There’s no guarantee of success when it comes to digital transformation.
In fact, 69% of projects fail (according to a study by global management consultancy McKinsey).
But how is it possible that something that brings so many benefits, especially economically, can fail the majority of the time?
One simple reason is that too many businesses unthinkingly dive into a digital transformation with tunnel vision on whatever technology they want to bring into the company.
And they forgot one of, if not the most, important parts of digital transformation.
Company culture.
The right culture helps a digital transformation thrive, but it can just as easily kill a project.
But why is culture so important for a digital transformation project?
The digital transformation culture
Business culture can be a driver for change and experimentation, but it can also be a blocker when employees are encouraged to do things a certain way “because it’s how we’ve always done it”.
These types of inflexible cultures are usually the result of an autocratic, top down approach to management.
Rather than having autonomy and freedom to try new ways of doing things, employees are instead boxed into legacy processes and systems.
Any appetite for change is resisted because there’s no guarantee new technology or systems will work.
A digital transformation culture takes a different approach.
It puts company and digital strategy together, and employees are encouraged to look for improved ways of working, provided they remain on the same path towards the business’ ultimate goals.
The problem many senior stakeholders have with digital transformation, is that the technology or processes brought in may only provide 1% improvements in certain areas of the business.
But looking long-term, these incremental 1% improvements can have a lasting impact on success.
Key Factors to Consider for Cultural Transformation
Ending top down ‘leadership’
A culture that embraces change and innovation (even values them) isn’t driven by top-down leadership, with employees micromanaged and pushed towards hitting targets.
Instead, a digital transformation gives employees more freedom to take ownership over their work, make more decisions about how they work, and experiment with new ways of doing things (without fear of judgement or reprisals if some things don’t work).
Focussing on collaboration and communication
Collaboration across teams and departments is one of the keys to a successful digital transformation.
Problems come up when decisions about digital transformation are made in individual departments, siloed from anyone else.
When this happens, departments are essentially competing against each other on which can become the most digitally mature.
And this competition – rather than collaboration – is what leads to siloed technology.
Duplicated systems that could work across departments increase costs and fail to provide the full benefits.
Incompatible software is purchased by departments, again wasting resources and making full collaboration nearly impossible.
For a digital transformation to have any chance of success, a company’s culture needs to focus on cross-department collaboration – ensuring teams are always working together to improve business-wide problems and not just their own.
Creating a digitally talented workforce
Around two-thirds of businesses find it difficult to hire staff with the digital skills they need.
With a lack of new talent to bring into the business, the best answer is to train existing staff in how to use new technology so they can be more confident with change.
This, however, for the most part, doesn’t happen.
While 73% of UK businesses increased investment in digital tools, only 9% invested the time to train employees on how to use them.
And it’s this lack of training and awareness that makes employees resistant to new technology because they feel they’ll be blamed if the technology fails to provide the expected benefits.
Others are suspicious of the technology, and so don’t take the time to get the most out of it.
Where the cultural challenges to digital transformation come from
Resistance to change
By its nature, digital transformation is a disruption of the status quo.
Whether it’s automating previously manual processes.
Moving on-premise systems into the cloud.
Or uprooting fixed phone lines in favour of an internet-based phone system like VOIP. And while resistance to change may come from the workforce, it’s usually rooted in fear and uncertainty over what the change will mean and who’ll be held accountable.
We’ve already mentioned how top-down leadership can stifle culture because employees aren’t empowered to work differently or look for improvements in how the business operates.
Instead, they’re expected to simply use legacy systems, even if there are better ways of working.
Overcoming resistance through better change management and communication is essential to any successful digital transformation.
Over-reliance on legacy systems and processes
Clinging to old technology or old ways of working (because it’s how things have always been done) is a major barrier to digital transformation.
Depending on how widespread legacy systems are in a business, it could greatly increase the scope of a digital transformation project with more compatibility problems likely to arise.
To overcome this, businesses need to create a cultural environment where innovation and experimentation with new ways of working are encouraged.
Siloed decision making
There is little chance of a digital transformation project working if decisions are only coming from the top down.
Employees working on “the front line” are more likely to spot opportunities for improvements as they’re the ones working within the current systems and with the existing tech.
But digital transformation also won’t work if decisions are siloed by departments or groups.
A digital transformation culture requires a more collaborative approach to improvements, with teams working towards the same goals and making decisions.
If problems are identified by one team, it should be standard practice that other teams are brought in from around the business to understand if this is an isolated problem or something that needs to be solved company-wide.
Culture is the real key to digital transformation
Technology is only as good as the teams using it, and even the most productivity-boosting, cost-cutting technology will fail in a business without the culture to embrace it properly.
Building a culture around innovation, collaboration, communication and where employees are encouraged to take risks and try new things is the only way to get the full benefits out of a digital transformation.
An iron grip and a focus on finances and sticking to old ways of working just don’t cut it in a more flexible, fast-paced business environment.