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It’s not a digital transformation without a cultural transformation

Digital transformation is a term that has not only swept corporate Australia but befuddled it. 

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Leaders are embracing such transformation wholeheartedly because they recognise its power. But as companies advance from pilot programs to wide-scale adoption, they often run into an unexpected obstacle: culture clash. 

"If you ignore culture, your transformation will almost certainly fail.”

The reason it can be confusing to executives (and then go unexplained to employees) is because a digital transformation isn’t just about investing in new digital technology.

Recently released research by the Boston Consulting Group found instilling a ‘digital culture’ has the greatest impact on the success of a digital transformation.

Which begs the question what does a digital culture mean, exactly?

Culture is the values and characteristic set of behaviours that define how things get done in an organisation; a tacit code of conduct that steers individuals to act appropriately and make the right choices, ones that accord with the organisation’s purpose, strategy and goals.

The key message of the research was if you ignore culture, your transformation will almost certainly fail.

We assessed 40 digital transformations in the research. Those that explicitly focused on culture were five times more likely to achieve breakthrough or strong performance (90 per cent vs 17 per cent).

Over a 10-year period, the results are even starker: 79 per cent of companies that focused on changing their culture by identifying desired employee behaviours and creating systems and incentives to reinforce them sustained strong or breakthrough performance.

Not one of the companies that neglected culture achieved such performance.

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So how does having a digital culture de-risk your digital transformation?

Digital culture empowers people to deliver results faster. A flatter hierarchy helps speed decision making. A digital culture serves as a code of conduct that gives employees the latitude to make judgement calls, on-the-spot.

A digital culture attracts digital talent.  Digital leaders are magnets for talent. Millennials are drawn to digital (and agile) companies, with their promise of collaborative, creative environments and greater autonomy.

Increase your odds

  1. Identify behaviours that matter and concrete steps employees can take to adopt them. Have a clear plan for how the current culture can morph into one that encourages the right behaviours and explicitly identify what those behaviours are up front before communicating them.
  2. In a digital culture, judgement and autonomy are behaviours everyone, from the most junior, to the most senior, have to practice. Symbolic acts to demonstrate the new culture from leaders are critical: schedule meeting-free days to allow for focus on execution; give people a budget to buy their own desk equipment; turn senior offices into team rooms.
  3. The traditional organisational structure, based on hierarchical power and teams or units competing for resources, will not work. In its place, successful companies need to make the most of the creativity and passion of their people. To avoid organisational chaos teams need to be given very clear direction in terms of both what needs to be achieved and why. 

The way organisations work is fundamentally shifting to adopt the ways of the digital or tech company – one that makes quick decisions, pushes decision making as far down as possible, and tries new things (and maybe even fails, but speed means they can try again; fast).

While shifting the culture of a large organisation can be hard, the results can be amazing for companies, and those that work for them.

Sam Stewart is Managing Director and Partner at The Boston Consulting Group

The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.

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