Globally, enterprises were expected to spend $1.3 Tn on digital transformation initiatives last year. While the organizations are optimistically investing in digital transformations, the success rates might turn out to be less. According to academic research, 70 percent of digital transformation initiatives never meet their intended goals.
What makes digital transformation successful?
Before initiating a digital transformation initiative in the enterprise, it is important for organizations to understand what is the key to their success. Boston Consulting Group, from their research work, has identified four pillars of digital transformation:
- Digitizing customer relationships
- Building digital talent and organization
- Harnessing data and advanced technology
- Digitizing operations and automating processes
The foundation of these pillars is a digital organizational culture. The research has found out that companies which focus on digital culture were five times more likely to be successful. Almost 80 percent of the companies which focused on culture sustained strong performance.
In this article, we will share the roadmap to create a strong digital culture.
What are the components of a digital culture?
‘One-size-fits-all’ has to be one of the most common catch-phrases used in strategy discussions. The reason it is so common is because it is applicable most of the time. Every organization’s culture is distinct, and every approach has to be customized to work for that organization. Even if we can’t circle in on the exact composition of an organizational culture, a digital culture usually comprises of the following five defining elements:
- It promotes an external, rather than an internal, orientation
- It prizes delegation over control
- It encourages boldness over caution
- It emphasizes more action and less planning
- It values collaboration more than individual effort
The culture will vary across companies and industries but must have all of these components in some form or another.
The roadmap for digital culture
For organizations, seeking to move towards their desired culture, here is a roadmap built on digital culture for digital transformation:
Step 1: Articulate the change required
It is imperative for organizations to first define the digital behaviors, and, second to establish systems to ensure employees exhibit those behaviors. According to BCG’s research, this is the foundation of establishing a digital culture.
Organizations often commit the mistake of expecting employees to exhibit digital behaviors, without clearly defining what they are - this opens it to subjective interpretation. According to BCG, organizations need to:
- Identify the characteristics of their target digital culture and define them unambiguously.
- Translate cultural characteristics into behavior examples. For instance, Basecamp has an employee handbook which has expected employee behaviors and organizational policies aligned to their vision.
- Conduct a gap analysis - see where your culture currently is, compared with where you want it to be. Once the gaps in target behaviors are identified, communicate it to your employees.
Step 2: Activate leadership characteristics and engage employees
Another imperative to establish a digital culture is an active and strong leadership, and engaged employees. Organizations need to activate leadership characteristics across the board. Tactically, here are a few measures that organizations can take, according to BCG’s research:
- Create avenues for leaders to act as role models of new behaviors. It always trickles down from the top, and it is important for leaders to be the torchbearers of new behaviors.
- Leaders should coach team members on an everyday basis to exhibit and practice these behaviors. Have 360-degree check-ins and group discussions at a team level as a system of checks and balances to create benchmarks and baselines for digital behaviors.
- Actions must not contradict the expected digital behaviors. Establish a mechanism to hold those accountable for actions which are an antithesis to the digital behaviors of your organization. For example, if one identified behavior is to disconnect and switch off, and it translates into an activity of not sending IMs on personal numbers, then it must be discouraged.
Step 3: Align the organization to embed a new culture
BCG’s research found out that pilot programs for embedding digital culture are successful. It is the scaling of these programs which is a challenge. The root cause of this occurrence is because new cultures in large enterprises are first piloted. The participants in the pilot are mostly the top percentile of leaders, and it also involves constant measurement, individual performance measures are customized and digital behaviors and culture adoption is factored in. These aspects can be missing when the actual rollout happens across multiple locations. According to BCG, the core issue with scaling up digital culture is a lack of incentive for managers to align with the new culture.
Research suggests the following actions that organizations can take:
- Revisit the operating model and anticipate what all is required after the pilot is successfully completed
- Stimulate new behaviors by incentivizing the right behaviors and hold individuals accountable for exhibiting the contradicting ones
- Incorporate behavioral assessments as a part of the hiring, onboarding, and new hire training functions
- Deploy customized communication and awareness strategies depending on your business context to align the organization to the new culture. Like Basecamp’s handbook, imagine creative ways of transmitting your message. Exhibit the desired behaviors in your communication strategy itself
Monetary investments will continue to happen in the digital transformation space. In parallel, organizations need to invest culturally - build digital behaviors and define a culture true to their context and vision.