How to create the right culture for digital transformation success
To take full advantage of the new technology landscape, it’s vital that business leaders not only invest in new technology but work together with their employees to advance the digital transformation agenda. By putting just as much emphasis on change management as they do on understanding new technologies, companies will likely see much better returns on their investments.
Today’s technology landscape is more complex than ever before. New technologies, such as artificial intelligence (AI), machine learning (ML), automation and the Internet of Things (IoT) are providing businesses with opportunities they have never had. For example, within two years the global manufacturing industry could see a $519-$685 billion boost to revenue through the development and sale of smart, connected devices. As a result of this potential, investment in digital transformation is booming. IDC predicts that within the next three years spend on such technologies will exceed $2 trillion.
Businesses will only be able to realize the potential benefits of these technologies if they can adapt and embed them into their organizations, yet they’re currently struggling to do so. Our latest research shows that a minority of businesses feel they have the right digital (39%) and leadership (35%) expertise to make the most of digital transformation.
One of the biggest barriers to transformation is people. Business leaders are failing to a) get their employees actively involved in digital transformation objectives, and b) invest in their personal development. With such sizable investments being made in the technology itself, this is concerning; organizations want to spend millions on new technologies, then not be able to realize its full productivity and operational benefits.
There are however, some companies who are already on the road to success. We’ve dubbed them ‘digital masters’, as they are the firms most advanced along the digital transformation journey. Learning from these companies can help other firms accelerate their digital transformation journeys.
Create a culture of transformation
It is impossible for an organization to transform itself without first changing its culture. Firms should drive change by focusing on data-driven decision making, experimentation, and becoming customer-centric. For example, 60% of digital masters say their employees take ownership of the operational implementation of new ideas.
To foster this, firms should give continuous feedback and reward behaviors that comprise their unique digital culture. These rewards could be financial or non-financial, but should be focused on improving engagement in digital transformation. Microsoft is one example of an organization that has reinvented itself through a cultural shift – tripling its share price in the process. Led by CEO Satya Nadella, Microsoft has transformed itself from a ‘know-it-all’ to a ‘learn-it-all’ culture, embracing an ethos of growth that encourages continuous learning and experimentation.
The majority of organizations say that the lack of digital talent hinders their transformation efforts. With advancements in digital technology and analytics, firms need to evolve talent management processes and structures too. Nearly 70% of digital masters have assessed the skills they need, compared to just a quarter of beginners. For example, some companies like Unilever have overhauled their recruitment practices using gaming and AI. However, there’s still work to be done. A recent study found 74% of firms are only investing $500 per employee on learning and development. To get ahead, firms need to be proactive in understanding their current and future talent needs.
Break down silos between business and technology
When investing in technology, companies now need to see it as a program that affects all functions, rather than sitting solely with the IT department. Business and IT teams both play a critical role in transformation, therefore it is very important for the CIO, IT and business teams to be aligned with the program’s objectives. Almost two thirds (63%) of digital masters say that it’s easy to organize cross functional teams versus 19% of beginners. At Volvo, the company combines its consumer facing innovation role with that of internal digitization. As a result, Atif Rafiq, who has the joint CIO/ CDO role, argues the company is in a better position to leverage common capabilities.
Put customers first
Finally, and by no means last, customers should be at the heart of any digital transformation journey. The essence of any firm is to ensure its customers have a good experience, want to return for more services and provide good references. To succeed, this has to come through in digital transformation efforts too. Nearly two thirds of digital masters agree that customer centricity is at the heart of what they do, compared to just 11% of beginners. Yet, by improving customer services through digital, companies will be a long way towards realizing the potential benefits.
In the wake of digital transformation, organizations need to keep pace on building the necessary capabilities in operations, IT-business relationships, vision, engagement, and governance. A renewed focus on the key dimensions for success in digital transformation, such as operations and governance and in particular, talent and culture, will help organizations revitalize their digital transformations. If organizations do not re-focus, they are in danger of lagging behind, and miss out on the potential prize to be won.
Claudia Crummenerl is the Managing Director of People and Organization at Capgemini Invent