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Data In New Report Signals That Culture Is Critical To Digital Transformation
by Olivier Blanchard | March 7, 2017
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As you probably know already, our research team in the process of gathering insights on the impact of technology disruption and the state of digital transformation. We are doing this through a combination of surveys and research projects that focus on real people working in the business world. (If you haven’t taken our survey yet, here’s the full version, and here’s the short version. Please take a few minutes to share your thoughts and observations with us. It’s all multiple-choice, so it’s easy and fun.)

We aren’t the only organization doing research on this however, and we occasionally bump into data that plays really well into the sorts of questions we are hoping to answer. Today, I want to put aside technologies and business processes, and point you instead in the direction of corporate culture – or leadership culture, rather. One central theme in our reports and presentations and insights is that all the hottest new technologies in the world won’t drive successful digital transformation if both the vision and the will to execute aren’t there. If technology and best practices are the pieces of the puzzle, culture is the table that puzzle has to sit on. Without it, there is just no way for any of the pieces to work together or remain cohesive.

Our friends at Crowd Companies just shared some data that we think is especially relevant to this aspect of our digital transformation discussion, so we want to share it here, and add a few quick observations.

One of the questions asked in The Corporate Innovation Imperative (which you can download here), innovation professionals were asked what they see as the biggest innovation challenges at their companies. The top results all spoke to cultural rather than technical or technological hurdles. They are, in order:

  • Fostering an internal culture of experimentation and innovation
  • Competing internal agendas and goals
  • Fear of conflicting existing revenue streams and roles
  • Overcoming middle management resistance
  • Deferred commitment and delayed action

Translation:

Fostering an internal culture of experimentation and innovation

  • Currently, the company culture does not lend itself to experimentation and innovation.
  • … which means that the leadership does not believe in experimentation, let alone innovation.
  • … which means that no mechanism exists to foster or reward experimentation or innovation.
  • … which means that hiring decisions and promotions are divorced from experimentation and innovation.
  • … which means that, at best, the organization has difficulty adapting to change, and at worst, is actively hostile to it.
  • … which means that the organization lacks the mechanisms and skillsets necessary to evolve and adapt.
  • … which means that the organization lacks the ability to adapt and evolve with the market.

Competing internal agendas and goals

  • Currently, the company is plagued by internal politics and competing silos.
  • … which means that internal collaboration marred by unnecessary obstacles.
  • … which means that the organization is unable to maximize the potential of its own internal capabilities.
  • … which means that the organization is operationally rigid rather than agile.
  • … which means that the organization is also financially inefficient.
  • … which means that the organization lacks the ability to operate with the efficiency of its more agile competitors.

Fear of conflicting existing revenue streams and roles

  • Currently, business units are playing defense rather than offense.
  • … which means that fear rather than an objective focus on SWOT analysis, is driving business decisions.
  • … which means that outdated products and models are being artificially propped up long after they should have been replaced, in order to prevent their inevitable cannibalization by more modern and effective replacements.
  • … which means that data supporting the need to evolve is likely to be suppressed or dismissed.
  • … which means that internal incentives to prevent change are likely to outweigh incentives to evolve.

Overcoming middle management resistance

  • Currently, middle managers are more concerned with protecting what they have than building new opportunities.
  • … which means that resistance from the top has now also infected the middle layers of management.
  • … which in turn affects hiring and promotion decisions.
  • … which in turn stifles innovation at the departmental and business unit level.
  • … which in turn affects investment decisions in technologies and methodologies.
  • … which in turn impacts the focus on internal skill development.
  • … which in turn paralyzes the organization from the middle.

Deferred commitment and delayed action

  • The best way to ensure that change is held at bay is to adopt a mentality of “wait and see,” and “better safe than sorry.”
  • This ensures that resistance to change is seen as a temporary stay rather than the permanent wall of change aversion it really is.

… or the short version: Cultures of fear are keeping perfectly good companies from adapting to change that they need to embrace in order to survive the next decade.

Tomorrow, I will add another data set to this discussion to help bring this all together, but for now, I want you to let these insights sink in a little, and settle, and gel overnight.

A big part of what we do here is try to steer you in the right direction when it comes to new technologies, and why they matter, and how they are likely to be used, and how quickly they will scale into the mainstream… but none of it matters if you don’t build the right framework first: Absent the right kind of culture, the right kind of mindset, none of our advice will amount to much. In order to be successful in the next few years – or, for many organizations, just to survive them – emphasizing the development of an innovation-friendly culture will be the single most critical aspect of their (your) digital transformation program. Companies that cut this corner or try to move forward without putting this at the center of their business model will fail. Period. No ifs, ands, or buts about it. Culture is what makes or breaks companies. It doesn’t matter if you’re Apple, IBM, Netflix, Disney, Starbucks, or Uber. Your culture will ultimately be the engine that either propels you towards another decade of success, or a slow death spiral into obsolescence. Everyone here has been studying businesses and industries in great depth for a long time now, and this is one insight that we all agree on 100%. So today, take a step back from cloud computing, and AI, and VR, and mobile commerce, and robots, and spend some time analyzing your organization’s culture. It’s probably overdue anyway.

Cheers,

Olivier

PS: And don’t forget to participate in our survey if you haven’t already done so.

About the Author

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.