A mid-sized Atlanta-based company CEO recently asked me to help his organization with Digital Transformation. He said, “We have a good team, but we may struggle to adapt to newer technologies.” I told him that he was not alone. More than 70 percent of the organizations that invest their money in digital transformation do not see full success due to their employee’s reluctance to let go of existing processes that they have been using for many years. This gap between adapting new technologies by organizations and employee’s reluctance can be easily plugged in by focusing and investing in changing the organization’s culture during the digital transformation.
The spending on digital transformation reached a staggering USD 1.85 trillion in 2022, estimated to reach USD 3.4 trillion by 2026. However, organizations focusing solely on the technology layer of digital transformation are getting it wrong. In 2018 alone, around USD 900 billion out of the USD 1.3 trillion spent on digital transformation was wasted due to unsuccessful efforts.
Digital transformation is not as much about technology as it is about creating the right culture and investing in people. Without assessing and understanding the impact on people or their experiences with the organization, the benefits of the technology can result in wasted or unused investments.
How culture is at the heart of transformation
At its core, digital transformation is about being flexible and agile so that an organization can adapt to changing markets. Leadership, employee interactions, and operational processes are the base of organizational culture. Digital Transformation cannot thrive in organizations with an inflexible culture fossilized in age-old legacy processes. Organizations on the digital transformation journey must first stimulate transformation within their culture, processes, and philosophy. They must adopt a digital-first culture emphasizing innovation, agility, flexibility, and data-driven decision-making.
FedEx is a great case study in successful digital transformation. The company focused on modern frameworks, automation, and reducing decision-making time to improve employee productivity and customer experience. This was enabled through extensive collaboration, exemplary leadership, and programs like Quality Driven Management (QDM), which promoted a learning-based, customer-centric, quality-oriented culture. Cultural transformation helped FedEx employees to embrace change, thus resulting in successful outcomes.
A cultural transformation involves changing mindsets to embrace digital technologies and creating an environment where employees are open to learning new skills and working methods. Investing in learning and development is also essential. Providing employees with the skills and knowledge to succeed in the digital era helps to create a culture that is adaptable and responsive to change.
The apparel company, VF Corporation, is an excellent example of how creating a high-performance culture boosts digital transformation. The company trained its senior and mid-level managers to enable them to assess the business for value contribution, thus driving digital transformation within the organization.
Leadership plays a critical role in shaping an organization’s culture. Leaders must set the tone for change and lead by example. Effective communication is also essential since sending the right message expresses the need for change, the benefits of digital transformation, and the employees’ role in making it happen.
IKEA is an excellent example of leadership and culture being central to digital transformation. IKEA focused on developing tech-oriented leadership with a new Chief Digital Officer who brought a digital shift in their culture. The shift led to the digitization of both internal and external operations while simplifying their IT architecture and bringing in a greater focus on customer touchpoints.
While technology is undoubtedly crucial for digital transformation, it is not the most critical factor. Culture is the foundation needed for successful digital transformation. Organizations that recognize this fact and invest in creating a culture that is open to collaboration and innovation will be the ones to thrive in the digital age.
