Why Genuine Digital Transformation Needs Focused Cultural Change.

by Chris Futcher

company culture aligns

An organisation’s culture is universally recognised as the biggest barrier to digital transformation in every sector and size of business.

This is true in the private sector, public sector and not for profit sector.

I often speak with CEOs, CIOs, CTOs, and Delivery Leads that have become jaded and frustrated with digital transformation and business change management projects and programmes because their people and business culture fights against what they are trying to achieve.

They’re literally pulling their hair out (or what’s left of it).

However, when your company culture aligns with your vision for transformation, then you have a very powerful and highly valuable asset. This creates a competitive advantage and underpins the success of your transformation programme. 

As tough as it is to admit, your company’s culture is one of the main reasons that you need to undertake digital transformation in the first place.

Transformation isn’t about technology, but it’s success relies on every single member of your organisation being able to adopt completely new ways of working.

So, it should come as no surprise that the number one cause of failure for digital transformation programmes is organisational culture.

To help you, this post will help you to understand your end goal – creating a digital culture. Then we’ll look at the cultural barriers, their impacts, and how to overcome them.

 

What is a digital culture?

The kind of culture that is critical for digital transformation to succeed is one that embraces change and where its people are empowered to fail. Where innovation is rewarded and where taking risks is encouraged in a highly collaborative environment. Encouraged because failure breeds learning and learning breeds innovation which in turn breeds success.

A digital culture has primarily an outwards focused orientation, rather than inwards. Employees and leaders are encouraged to look to partners and engage with customers to create new solutions and products.

Taking risks is encouraged. People are empowered to fail fast and learn. Most things fail. That’s life. In order to move forward, there must be some failures. This is acceptable.

In a digital culture, the status quo isn’t acceptable. A digital company knows that if it sits still, then it’s falling behind. This isn't just a leadership thing, its top to bottom and left to right. You don’t have to be a CEO to spark change in a digital organisation. Most digital transformation starts with small pockets of innovation which deliver results and wins support and willingness to make bigger and bolder changes.

leadership

In a digital culture, people are empowered to make decisions without the need for a committee or sign off. There must, of course, be some guiding principles and boundaries, but your people must be trusted to make decisions. This creates a much flatter and less hierarchical organisational structure.

Digital organisations stop planning, at least in the traditional waterfall sense of the word. A digital company only plans short term. In the digital age, things move way too fast for any traditional planning to be meaningful. By the time the plans are drawn up, they’re out of date and you’re still falling behind. A digital culture promotes speed and iterative development. New products are launched as soon as possible, not when they’re perfect. New conclusions, new ideas and improvements come from real user feedback after a few weeks, not months or years.

In a digital culture, there are no individuals. We have to promote collaboration at all levels and not an individual effort. Cross-functional working is the norm.

There are no more IT projects.

Every project is a business project.

no more IT projects

Most companies today operate in exactly the opposite way than I’ve just described. Most companies feel they have to fit into the norm of careful planning, not making mistakes and risk management. Staff who fit into the hierarchies and who make the fewest mistakes are the ones who seem to do the best. Staff who take the fewest risks and work only within the silo of their own department or business unit are the ones who get the promotions.

So considering all that, it’s no wonder that digital transformation fails if you don’t specifically do targeted work around your culture. This kind of shift in the way you need people to behave and think cannot just happen by itself, organically because you decided to “become digital”.

However, even with focussed work and proactive leadership, your people will resist this change. 90% of them will sweat when faced with a change to a process or system, let alone a complete change in the way they need to think.

This isn’t a choice they make. It’s hardcoded, rooted deep within our DNA.

Humans love convenience. Almost every piece of technology that ever existed is to promote convenience or eliminate effort. But we instinctively avoid new process or change because it brings risk and uncertainty. It also brings effort. The very thing we are all trying to avoid with technology and innovation in the first place.

The issue isn’t the adoption of something new, it’s the process of change itself. Even people who enjoy learning and technology avoid the effort of making a change, especially in the workplace. As soon as we've finally made the change, we start to avoid changing it again. This cycle doesn’t end unless we make it end with hard work and effort.

 

An example based on personal transformation.

We go through our own personal transformation all the time.

Think about the last time you got a new phone. The stages are exactly the same. The process is well documented and is written about in countless change and management publications, blogs and papers.

The process goes something like this: 

Denial.

“I don’t need a new phone”

“They’re really expensive”

“They’re much harder to use”

“I only use my phone for x, y and z anyway”

 

Fear.

“There are too many choices”

“What about all of my data and pictures of little Billy?”

“What if I don’t like it?”

“What if it’s too big/small?”

 

Anger.

“What the heck does that noise mean?”

“What is this new button layout?”

“How can I find my calendar app?”

“I knew I shouldn’t have done this. I hate it!!”

 

Delight.

“This is the BEST phone I have ever had!!!”

“Why didn’t I do this sooner?”

“I can take better pictures”

“I can message faster

“I’ll never miss another appointment”

“I can just tell it what to do!!”

 

Attachment.

“I was looking at my old phone the other day it is so big and heavy”

“The apps run so slowly compared to my new one”

“Why did I wait so long???!!!”

 

Then the process starts all over again. This is the way things are. We cannot change our DNA, but we can be aware of it and manage the natural instincts by ensuring that our culture enables and promotes the right way of working.

Real digital transformation is about being more adaptive to change and accepting it as the default state.

 

The three “people-hurdles.”

There are generally 3 ways in which your people are going to become hurdles to your transformation and if we can understand how that happens, we can address it head-on and ensure that transformation doesn’t fail.

three people hurdles

 

1. Missing the Innovation Mindset.

Key Reason number #1 and the biggest most frequent barrier to transformation.

Your people do not have an innovation mindset.

This is the most common reason that companies fall behind the technology curve. The kind of mindset needed for transformation is one that embraces change, rewards innovation, takes risks, learns quickly from mistakes and is highly collaborative.

Innovation Mindset

 

How to create an innovation mindset.

So how can you promote the innovation mindset?

How can you get your people to operate and think in an entirely new way?

Firstly, you need to help people see the benefits of change. This can only come from showing them and letting them see for themselves the positive outcomes from digital initiatives which have already been delivered.

The way we leverage the positive results of change and disseminate this around the organisation is critical to spreading and promoting the innovation mindset.

 

Incentivise Innovation.

You should look to introduce incentives for being more innovative. This will start to get people thinking and working with a more innovative mindset.

You can start by incentivising the measures covered in the next section that relate to changing what your people do.

Incentivise Innovation

 

Change what your people do and measure it.

Firstly, changing what people actually do is critical to instilling the innovation mindset. It’s pointless to expect different outcomes if what they are doing and the way they approach their day to day lives in the company stay the same.

Some ideas around activity measures or input measures are as follows:

  • Generating ideas
  • participation in sprints/hackathons
  • contributing to innovation program development
  • attending conferences/meetup/meetings
  • Contribute to innovation surveys or customer research,
  • Courses or workshops taken

All of the above will serve to change the way that people prioritise daily life within the business, and keep innovation at the forefront of their minds.

idea generation

Some ideas around measuring output are as follows:

The next type of measure are the outcomes or outputs that come from working innovatively. These measures need to make it clear that it is everyone’s responsibility to be involved with digital initiatives:

  • Building prototypes
  • Running experiments
  • Collecting Data
  • Engaging people in initiatives
  • The results of courses or workshops

 

Some ideas around hard measures are as follows:

Thirdly and the most important are the hard measures. The actual business outcomes that your people achieve through working more innovatively.

  • products to market
  • customer # generated
  • revenue generated
  • sign ups
  • cost savings
  • time savings

 

Construct environments and provide access to tools that promote:

  • Cross-functional collaboration
  • Experimentation
  • Sharing progress
  • Move away from any waterfall project planning.
  • Implement lean/agile or an iterative methodology
  • Start using Design Thinking principles

 Sharing progress

2. False logic.

The second way that people become barriers is that they operate with false logic. 

Here’s the logic:

“this is the way we’ve always done it so there must be a good reason for it”

And this assertion causes resistance.

 

How to counter false logic.

The simple way to deal with this is to trace the logic back to its root cause and publish the findings.

If you can show people that their logic is false, then the resistance should dissipate.

false logic 

3. Poor accountability.

The final way the people become barriers to transformation is because of poor accountability.

What we’re talking about here is the accountability between the actions of staff and the success of the company. This is critical for a digitally mature organisation.

poor accountability

For any organisation to be efficient at serving its core purpose, all effort and work needs to be measured against whether or not it contributes to that purpose, and this is especially true for organisations that need to digitally transform.

Otherwise, people will simply carry on doing the same today as they did yesterday. Implementation of new platforms are essentially pointless investments. Again, we’ve already mentioned this theme. This is a trait of inward facing organisations. We’re not looking outwards, putting ourselves in the shoes of the customer or looking beyond our own area of responsibility.

Poor accountability also removes any sense of urgency or time-based pressure. This is especially prevalent in Public Sector organisations that have a captive market. This, in turn is exacerbated by inwardly focused management that create their own methods of performance management that do not contribute towards the company’s mission.

Support functions such as IT and HR need to be just as accountable for the productivity they enable.

When HR performance is measured on cost saving and time efficiency this kills innovation.

IT KPI’s around simply keeping things working means no there is no incentive to find innovative ways to facilitate better organisational wide performance, or enabling better connectivity and collaboration between systems and external partners.

Often, upgrades are missed or discounted because of the short term cost implications. When in reality there is an widening gap between the capability of existing systems and what the external needs and what the customer already expects.

All of these things destroy innovation.

 

How to develop the right kind of accountability.

It is critical to develop accountability that links directly to the transformation vision and the organisation's mission or positioning statement.

shared vision 

Recap.

To recap, there are three ways that people become barriers:

1. They are missing the innovation mindset.

2. They are operating with false logic.

3. They have poor accountability.

 

How to establish your current digital cultural status.

To overcome these and many other cultural issues isn’t easy.

In fact, it’s the most difficult part of any digital transformation. Digital change brings uncertainty, hard work and a new way of operating on a daily basis for the entire company.

The real focus of digital transformation is about delivering new ways of working that ensure a process of continuous, iterative change is at your company’s core.

Education and engagement are key to your company’s cultural transformation.

education and engagement

Resistance to change is a completely natural and even hard-wired human reaction. However, it’s almost certain that there will be some difficult decisions to make as your transformation gets underway.

If your staff can’t or won’t get on board then there really is only one option.

Your entire company must be on board, with no exceptions.

 

You must conduct a cultural assessment.

Ground zero.

Your need to develop a digital culture assessment framework (this can be a spreadsheet, no need for fancy software), and assess every team, role and leader against the following three attributes: 

Openness.

Ask…

  • Are your managers, influencers and decision makers receptive and optimistic towards change?
  • This includes new technologies, processes and ways of working. 

We need the answer to be “yes” for all of these people. 

Adaptability.

Ask…

  • How do people cope when changes do occur?
  • Do they take ownership?
  • Do they self-learn?
  • Or do they ignore the change until it’s impossible not to?

We need everyone to be able to take ownership and self-learn.

 

Accountability.

Ask…

  • Are people at all levels empowered and directly responsible for measurable or observable outputs that benefit the organisation’s success?

Again, we need this to be “yes” for everyone.

 

Then empower your workforce.

For many of you reading this post that undertake this kind of cultural assessment, you’ll discover that you have lots of people resistant to change, pessimistic about the need for change, hating new technologies and processes, shirking responsibilities, not teaching themselves anything, ignoring changes until they’re falling off a cliff, and most of all, not creating any measurable impact on the business’s overall success.

This means that your digital transformation programme will fail unless you empower all of your people with a shared vision and provide support and education that empowers them to engage with the process, and tell them regularly exactly how they are contributing to the organisation's success. 

empowered workforce 

Build on the positive nuggets you find.

Once you have a clear picture of the culture within your organisation you can target the problem areas. Not only that, you can find the pockets of digitally mature parts and people in your company and use them to assist in spreading that digital culture across the organisation.

Building a digital culture takes time, and effort. So, start this initiative as soon as possible.

 

If you need any help or advice with your cultural assessment, get in touch.

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