Culture Eats Strategy in Digital Transformation

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A lot of companies are at risk of becoming victims of digital Darwinism these days. Competitors in their industry are ahead of them in the digital arena. And there is always the risk of an outsider disrupting the entire industry. For many companies the words digital transformation ranks high on the list of priorities.

One of the key factors for succeeding with digital transformation is to get buy-in from top management. I’ve written about this before, if you want to learn more. The reason for this is obvious, without management backing any effort is doomed to fail.

But especially for larger companies the other side of the coin is just as important – to get employees to buy into the need for digital transformation. The reasons for this are obvious as well, if the whole company does not change its way of doing things it’s not a transformation. It’s business as usual with a thin layer of digital paint on the surface.

A Culture of Change or the Opposite?

Lack of digital knowledge among top management has often been quoted as an obstacle to digital transformation, but the same can be said for the rest of the company as well. Not everyone needs to embrace it, obviously, but a large part of employees do have to understand that integrating digital solutions into all aspects of the business is a necessity.

Getting employees to accept change is easier said than done. And this is where the company culture comes into play. If one aspect of the culture is a willingness to change that is a huge advantage. But the opposite, a reluctance to do so, can be the downfall of any attempt to transform a company. Drucker has taught us that culture eats strategy for breakfast, and if we are to avoid that fate we have to understand the reasons why reluctance to change can be so strong.

Adopting Innovation

In the final analysis companies are made up of people. If you were to divide the employees of a larger company according to their interest in all things digital you would likely see the same proportions as in the innovation adoption lifecycle model above. In other words, a small group would embrace it whole-heartedly and begin to innovate not only how they themselves use digital but also find new way for the company to make use of it. A larger group would adopt the new ways quickly and with a positive attitude. But those two groups would probably represent less than 20% of the total number of employees. More than 60% would gradually adopt digital tools and processes, but with a certain reluctance. And around 15% would resist any change at all.

All in all most companies would be facing reluctance and resistance to digital transformation from, with a conservative estimate, more than half of its workforce. And that in turn will have an impact on the culture as a whole.

There are two main reasons why people are reluctant or resist: Lack of interest or Fear of change

Lack of Interest

Even though digital tools and ways of working are used a lot in most companies I believe it’s fair to say that to many employees they are of little interest. Computers, software etc get the job done, and nowadays few can remember a time without these tools. But to many of your colleagues the idea that digital could do more, apart from certain areas like marketing and customer service, has probably not occurred to them.

This is interesting in itself, because at home they likely use digital more and more each year, and in areas of their lives where they could not have imagined it would play a part just a couple of years ago. But the difference there is that they can see real results. Tasks are done more quickly, shopping becomes easier, research and entertainment as readily available. To them digital in the workplace is often a very different experience.

In order to overcome the lack of interest I believe we have to do two things. The first is to improve the digital tools and processes already being used in the company today. In order to do this we will have to change or simply get rid of many of the rules and regulations in place around everything from hardware to software. Developing a more open-minded take on BYOD (Bring Your Own Device) is one example. If we can make our colleagues work experience more similar to what they already can do in their personal lives, they will see some real value to the change.

The second thing to do is to educate employees of what digital transformation means, and why it is a necessity for the company to change. Very often we expect them to understand this on their own, even though we know that very few people invest time in learning things unless it is something they are interested in or see as beneficial to their career or life. In order for this to happen some companies have created roles like Chief Digital Officer, charged with educating and inspiring internally, and I think this is a good way of starting the process.

Fear of Change

Digital transformation by its very nature disrupts the way a company works and how it’s organized. Naturally, it will mean that certain tasks and roles will disappear either in part or entirely. Small wonder then that a lot of people fear the consequences it will have on their jobs, their standing and their future. In an MIT/Sloan Management survey 20% of respondents said that internal politics, including fear of losing power, impeded digital transformation. I believe that figure in reality is much higher.

A couple of months back I attended a seminar on digital change where a former CEO of a large corporation spoke. One thing she said that stayed with me was ”We have to transform with the people we already have employed”. What she meant is that most companies will either have to teach and convince their current employees of the necessity of transforming, the solution of letting them go and hiring new talent is rarely an option.

So the fact of the matter is that companies that want to transform are going to have to convince existing employees that this is necessary. And in order for this to work I believe that they need to do two things:

Once again education and inspiration is a key factor. In order to overcome fear and resistance to change, companies need to educate employees both on the necessity to transform and on the dire consequences that staying the same will have. The Chief Digital Officer I mentioned earlier can play an important role here as well.

The second thing is to make digital transformation part of each manager’s scorecard, i.e he or she is measured on willingness to change and adapt. That is one of the few things a company can do to come to have an impact on internal politics.

Culture Always Beats Strategy

Lack of interest and fear of what may come are two underlying reasons why a company may have a corporate culture that resists change. I believe that visible improvements, education and measurements are key factors in addressing both of them, and thereby having an impact on the corporate culture. One thing is certain, we will never succeed with a digital transformation if we don’t have the corporate culture on our side and employee buy-in.

Over to You

What cultural factors or employee attitudes do you see that can have an impact on a necessary digital transformation? Leave a comment below.

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Digital Transformation is being embraced by organizations of all sizes across most industries. In the Digital Age today, technology creates new opportunities and fundamentally transforms businesses in all aspects—operations, business models, strategies. It not only enables the business, but also drives its growth and can be a source of Competitive Advantage.

For many industries, COVID-19 has accelerated the timeline for Digital Transformation Programs by multiple years. Digital Transformation has become a necessity. Now, to survive in the Low Touch Economy—characterized by social distancing and a minimization of in-person activities—organizations must go digital. This includes offering digital solutions for both employees (e.g. Remote Work, Virtual Teams, Enterprise Cloud, etc.) and customers (e.g. E-commerce, Social Media, Mobile Apps, etc.).

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