Four steps to digital transformation: Culture

15 May 2018

Through our conversations with CEOs and Executive Team members we have identified four essential ingredients for digital transformation. In last month’s article we addressed the importance of Structure. In this, the second of four articles, we address the importance of Culture.

Start At The Top
Embedding digital into the organisational DNA is not an easy task. It requires the right mindset at the highest levels of the business, underpinned by a fundamental commitment to a digital future. Given the risks involved in re-tooling any business of scale, the decision to pursue a digital path often feels like an act of faith – a leap in the dark from which there is no return.

Culture reflects the underlying assumptions, beliefs, norms and ways of working of an organisation – often referred to as the unwritten rules of behaviour. Why is this so important?

One of the big risks with a digital transformation is that it stalls because of internal misunderstanding, misalignment, conflict or obstruction. Culture often determines what happens when the boss is not looking. Once the digital aspiration and direction has been set, how can momentum be maintained, kept front of mind amid the daily operational fire fight? The appointment of a Chief Digital Officer (CDO) is an important step, signalling genuine intent and clear responsibility. But equally important is a climate where people are open, enthusiastic and excited about a digital future. These are the people who will nudge the transformation programme in the right direction when the boss is not around. Culture provides this crucial contextual support.

Make It Visible
An important part of building this constructive culture is to make digital visible. One former digital executive and current CEO emphasises the need to experiment with, and provide a showcase for, the latest digital work. He recommends using cutting edge technology to demonstrate the art of the possible to all parts of the business, rather than just preaching to the converted (ie to the digital teams).

This inclusive and visible approach helps encourage engagement, excitement and innovation. Open/shared online channels can be used to make the digital journey a truly collaborative, co-creative process, enfranchising both digital and non-digital teams, and cross-pollinating ideas (and equally important, relationships) between them. In this way, the mission becomes a concerted, holistic objective, rather than simply a top-down edict.

Customer Centricity
Digital transformation programmes can go awry, therefore, if there is insufficient energy. Equally however, they can run into problems if there is too much zeal and blind faith. Yes technology can be exciting, and can feel like the future, but what is the purpose of this digital agenda? Ultimately, it must benefit the customer if it is to be truly value-adding and sustainable. This is why an effective digital culture must have the customer at its heart.

The cultural characteristics that prevail in successful digital organisations – collaboration, empowerment, technological know-how – these must be grounded in a deep foundation of customer understanding. Time and again studies have taught us that true innovation occurs at the coal-face. Those people in daily customer contact have the best understanding of both the issues and opportunities, and it is their gold-dust ideas that need to be captured, fostered and propagated across the organisation.

What type of businesses have got this right? At Auto Trader UK, they sought to create an environment where empowerment trumped command and control. They achieved this by a) clarifying how the culture would need to change in terms of both the values that the organisation would hold to and the principles on which the organisation would be run and decisions would be made b) thinking through the implications of this new culture for expectations from their leaders, particularly the type of leaders and leadership team they needed to effect the change, and c) creating a conducive (and unusual) structural environment where the business moved from a series of organisational silos to one team with common goals and incentives – Finance, Corporate and other key functions were brought together. This approach created cohesion, unity and a greater level of visibility and accountability, ultimately delivering a digital business and enabling enhanced performance.

In summary, driving change can feel like cycling up-hill and into the wind. But if you get the internal climate right, whilst it may still be a long haul to reach that digital yellow jersey, you can at least benefit from a cultural tail-wind.

Next time, in the third article in this series, we focus on having the right People to deliver your digital future.

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