The role of culture in digital transformation

Key takeaways:

  • Risk awareness and opportunity spotting are essential factors for digital transformation, which are only possible with a healthy company culture.
  • Culture comes down to responding to feedback, adaptability, transparency, and resilience.

Culture is make or break when it comes to successful digital transformation. Yet, most organisations focus on planning, estimating, and hitting deadlines over focusing on the culture that is necessary to deliver the work.

In this blog, we’ll unpack the role of culture in digital transformation through three topics:

  • What do we mean by culture and digital transformation?
  • How culture and digital transformation are intrinsically linked
  • How can you build a culture that is conducive to digital transformation?

You cannot disrupt an industry without listening to customers.

You cannot disrupt a company without listening to the employees.

What do we mean by culture?

Culture is the collective ideas and beliefs of a community or workplace. In business, it’s the approach to operations, decision-making, and individuals’ attitudes to that approach.

Culture is not your company perks or a hybrid work environment.

And what about digital transformation?

Transformation; the act or process of changing completely.

Digital transformation refers to organisations creating significant and necessary change with technology.

Some organisations wrongly see digital transformation as refreshing technology or digitising existing processes and procedures, but it’s more than JIRA tickets, standups, and “sticking to processes” as we’ll continue to explore.

Do all organisations need to undergo a digital transformation?

The short answer is no; not all organisations need to embark on a big digital transformation journey.

Digital transformation is needed when your technology is stifling innovation, causing you to lose market share, or leading to employees moving to competitors.

Here are some of the most common signs that we see in organisations in need of change:

  • Employees are unable to do their jobs properly
  • Team members are leaving the business 
  • Customers are becoming frustrated and unhappy 
  • Technology is hindering the ability to respond and compete 
  • Innovation is blocked by capacity or operational constraints

If your company wants to overcome its obstacles and reach its goals, you need to understand how to get there while identifying and navigating risks. These risks might be change-resistant staff or operations blocked by the daunting complexity of entangled legacy systems.

Adding a layer to the challenge, digital transformation is like changing the engine of a jet while flying the plane. You have to keep your business operating while it’s undergoing change.

Examples of businesses that get consumed by it and who refuse to do it

The case of Blackberry

In 2009, Blackberry held 20% of the smartphone market share and its iconic qwerty devices represented a status symbol for many. By 2016, their market share had dropped to 0.1%. What happened?  

Firstly, the business failed to acknowledge the bright future of touch screens. Secondly, Blackberry was detrimentally loyal to its un-user-friendly operating system. When Apple and Samsung stormed the market with slick touch screens and a wide range of applications to choose from, Blackberry failed to keep its customers. 

Other big names that suffered or went under by refusing to change include Polaroid, Blockbuster, Kodak, and the bookstore chain Borders.  

These brands failed because people within the business couldn’t see they had become their own undoing. Their culture created a barrier to their own digital transformation.

The case of Dunfermline Building Society

In 2009, Scotland’s then biggest customer-owned lender, Dunfermline Building Society, was forced to write off £9.5m of its £11m profits, partly leading to its demise. What happened? 

In an attempt to capitalise on digitalisation, the bank spent over £30m on setting up an IT subsidiary to deliver mortgage software that could then be sold to other banks. Partnering with a software company, the plan was to develop the product on their pre-established technology. However, the base product had never been tested in the UK market and there were several functionality gaps that needed to be addressed alongside the implementation.  

The costly and risk-filled attempt at transformation ended up eating away profits and contributing to the bank’s collapse. The project’s failure can be attributed to ignoring glaring risks, getting distracted from the core business, and relying on an unproven product.

The Cargo Cult provides another great example of acting with good intentions but failing to understand the context or root cause of the situation.

How culture enables digital transformation

So, let’s get back to the topic of culture, and why culture change is essential for digital transformation.  

Internal and external feedback is key for you to avoid context blindness. Just as you cannot disrupt an industry without listening to customers; you cannot disrupt a company without listening to its staff. 

For instance, implementing automation can be great for improving efficiency, but you can’t start with the solution – you must start with the problem. Consider the needs of your team and operations and create a solution that fits those requirements. 

Similarly, upgrading to a new tech stack can free up capacity for innovation, but you shouldn’t prescribe a shiny set of tools without considering the whole ecosystem. 

At the start, and heart, of all of these journeys, is culture. If employees aren’t empowered or feel safe to raise issues and shortcomings, you will not see transformation-critical risks and opportunities.

Culture also has a significant impact on the viability of digital transformation. Any transformation can be expensive, but staff who are welcoming of change will make your digital transformation easier, faster, and more cost-effective.

Budweiser; The Energy Company

Budweiser is a great example of a company that identified an “impossible” opportunity, accepted and managed the risks, and made change happen successfully. How did they do this?

Budweiser is a beer company. But in 2022 it became an energy company. Their green strategy was to move their business to clean energy and sustainable manufacturing processes. 

After they reached their 2017-2025 green manufacturing targets faster than expected, they turned to other parts of the journey. One area they couldn’t influence as easily was the bars that sell their beer. 

They understood that after the recent economic downturn, they couldn’t demand bars to switch to sustainable energy which is usually more expensive. However, Budweiser could buy renewable energy in mass quantities and pass the savings into the bars.

We’ll hop, skip, and jump over the finer details of their transformation, but Budweiser now supplies 2000 (and counting) pubs and bars in Brazil and Ireland with clean electric energy, making them an energy supplier.

What does a culture conducive to digital transformation look like?

Culture and digital transformation are intrinsically linked, but a good culture is not guaranteed. Here are three things you can do to make your team more welcoming to change and ultimately make your digital transformation easier, faster and more cost-effective:

Listen to your employees

Create positive feedback loops through all operations in your company to support your awareness and response to risks and opportunities.

Encourage directness with decision-making

To steal a leaf from Kim Scott’s popular book, Radical Candor, good culture for digital transformation requires radical optimisation. The ability to clearly and directly discuss missed opportunities or new rising risks and act accordingly. 

Your company should be happy and able to make decisions without falling back on political cliches and office jargon.

Invest in resilience

Resilient teams can handle the significant and sudden change that comes as you redirect towards a better solution, even if doing so is emotionally difficult.

In summary; a good culture will save your digital transformation from itself.

You don’t need to change; your survival is not mandatory.

W.E. Deming

A company does not need to change. It does not need to go through a digital transformation. Why? Because a company’s survival is rarely mandatory to the rest of the world.  

A good company culture will steer you towards the best solution that was not apparent at the start of the project. A bad company culture will stick to the prescribed plan and likely drive your transformation into the ground. Invest in culture, and you’ll see a return in the viability and success of your digital transformation.

At Intechnica, we are experts when it comes to digital transformation. Our services are designed to help businesses unlock innovation and get to market faster by removing legacy technology and by developing a healthy technology culture. To find out more, get in touch with our team of experts.

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