Why Culture Influences Digital Transformation
Updated: Jul 24
What role does culture play in the Digital Transformation realm?
In the digital era, digital transformation is necessary for companies to survive. Whether businesses are implementing specific tools or developing strategies that disrupt, the International Data Corporation forecasts worldwide spending on digital transformation will reach $2.3 trillion by 2023.
Integrating technology is only one aspect of effective change, however. To successfully implement digital initiatives and outpace competitors in the market, organizations need to consider the cultural aspect of change. In a study by BCG involving approximately 40 digital transformation projects, organizations that invested time and effort in culture and alignment were five times more likely to report strong or breakthrough financial performance, compared to businesses that didn’t address culture.
If the cultural component is so important to digital transformation, why isn’t it at the forefront of digital change? Why does the focus of change more readily target shifting technology, products, services, organizational structure, and talent? The short answer is that changing or aligning with culture is hard—especially in long-established businesses, and those with deeply-embedded cultural roots.
Recognizing when change is needed
Culture encompasses the core values of an organization, from which all strategies and activities flow. Recognizing that there is an issue with alignment between culture and strategy is the first step in any change process. Positive cultural aspects can be strengths, while entrenched cultural mindsets can be a major roadblock for adoption of new technology.
For instance, if the employee culture of a business is distrustful of a technological change, the transformation effort is more likely to fail. That’s why a collaborative and inclusive change process with clear and constant communication is vital for teams to understand, champion and execute digital transformation.
In addition, clear, specific cultural values that are referred to consistently are more effective than vague references, such as “collaboration” or “innovation.” For example, the Mayo Clinic has a small number of highly specific cultural values that match and act as guidance for strategy. By focusing primarily on values of a patient-centered culture, multi-disciplinary teamwork, and physician-led governance, this exemplary organization is a world-leader in diagnosing and treating some of the most complex diseases.
Creating whole-company alignment
A second area of alignment that is critical to digital transformation efforts is the one between the board, the executive team, and employees. To get complete buy-in, those at the top need to fully understand the change, and champion it. This can be challenging if board members come from a culture that is not comfortable with taking risks or is not entrepreneurially-minded. Having diversity on the board, where you have a mix of members with start-up mindsets versus more traditional mindsets, is a strength. Ask yourself, do our board members regularly interact and use the company’s products and services?
With digital transformation, one element of the culture has to be a willingness to embrace experimentation, and forging ahead into the unknown. Being tech savvy is not just the domain of the IT department or chief digital officer, it must be a mindset that everybody at the company seizes, from senior leaders to employees at every level. A healthy culture that is aligned with strategy ensures that individuals will make decisions that work towards the company’s goals.
Making changes to prioritize culture
If you discover there is a misalignment between culture and strategy, it is possible to make changes. One approach is to review the behaviors that are standard in your organization. Think about what the ideal behaviors would be if everyone—and the company—were operating optimally. What actions would people take that drive the business toward its goals?
Then connect with those in leadership, and ask them to describe what new behaviors would be prevalent, given the culture you envision and the strategy you are pursuing? What deep-seated behaviors can be eliminated?
Perhaps behavior changes involve making board members more hands-on. Or creating a less formal style of management, with particular senior managers more visible. Or breaking down silos between different areas of the organization. Perhaps changes involve actively supporting continual learning, or cross-functional collaboration that cultivates digital transformation.
For instance, if your business wishes to offer a better service experience, how could its interactions with customers be enhanced? What feedback practice would you put into place to discover issues? How can you enlist the imagination and ideas of employees to source solutions? Think about the ways your staff might change their engagement if they see others doing their jobs in a different way.
Too frequently, leaders think of culture as an afterthought to digital transformation. By examining the company’s culture and strategy, thoughtfully communicating the need for alignment, and drawing on input from all levels, leaders will be far more effective in delivering the desired change effort.
About the Author
Ashiq Ahamed is the Founder & Managing Partner of SolvedAF Consulting Inc., a boutique consulting firm providing IT consulting, growth advisory, and digital transformation services. As a strategic, delivery-focused leader, he works with organizations to change their thinking when it comes to technology, implementing solutions that achieve organizational efficiencies and improve the end user experience.
Known for his ability to see the big picture, Ashiq draws on his expertise to help organizations align their technology with their business goals.
Learn more about SolvedAF at www.solvedaf.com.
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