can incite reactance in employees include restructuring or reorganization. Reorganizing teams can create concern among employees who fear they will lose control of their work or position. They resist the change because they want to maintain their autonomy.  

Employees who show resistance in the form of reactance can be recognized by their active stance against change. They openly criticise change initiatives, are emotion-driven and provide logical fallacies to substantiate their arguments. An example of a logical fallacy is: “We already tried a similar change in the past and it did not work.” In addition, they are unwilling to cooperate in the change process and may try to discourage others from participating in the initiatives.

In this article, we have introduced different forms of resistance, from a passive attitude to very strong resistance. It is important for organizations to be able to identify the various forms of resistance that occur with digital transformation. Then, based on the identified forms of resistance, an organization can decide what interventions can be used to deal with them. 

The second part of the series will focus on how behavioural economics can support change management in digital transformation. There we discuss the application of interventions from behavioural economics and provide practical examples to effectively deal with inertia, skepticism and reactance. 

Feel free to contact me at: kyra.koper@highberg.com.

K. Koper, „The Application of Behavioural Economics On In-App Surveys And Its Effect On Survey Response Rate: An Empirical Study,” 24 Mei 2023. [Online]. Available: https://theses.liacs.nl/2766. [Geopend 2024].

E. S. Knowles en J. A. Linn, „Approach–Avoidance Model of Persuasion: Alpha and Omega Strategies for Change,” in Resistance and Persuasion, Taylor & Francis, 2003, pp. 115-148.