Companies launch digital transformations for varying reasons, whether that's providing better customer or employee experiences or to meet demand spikes faster while reducing costs. When companies undertake digital transformations, their competitors need to do the same. They set targets, deploy new technologies, train staff in new procedures, and plan their initial rollouts.
A year in, some companies find their digital transformation projects stalled or scaled back; over budget and behind schedule; or canceled all together. These companies thought they were ready, but were their corporate cultures ready?
WHAT WENT WRONG?
That's a question many C-suite executives ask in the wake of digital disappointment; the rate of digital failures may be at least 50% — and could be as high as 90%.
Typically, there's no single factor to blame, but the corporation's culture is frequently a key factor. And it's a factor that's easy to overlook with a project, like digital transformation, that may seem to be about technology rather than about people.
The truth is that C-level execs overlook corporate culture at their peril. The willingness, even enthusiasm, of the people tasked with making digital transformation work is crucial.
Do employees at the front-lines of transformation embrace the change? Are they invested in it? What about the top executives, the ones who must set the tone for the organization? Does the change have their buy-in and ownership?
If executives suspect the answer to these questions isn't "yes," their digital transformation could be headed for trouble.
WHAT CAN THEY DO?
The first task for executives considering digital transformations is to understand their corporate cultures and consider aspects that will need to change, especially regarding collaboration and information sharing.
Digital transformation is disruptive in that it impacts the way people work, how they interact and how they share information. These are fundamental shifts in employee culture and behavior.
It isn't unusual for IT-led digital projects to stall when culture change isn't recognized as an essential component of the project. This is true because IT can't influence culture outside its domain; this requires leaders in the business to enable new behaviors and ways of working for users. Often the first culture change required is to engage business ownership.
There are also certain aspects of culture that can support — or disable — digital transformation. Employees should feel empowered to make a difference in the company, rather than fearful of the consequences for doing things differently. Executives can take their workers' pulse on that by thinking about whether they speak up and contribute to discussions about change or meekly follow the flow.
Agility is another consideration; do decisions flow freely or are they encumbered by layers of bureaucracy? When presented with new ways of working, do employees ask "why not?" rather than "why?"
Collaboration is crucial, too. Employees need to share information rather than hoard it; they need to focus on customers and their needs, rather than on their own.
IT'S TIME FOR ACTION
If a company's assessment turns up concerns, it's time for action. It's tough to change people's minds but easier to change their behavior. The company should motivate people to do the right thing; bad behaviors need to be discouraged and good behaviors encouraged. Knowledge sharing and customer focus should be rewarded.
Beyond the level of the individual behavior, organizational structures may also impede acceptance and implementation of digital transformation. At IMG we often see that promoting collaboration and coordination may involve replacing current business unit and functional structures with smaller, loosely coupled business components.
To encourage senior-level staff and executives to support digital transformation, they should own it. This isn't something that's going to be handed to them by IT and they need to understand that.
The CEO should reiterate the message frequently and executives throughout the business should have mechanisms through which they can work together to drive and direct the change. Their overall performance needs to be evaluated, in part, by how well they and their reports support digital transformation.
CULTURE OR TRANSFORMATION: WHICH COMES FIRST?
In a perfect world, the business might address all of its cultural impediments prior to digital transformation and then begin its transformation project. But that world isn't this world.
Changing culture is at best a mid-term, if not long-term, proposition. Few companies, however, have the luxury of spending months or years on cultural change before starting their digital transformations.
Fortunately, they don't have to. Early phases of digital transformation — assessments, planning, even pilots and narrow rollouts — can be implemented simultaneously with cultural change programs.
Each, in fact, can support the other; early successes with digital transformation can encourage the very cultural changes a company seeks, while every step forward in cultural change makes digital transformation easier to adopt.
Cultural change is the beginning and doesn't end with the technology implementation.
The company that starts on this path may find, a year from now, that it's applauding its success rather than puzzling over a stalled or canceled project.