Why is culture important when embarking on a digital transformation?
Let’s start with Gartner’s broad definition of a Digital Transformation (DT):
<<Digital transformation can refer to anything from IT modernization (for example, cloud computing), to digital optimization, to the invention of new digital business models>> (Gartner glossary)
So clearly a lot of different types of changes can be “packaged” as a DT.
<<To make any transformation stick, you must define the culture before you implement new digital tools or ways of working. That’s because doing so addresses the one thing standing in your way: the mindsets and behaviors of people.>> (Enterprisersproject.com, 2020)
Crucially, what is important to realise is that DT is not only about data, tools and systems, it is in fact first about people. The main reason is that the success of a digital transformation depends on everyone in the organisation. Management cannot just command employees to transform the organisation into a digital one. Leaders must focus on changing the mindset of everyone in the organisation, as well as the organizational culture and processes, before deciding on the digital tools to use and how to use them. This is the only way to get everyone engaged and motivated to truly transform the way the organisation operates and the way it relates to its customers.
<< [..] Customer wants are rapidly evolving, requiring dramatically new levels of organizational flexibility, agility and adaptability.
And that responsiveness is about technology, yes. But it’s very much about humans. Data can tell us what people have done in the past and what they need, but it can’t create new products and services. Digital technology can’t see trends, nor help you decide how to shift a business as markets evolve. It can’t drive culture, those values and beliefs that make people want to come to work for you every day.>> (Prophet, The Body Mind and Soul of digitally evolved organizations, 2018).
What mindset is expected for a Digital Transformation?
<<Shortcomings in organizational culture are one of the main barriers to company success in the digital age. That is a central finding from McKinsey’s 2017 survey of global executives which highlighted three digital-culture deficiencies: functional and departmental silos, a fear of taking risks, and difficulty forming and acting on a single view of the customer.>> (McKinsey, 2017)
DT is usually associated with the Agile methodology, with Devops teams, with adaptability, with empowerment, with management openness and with taking risks. So what “digital mindset” or behaviours is sought from employee in such a working environment?
The following is not an exhaustive list of behavioural traits but is a good aggregation of published digital mindset definitions:
· Fully on board with the shared vision and goals
· Comfortable to take decisions
· Customer focused
· Seeking ideas from other teams
· Always willing to share experiences and ideas
· Data driven but trusting intuition/judgment
· Willing to take calculated risks, to experiment
· Always learning
· Adaptable to continuous change.
An organisation embarking on a DT must therefore define and then establish an internal culture conducive to the desired digital mindset described above.
It should be about Collaboration
Fundamentally, the role of a culture supporting a DT (ref. Greg Watson, COO at Napier AI) is to:
· Share the vision: You can’t simply sanction digital transformation. You must share your vision of what must be achieved, and why, in order for everyone in the organization to understand how crucial digital transformation is. [..]
· Empower the employees: Digital transformation requires rapid change. Embracing rapid change requires the consent of those who will bear the brunt of new policies, procedures and processes. [..]
· Break down barriers: Silos across teams and technology can stop even the most dedicated customer advocate from going the extra mile [..].
Once the vision and goals are clearly communicated and understood by everyone, the empowered employees collaborate freely across teams, functions, businesses and geographies, to delight the customers.
<<Ideally led by the CEO, in partnership with CIOs, CHROs and other senior leaders, digital transformation requires cross-departmental collaboration in pairing business-focused philosophies with rapid application development models.>> (CIO.com, Sept. 2020)
Establishing collaborative behaviours as the norm throughout the organisation is therefore the single most important cultural trait to successfully achieve a digital transformation. A collaborative culture has other benefits too:
· It establishes a working environment inherently diverse and inclusive
· It facilitates for each employee the use of many of his/her skills/competences untapped by his/her current role job description
· Collaborative behaviours are recognised and rewarded
· It is a culture conducive to self-actualisation for all employees
· It fosters empowerment and openness.
What should the needed culture transformation look like?
The following answer to this question is structured using Prophet’s Human-Centered Transformation Model ™: DNA, Body, Mind and Soul. Prophet – a global consultancy firm – see Culture being synonymous to Experience.
BODY: Reinventing the Operating Model.
Organisation
A collaborative culture has these characteristics:
· A flatter hierarchical structure
· Communities of practice (or disciplines) not department
· Multi-disciplinary teams (squads) collaborating to satisfy customers’ needs and wants.
A collaborative culture is also a flatter culture with people empowered to make decision and voice opinions.
Governance
<<Lack of hierarchy, though, does not mean lack of leadership. Paradoxically, flat organizations require stronger leadership than hierarchical ones. Flat organizations often devolve into chaos when leadership fails to set clear strategic priorities and directions.>> (HBR.com, Jan 2019)
Leaders are there to provide the teams with what they need to perform, rather than telling them what to do. They are guides rather than commanders.
Process
It is key for everyone to feel empowered to adapt, replace or create the processes needed to deliver on the digital transformation.
Roles
The right roles for a digital transformation to be defined and assigned.
For instance, one senior leader must be appointed to lead the Culture Transformation in a “Chief Culture Officer” capacity, and lead a team to manage the various aspects I mention on this article. Changing the culture touches the entire organisation and every functions, disciplines and businesses will play a part. This needs direction and coordination.
Incentives
To foster a collaborative culture it is essential to incentivise collaborative behaviours. This means systematic recognition and reward of the most collaborative teams and individuals. Individuals making significant efforts in this area should also be recognised.
Fundamentally, collaborative behaviours must be part of everyone’s job description and must be part of everyone’s performance appraisal.
During appraisal, questions such as these should become common practice:
“Have you offer your knowledge/expertise recently? Give an example”
“Where you specifically asked for help by anyone? Describe what happened”
“Did you call for help or advice or opinion outside your team recently? Give an example”
“Did you engage in any internal or external online debates? Any interesting insights?”
Systems & Tools
Culture is about people yes but within an organisation, especially in large ones, the right collaboration systems and tools configured and used in the right way, can enable a much faster uptake of the desired behaviours and facilitate the breakdown of knowledge silos.
From a technological point of view, a digital and a cultural transformation join up through the “democratisation of technology”. Gartner defines this as <<[..] providing people with easy access to technical or business expertise without extensive (and costly) training. It focuses on four key areas — application development, data and analytics, design and knowledge — and is often referred to as “citizen access,” which has led to the rise of citizen data scientists, citizen programmers and more.>>
Many communication/collaboration tools such as Intranets, ADO, Jira, Salesforce, Microsoft Yammer, innovation portals, Teams or Whiteboard, are often already widely available in organisations but not necessarily used correctly or to their full collaborative potential. Some improvement suggestions:
· Intranets could be used to promote collaboration as much as digital initiatives. It could regularly recognise the most collaborative among us for instance
· Ms Yammer and Teams must be clearly differentiated so that everyone which one to use for what. Essentially, if the audience is specifically known, use Teams, if not use Yammer. I am also confident that in a collaborative culture, a tool like Yammer would not only be used more often and by more people, it would also be “better” used: Some features and under-utilised such as the possibility to “Follow” someone or a topic of interest
· Ms Teams has seen its use grow, in most organisations using Microsoft tools, as an online conferencing tool, especially since Covid-19. However, its initial and core purpose to be a team’s knowledge/collaboration portal is often overlooked. Ms Outlook and emails remains the main communication tool for a team and that needs changing for a more collaborative environment. Microsoft is about to introduce more integration between Outlook and Teams so that will blur the lines in favour of Teams hopefully
· In the case of ADO or Jira (or any other Agile continuous delivery tool), it is key for an organisation to have a unique DevOps platform to break down knowledge silos further
· Salesforce as a single record of the customer to have a single view of the customer and drive collaboration instead of competition between commercial teams
· Ms Whiteboard is a great online design/brainstorming tool – especially for geographically dispersed teams. Tools such as this one should be promoted and used more widely.
· Ideation/innovation portals: A key objective of a digital transformation is to foster innovation and doing so in the most collaborative way implies selecting and imposing a standard ideation platform. One of the first thing anyone with an idea wants to check before sharing it is whether someone else already had the same or similar idea. If yes, an option is to join forces with that person. The only way to enable this is to have a single place where ideas are posted and assessed.
MIND: Energize the Talent
A new culture with associated talent management and learning is required to sustain and leverage this new potential.
Talent
<<Too often work is benchmarked against a norm: a row on a spreadsheet. What’s valued is your economic productivity – your ability to work faster, cheaper, and in high volume – and ethics aren’t valued because they’re so difficult to measure from a productivity standpoint. It’s one of many intangibles – how innovative you are, your empathy, or why you’re doing what you’re doing. Purpose, Self-improvement, and connection, especially, are not conducive to measurement. As a result, very little time or effort is devoted to ensuring that employees are learning and growing, are committed to organizational goals, or are enjoying a sense of affiliation and inclusion.>> (Rishad Tobaccowala, Restoring the Soul of Business, 2020, chap.3 pg 37).
The intangibles that Rishad refers to must be given as much importance as the tangible ones. Propensity for collaboration in particular, will become an increasingly important competency. Others such as the ones listed by Rishad will need to be nurtured, assessed, recognised and rewarded: Purpose, self-improvement, self-actualisation, willingness and capacity to learn, creativity, capacity to innovate, etc…
If harder to measure, some indicative measurements are possible for some of these intangibles. For instance, a tool like Yammer can provide some useful evidence of someone’s collaborative behaviours. A 360 behavioural performance review is another useful measurement method, with colleagues feeding back on how much assistance they received from you and/or how open and respectful you were for their contributions and/or how much you sought diversity of opinion, etc…
Performance and behavioural assessment should no longer be for the next 6 or 12 months but become a more continuous process. In a digital, agile, fast moving, fast innovating organisation, it makes no sense to ask everyone to plan specific activities and objectives for a full year in advance. One can set annual guiding principles and a wish list but delivery objectives should be set on a quarterly basis at the most.
Capabilities & Skills
In a digital/collaborative organisation, what an individual is capable and willing of learning and doing should be more important that what he/she has done in the past. Space and time will need to be given for everyone to learn. Crucially in a collaborative culture, learning is expected to be more often from colleagues than from formal online or classroom style course. Sharing one’s knowledge/expertise should therefore be incentivised.
SOUL: Create more Meaning.
Mindsets and behaviours
A culture transformation must be first and foremost about changing the mindset and behaviours, or more precisely about promoting, encouraging and rewarding a desired mindset and a set of associated behaviours. And this must be done for the long term and therefore must be rooted in the organisation’s vision, purpose, goals and core values. Such a change should not be rushed but instead done gradually, starting with quick wins and making to get everyone on board with the target culture. One recommended way to achieve this is to have all employees involved in the definition of the collaborative mindset and behaviours.
<<[..] while certain behaviors required for innovative cultures are relatively easy to embrace, others will be less palatable for some in the organization. Those who think of innovation as a free-for-all will see discipline as an unnecessary constraint on their creativity; those who take comfort in the anonymity of consensus won’t welcome a shift toward personal accountability. Some people will adapt readily to the new rules—a few may even surprise you—but others will not thrive.>> (HBR.com, Jan 2019).
Motivations
Every organisations will have ambitious strategic goals (such as achieving a Net Zero Carbon emission by 2050 for instance). To achieve them, the workforce will need to be kept motivated. A collaborative culture has the potential to provide a motivating working environment through:
· Empowerment
· Inclusiveness
· Continuous learning
· Increased variety of work
· Appraisal giving equal importance to who you are and your collaborative behaviours (versus what you achieve).
Stories
A digital organisation must be data driven but data needs to be interpreted and contextualised to extract meaning and generate true value.
<<Great bosses impact the spreadsheet through stories:
· Stories that inspire;
· Stories that teach;
· Stories that reasonate; and
· stories that motivate.
They share their stories of failure as well as successes. These bosses encourages their people to talk about their own experiences and offer their perspectives. They believe in on-going dialogue [..]. As long as they get their people engaged and thinking widely and deeply, the’ve done their jobs.>> (Rishad Tobaccowala, Restoring the Soul of Business, 2020, chap.12 pg 180).
Leaders need to understand that stories have the power to multiply the value of Data. A collaborative culture is not only more conducive to storytelling, it fosters it, making it become common practice for sharing experiences and for learning.
Symbols and Rituals
A new culture will in time undoubtedly also permeates through symbols and rituals but this is not a priority concern when initiating a cultural transformation.
DNA: What the Organisation stands for.
Purpose
This is not only about being a purposeful organisation but also about acknowledging that each employee will be more productive when given the space and opportunities to define and fulfil his/her own personal purpose.
Values
An organisation embarking on a digital transformation journey does not necessarily need to change its corporate values. What it must do as a minimum however is align them to what being a digital organisation will mean.
Brand
If an organisation embraces a collaborative culture, it would make sense for its external brand image to convey this mindset too. For instance, a collaborative culture will facilitate the adoption of co-innovation with the customer.
Employee value proposition
The Employee Value Proposition (EVP) will need a clear focus on the benefits of a collaborative working environment.
Other concepts to be considered for the EVP are:
· The strong sense of collective Purpose
· Continuous performance and behavioural assessment (as mentioned in the ‘Talent’ section above)
· Encouragement and opportunities given for everyone to leverage skills and competencies outside their current role. No one should be exclusively contained in a ‘box’ framed by a job description.
Strategy
<<The fact is, culture eats strategy for lunch. You can have a good strategy in place, but if you don’t have the culture and the enabling systems that allow you to successfully implement that strategy, the culture of the organization will defeat the strategy >> ( Dick Clark, CEO of pharmaceutical giant Merck).
The culture transformation to support a digital transformation must be considered strategically for the long term. The new culture will have to continue to strengthen and flourish long after achieving the digital transformation. The new culture must have strong foundations not strictly associated with the transformational phase, but instead rooted in the organisation’s long-term purpose.
