Most digital transformations fail—have you answered the critical culture question?
Reading time: 9 minutes
“We need to be more Agile”, “We need more digital innovation to survive”, “We need to deliver more engaging and satisfying experiences to our customers”, “We need a digital strategy to make an impact in the market”...
The list of phrases that spark digital transformation initiatives can go on and on. But what does it really take to deliver on these pitch-friendly statements? It’s easy to forget about the foundational building blocks that enable the promises of the buzzwords. A November 2019 Gartner study on digital business consulting and implementation services found “54% of leaders say their organization doesn’t have a clear vision for transformation, and only 11% have scaled digital business transformation”.
To complicate things further, “digital transformation” is an umbrella term made up of many individual transformation streams that each require dedicated executions, ranging from digital operations, to digital customer experiences, to digital business models. It’s important that organizations be specific about their digital transformation needs and not treat the transformation as just the sum of its parts.
Regardless of the stream(s) your organization pursues or considers pursuing, at the heart of every successful digital transformation is the people. Your people live, breathe, and champion the transformation efforts, while they also resist, argue, and vent about it. They will determine whether the change efforts succeed or sputter out after a few years. They will need to make the necessary mindset shifts to operate in the future state.
A culture shift must happen.
Culture often gets overlooked (or treated as a secondary or tertiary initiative) by many organizations, buried under the shinier prospects of new digital capabilities or new processes and business models. But it’s a foundational piece to transformation. Behnam Tabrizi et al.’s recent Harvard Business Review article “Digital Transformation is Not About Technology” outlines five key lessons from the authors’ digital transformation experiences, almost all of them centered around people.
But don't worry if you're not a change management expert! What follows are nine key elements you need to successfully enable a new (or restart an existing) digital transformation journey for your organization—assuming the “why?” and “why now?” has already been clearly articulated, and communicated to those involved. If you’re missing this crucial first step, work with your leaders to answer these key questions first.
Management transformation comes before digital transformation
What would it be like to eat at a restaurant where the head chef didn’t believe in the menu or didn’t understand the new cooking techniques needed after the menu was updated?
Digital transformations ultimately live or die with management, regardless of whether the transformation journey begins top-down or bottom-up. If you’ve worked on an enterprise initiative before, you also know it’s doomed to fail without leadership engagement. Every leader and manager involved in your organization’s transformation journey must understand the need, urgency, and desired outcomes of the digital transformation. They need certain mindsets and methodologies to operate in the future state and to support their people through the long change journey. And because some of this will be new and foreign, they need ongoing coaching to support their personal change journey.
All of this needs to start before the digital transformation goes into full swing, or you’ll end up trying to convince both your kitchen staff and your diners that they should stay in the restaurant while you’re trying to put out three separate grease fires.
Everyone has skin in the game
One of the conditions of successful change initiatives is a critical mass of support. This creates a sustainable change environment where initiatives are championed, propagated, and supported within the organization. It also requires an ever-decreasing reliance on leadership enforcement or external influence (such as an organizational change vendor) to maintain transformation momentum.
To build a sense of ownership for your digital transformation, plan for ways to positively reinforce the following behaviours at all levels in your organization:
- Support of entrepreneurial mindsets in others (including autonomy, bias towards action, pragmatic optimism, and mental flexibility)
- Sharing of change effort responsibilities
- Trust and collaboration (not command and control)
Share the journey
Be prepared to share your digital transformation journey with everyone in the organization, even those who may not yet be involved. This includes recognizing both the wins and the failures. A common myth is that sharing failures will lead to negative momentum, but this only holds true when failures aren’t recognized as valuable learning opportunities.
Sharing the journey builds the necessary mindset shifts by reframing failures as learning opportunities. It also brings the added benefit of organically building interest in your digital transformation stories, demonstrating openness and transparency. If you’re a large or more complex enterprise, consider a communications plan to coordinate content authorship, media channels, and communication cadence. From our experience, monthly to quarterly cadences are most effective.
Define shared core values and break down silos
Successful digital transformations usually start in a localised setting of an organization, then scale and evolve to wide-reaching efforts that touch all the other parts of the organization. But this isn’t possible without cross-functional collaboration being the working norm, a set of shared core values all employees understand, and embracing the practice of holding each other accountable.
Start your digital transformation planning by feeding two birds with one seed — put together a cross-functional team, representative of the organization’s people, and task them with defining the core values to be communicated at the start of the digital transformation journey.
Integrate core competencies
Your organization grew on your core assets, processes, skill sets, and the unique way all this was combined. They made your organization hard to copy, or provided an advantage over your competitors.
Over time, organizations can lose sight of their core competencies during the flurry of continual improvement activities of the digital transformation. This often manifests in several ways:
- Older technologies are eschewed in favour of the new ones being adopted
- Previous processes and methodologies are looked down on
- People using previous methods are implicitly made to feel “less than” until they adopt the new ways of working (hearing someone exclaim “Why are you still using Waterfall?" in a condescending tone during an Agile transformation is one common example)
Avoid these potential pitfalls by looking for ways to build around existing competencies, including:
- Assessing if your core processes can be adapted to work in the future state before building new ones
- Reorganizing and upskilling employees based on their current strengths
- Providing coaching support to help employees resolve the old with the new
- Collaborating with existing channel partners in the transformation journey
Re-define the “How”
“Love the problem, not the solution.”
“Measure what matters.”
“Make data-driven decisions.”
Does any of this sound familiar? These quotes represent incredibly popular frameworks like Lean Startup and Objectives and Key Results that brought meaningful success to early practitioners. They’ve helped organizations adapt to the increasing pace of business in the digital era because outline the mindset shifts everyone involved in the digital transformation need to embrace in order to thrive in the future state. They’re difficult but incredibly rewarding transitions for any individual to make, because they compel us to change the way we’ve been taught to approach “work” over the last 50 years or so.
One of the most effective ways to encourage your organization to redefine the “how” is to ask your thought leaders to practice the mindset shifts in their day-to-day, in ways that are obvious to others. For example: If you want your teams to shift to outcome-driven product development mindsets, consider introducing the review and re-evaluation of previous desired outcomes as one of the first things you discuss during recurring product strategy meetings. Or take the brave step of using outcome-driven roadmaps rather than output-driven project plans (when appropriate).
Support others in the organization who want to embrace these new mindsets and methodologies to build internal champions. Provide everyone the necessary supporting tools and processes to lower the friction of adoption. If you want to drive increased product stickiness among your customers, as an example, but you’re only measuring your development teams on their average throughput and code coverage, then you’re signalling to your teams that your product's desired outcomes are of little importance.
Culture: What leaders reward, celebrate, and punish
Workplace culture is formed and molded by people, and we are complex, messy beings. One of the core influencers of culture is what an organization’s leaders choose to reward, celebrate, and punish. Consider this scenario: You’re a recent hire, still navigating how your new organization works, but you’ve taken the courageous initiative to experiment with optimizing an existing business process. Your direct manager finds out and scolds you for attempting this. They tell you all ideas need to go through upper management first. Would you attempt this type of experimentation again?
If the upper management team consistently signals that this type of initiative is undesirable, then a workplace culture develops where only they can define business processes. And before you know it, this scenario can easily snowball into a culture of deferred responsibility.
Leaders need to be mindful of what they choose to reward, celebrate, and punish, especially through the turbulent periods of a digital transformation journey. The mindset shifts mentioned need to be consistently reinforced in a positive way if they’re expected to stick. This may require new shared core values that clearly articulate what leaders will find desirable.
While planning your digital transformation journey, consider dedicating time to:
- An honest look at your existing workplace culture to identify any parts that need to change.
- Practicing mindful leadership techniques with your leaders.
- Providing your leaders with coaches to reinforce desired behaviours.
Teams lead, leaders learn
One of the most impactful mindset shifts driven by the Lean Startup framework is taking an experimental approach to testing every major assumption of your business, rooted in the scientific method. It’s allowed businesses to test their riskiest assumptions faster than before, enabling better market and business agility. It’s so powerful that this concept is often imbued into digital transformation efforts without it being called out explicitly, especially if the transformation includes adopting Agile methodologies for delivery.
If your digital transformation efforts include adopting the Lean Startup framework, then your leaders also need help making the mindset shift to “teams lead, leaders learn”. If you’re already in the middle of an Agile transformation, you’re likely familiar with “servant leadership” — a leadership philosophy that emphasizes enabling, serving, and providing guidance to others. Sharing the power and control with those executing the work fosters more ownership and engagement (acting as a positive feedback loop to everyone having skin in the game). To help your leaders adopt this mindset, teach them the practice of always asking two key questions whenever their teams complete an experiment or project:
- “What did you learn from it?”
- “How can I support you next?”
Create psychological safety
This last foundational element is often the toughest culture and mindset shift to make because it requires time to build and continual positive reinforcement by everyone in the organization. It is also the most rewarding one because it allows your organization to use the creativity and thought power of every individual, regardless of their role or position. It allows for stronger, healthier relationships between colleagues and allows new teams to get through their storming phase faster (read Tuckman's team-development Forming Storming Norming Performing model if you're unfamiliar with storming).
You’ll know your organization has achieved this culture and mindset shift when you are able to consistently recognize three key behaviours exhibited by everyone:
- Individuals feel comfortable speaking up
- There’s a culture of learning, where individuals feel safe trying new things and can admit when they don’t know something
- Employees express to their managers that they feel supported by their team
To build psychological safety, brainstorm action items you can take to address the following four points. Consider experimenting with your immediate team first, then adjusting your approach based on learnings with your team, before spreading this culture wave to other areas of the organization. These action items can include:
- Increase interpersonal time to build trust among colleagues, which helps individuals be more willing to extend the benefit of the doubt to others.
- Increase vulnerability so that individuals feel comfortable sharing their mistakes with others and the fear of being judged is broken down.
- Clearly articulate and practice team norms, to instill shared core values and behaviours that ultimately lead to increased trust and cohesion on the team.
- Increase role clarity for every function so that others understand why you do what you do, and understand the intent behind your actions.
Slow and steady
Successful digital transformations at enterprise organizations take at least 8-10 years. So putting in some effort to plan the journey ahead is necessary to increase the chances of success. If you’re partnered with a vendor to accelerate your journey, make sure they have these foundational elements at the core of their efforts. Without a strong foundation of the necessary culture and mindset shifts, the transformation cannot become sustainable, especially when change fatigue becomes a common complaint after the first few years.
A truly successful digital transformation becomes self-perpetuating, not something your people are grumbling about in the hallways. It’s all about your people.