Sixty-two percent of companies surveyed by Capgemini say that their own corporate culture is the biggest hurdle on the path to digital transformation (Digital Transformation Review No. 10). A truism? Our Change Management Study proves that investing in cultural transformation is worthwhile: Companies with a mature digital culture do not only have the happier employees, they are also financially more successful. That comes with the development of new strategies, the restructuring of processes and the change of business models should be top priority. For companies with a less mature digital culture (“Late Adopters”), managers recognize the importance of cultural change; However, only the pioneers of digitization (“Front Runners”) engage in activities. In 80 percent of the Front Runners, the CEO is responsible for the cultural change, but only 10 percent of Late Adopters. The biggest obstacle for the interviewees is the lack of communication with the employees, silo mentalities and no or insufficient handling of employees’ fears. A key success factor to changing corporate culture is an iterative change management approach as described in the last chapter.
Front Runners do many things differently
The triad of strategy, structure, and culture is essential for the transformation success at the Front Runners. Culture is tough strategy work, in which digital strategy and culture must be brought together. Eighty percent of Front Runners have a clear digitization strategy associated with the cultural target picture, whereas none of the late adopters create a clear target culture. Designating change leaders and creating new roles such as the Chief Digital Officer (CDO) and digital business units is a clear feature of Front Runners. Only then will they be able to integrate the digital culture change. Late adopters do not have a digital business unit and only 20 percent adjust their processes. In terms of structure and organization design, companies with an agile form of organization have an even more pronounced digital culture.
Front Runners manage cultural change more successfully because they pay more attention to employees than to technology. Managers engage their employees, reduce fears and overcome silo thinking. The management promotes new ideas and gives confidence and creates leeway. This includes the toleration of errors, the emphasis on the value of knowledge and learning and, in general, higher emphasis on the needs of employees. Constituent element of such a “culture of trust” is the early involvement of the employees in the transformation and the willingness to provide free space for individual and self-driven initiatives.
The transformation succeeds only in iterative sprints
How can companies transform themselves into a digital enterprise? Our study results and experience show that a transformation with an iterative change management approach is a crucial success factor. Linear procedures such as the waterfall model cannot be applied anymore. Change becomes more agile, short sprints and observations alternate, and learning becomes the main focus. In short, as companies become agile, change management needs to become agile as well. With a systematic “Culture Transformation Journey” new ways of working, cooperation and thinking models are established.
Design and architect
The journey starts with decision-making by top management and the firm resolution to make a start: GET STARTED. The commitment is underlined by the appointment of one or two responsible managers. They are the project sponsors. Ideally, they are managers who are familiar with the principles of digital culture. At the very beginning, we assess the maturity of the digital culture with an online based tool (please find the link below). After the assessment, we discuss the digitization strategy with the management in alignment with their cultural vision. It goes without saying that the project should not be treated as a secretive operation, but rather communicated to the organization. Most of the respondents also considered the lack of communication to and with the employees to be the biggest obstacle to digital culture change.
Build and shape
In the next phase, cross-functional teams of managers and employees define and refine the target culture and the desired behaviors. The company determines the prioritization, with its strategic direction. It is not necessary to address all cultural dimensions but customer centricity should always be considered. Of course, some things will already be moving in the right direction. The teams identify best practice examples in the company’s ecosystem, among the customers, suppliers and, where possible, among the competitors.
Test and learn
The question of whether and how the digital culture can be brought to life is now tested in a small group. This can be called prototyping. How will the culture of “good mistakes,” namely those which can be learned from, be received by the employees? How do we achieve interdepartmental collaboration? How does the collaboration change the quality of our work? What cultural levers prove to be particularly effective? Where are the obstacles, and how can they be overcome? What experience do we gain if we switch our mode from endurance running to quick sprints?
At the strategic level, the vision for digitization is translated into specific technologies and processes. These are likewise tested in protected zones to gather experience and keep the risks within acceptable limits. This stage is the longest on the journey. As people don’t change their behavior overnight, it takes a certain amount of time to determine whether the attitudes are being adopted by the employees. The process can take two, three months, sometimes up to half a year. It should never last so long that the momentum starts to flag, however.
Adopt and share
In the last stage of our “journey of culture transformation,” we measure the success of different initiatives and determine which initiative will be implemented. During the implementation of the digital culture, the project sponsors provide valuable support with their process know-how and the acceptance of their digital leadership. Their enthusiasm, their zeal and their example strengthens the employees’ willingness to participate in the reconstruction of the culture and therefore helps make the digital transformation a success.