Why Culture Feeds Digital Transformation
A company culture that supports digital transformation is a must if you want to be successful in the journey towards digital capability. Many legacy companies have a foundational culture that doesn’t support innovation, forward-thinking and progress, so it’s no wonder that they happen to be the companies that struggle the most with successful digital transformations.
On the other end of the spectrum, highly digital companies like Amazon and Uber are well-known to have struggled with their Silicon Valley style culture and could have benefited from some of the valuable cultural components of lasting legacy companies.
Despite a study from the research team at GapingVoid that shows companies with great cultures have 50% higher retention rates, higher share price returns (11.5% as compared to the market average of 6.4%), and CEOs with a higher compensation percentage of company revenues (about .16% as compared to .07%),many leaders and employees are still confused about what culture really is.
Culture is more than a list of lofty words hung publicly in the workplace.
Culture is much, much more-and getting it right is critical not only for business growth and success but for digital transformation that lasts and impacts the bottom line.
In this post, I’m going to define the term “culture” and share why it is so critical for building a digital capability within a company. I’ll break down the best way to view culture and the way it should integrate into a company’s management strategy, and I’ll explain why not all aspects of legacy company culture need to be nixed.
I’ll also share the four key values of digital culture and how to integrate them into your existing company culture in a way that sticks.
The Definition of Culture
This Harvard Business Review article states that, “Culture expresses goals through values and beliefs and guides activity through shared assumptions and group norms.” It can be a bit elusive in nature because, “much of it is anchored in unspoken behaviors, mindsets, and social patterns.”
Although a traditional understanding of the term “culture” comes with the assumption that it is created “organically”, it can-and should-be managed and adjusted for the betterment of the organization and its people.
A company’s culture is what allows a shared purpose to drive progress. It’s pervasive, enduring,and implicit. And, if unmanaged, it can undermine business growth and hinder any signs of success regardless of whatever bulletproof digital strategy (or any strategy for that matter) a company has in place.
Peter Drucker said it best, “Culture eats strategy for breakfast.”
An MIT Sloan article titled,Building Digital-Ready Culture in Traditional Organizations defines culture as, “What happens when the boss leaves the room.” It’s simply the way things are done, the way people think, and the way they behave.
And not only is culture munching on strategy at breakfast time, but it’s actually more stubborn,too. Unlike strategy, culture is hard to change, as it has typically become unconscious in traditional organizations.
Why a Cultural Shift is a MUST for Digital Transformation
To successfully build a company’s digital capability it must first have a culture that won’t “eat”the transformation strategy right out of the box-conversely, it should feed and fuel your transformation efforts, making them that much more effective.
Frankly, organizations that have a deeply rooted culture that values stability over innovation,predictability over adaptability, and consistency over change are in big trouble if they don’t address the limitations of their outdated culture first.
Legacy organizations built in times of scarcity or through tough economic times likely made it through to the other side with a culture that valued predictability and safety. Those were not times of experimentation, exploration, and rapid growth. Rather, in those times, the goal was to push through without failing, slow and steady, safe and sure.
Nowadays, the companies that are digitally capable are king, and their empires are built on a cultural foundation that fosters exponential growth and embraces change without fear.
With innovation happening at exponential rates each year and digital companies flooding every industry, traditional organizations simply can’t choose inaction and continue to thrive. Although many elements of age-old company cultures are beneficial and worthy of being preserved,some simply must change with the times.
Thus,a cultural shift is a MUST for digital transformation.
What to Change (And Keep) in Your Company’s Culture to Increase Its Digital Capability
To be clear, your entire company culture doesn’t have to get tossed to the wind. There are likely many components of your culture that are positive and have supported your success thus far-and will continue to facilitate growth into the future. For example, integrity, stability,employee morale, and heritage should be preserved in the transformation process, but critical practices like rapid experimentation, self-organization, and data-driven decision making with the customer at the forefront should be executed immediately.
To see a snapshot of what to change and keep in your company’s culture, take a look at the chart below.
As you can see, the typical digital and traditional cultures do have some overlap, but there are obvious differences that must be considered during digital transformation.
When transitioning from a traditional practice to a digital one without compromising important values,a traditional organization will need to build new digital practices, preserve certain traditional ones, and reorient others to stay relevant in today’s environment and activate progress.
The strategies that take place within each of these components of a cultural shift-BUILDING,PRESERVING, and REORIENTING-are what determine the successful adoption of digital transformation in the long-run.
The Four Key Values of Digital Culture
According to the same MIT Sloan Management Review Article, studies and surveys report that there are four broad key values of digital culture. Whatever changes, preservations, and shifts that are made within an organization will likely fit within one of these key values in order to succeed.
Digitally capable companies strive to change the world radically through constant innovation.They are driven by a desire to have a large impact and oftentimes have a vision greater than the company itself.
Companies that have undergone a successful digital transformation move fast and iterate instead of waiting to have all the answers before acting. The inspirational phrase to “Take messy action,” applies here, as the idea is that messy action (and correcting with experimentation and learning) is better than no action at all due to fear, conformity, or rigidity.
Digital organizations engage broadly with diverse sources of information and insight. The organization-and its people-are happy to share advice and information openly rather than keeping knowledge to oneself because they see the possibility for growth and innovation through collaboration.
The cultural foundation of digitally capable organizations encourages people to have high levels of discretion to do what needs to be done.Instead of relying on formally structured coordination and policies and keeping black-and-white rigid rules, they encourage outside-the-box thinking if it means forward momentum, innovation, and expansion rooted in integrity.
Culture as a Key Management System in Digital Transformation and Beyond
Jason Korman, the CEO of GapingVoid, offers another interesting definition of the term “culture”within organizations. He defines it as, “A management system; a designable method of informing the beliefs, mindsets, and mental models that will drive operational excellence.”
“Culture, when properly designed and executed, is the greatest leadership tool in existence.”
- Jason Korman
Considering culture a “management system” is an interesting re-framing, and empowers organizational leaders to leverage it to guide their team to success. In another article, I’ll expand on this idea of culture as a key management system, and I’ll dive into the things leaders, specifically, can do to expertly design and execute this tool in their own organization.
If you need support in structuring the planning of digital in your company, and you’d like guidance on how to set up your organization’s culture so your digital transformation is a success, Second Spring can help. We offer The Digital Advantage Gameplan™ Fast-Track System-a 3-week, hands-on, collaborative and consultative approach to laying the foundation and successfully transforming your company’s digital landscape.
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