Friday, August 25, 2017

Culture as a Competitive Advantage in Digital Transformation

The human work of solving problems, facing challenges and overcoming obstacles tends to share a common goal: creating stable, secure and predictable environments. The tendency for most humans is that once we solve a challenge, we want to be done with it.  That propensity, however, does not fit with today’s reality of perpetual change. 

In the digital business world, organizations have no choice but to operate in an unclear, uncertain and continuously shifting environment that requires a new mindset and approach to formulating business strategies.  Digital winners recognize that change is part of the game, and that they need to develop ways to exploit continuous ambiguity.   In fact, in our surveys of high-tech professionals, when we asked how long they thought digital transformation initiatives would last, about one-third of the surveyed technology professionals answered “forever” – and as we all know, forever is a long, long time.

In the Fourth Industrial Revolution, change is not something to be solved; instead, change is the energy that propels organizations into perpetual motion – creating new innovations, designing new business models, identifying new threats and opportunities.  Business leaders must continuously recognize new trends, competitive forces and markets, and then retool, reprioritize, re-educate, culturally align and retrain employees to capture new opportunities profitably. They must constantly fight “normalcy bias,” which is the desire to keep things the same.  They must foster an environment that embraces change and recognizes competitive opportunities reside in every instance of change.

Three Cultures that Block Change

Our executive interviews revealed the extent to which company cultures can block or restrict change efforts.  One healthcare executive listed his organization's culture as his biggest challenge, ahead of resistance to re-engineering workflows and outdated technologies.  Additionally, about 20% of the surveyed technology professionals revealed cultural issues were the biggest challenges they’ve encountered with digital transformation.

In our research, we’ve identified three different cultural types that can impact an organization’s ability to engage in digital transformation:

Leadership Culture

A culture of change at the leadership level is one that embraces the use of digital technologies to compete, and defines the high-level digital transformation doctrines and strategies from the very top of the organization.  If business leaders don’t convey a full understanding of how digital technologies are impacting their industries, markets and customers, and then acting upon it, they are a detriment to their organization’s future. Executive interviews for this report revealed the following insights:

  • Leaders struggle with accepting change - adjusting their mindset, and appreciating the true significance of digital transformation on their business and future.
  • Leaders often require a major failure event to wake them up to the need for decisive action and digital transformation.
  • Leaders must realize that different segments within their workforce view digital technologies in different ways, and they must be managed, educated and trained differently as a result.

Institutional Culture

A company may have insightful leaders, but if the organization does not follow, even the best leadership efforts will be ineffectual.  Here is a few insights from executives that we surveyed:
  • Digital transformation means it’s not only the IT infrastructure that must change, but all segments of the business.
  • Digital transformation and organizational agility must be embedded deep in the culture of an organization.
  • Without continuous education and engagement the workforce will resist change. 

Customer Culture

It’s critical for businesses to understand the culture, practices and fast changing behaviors of their customers and align with them quickly enough to matter.  Among the surveyed technology professionals, 65% reported the prime motivation to engage in digital transformation was fast-changing consumer behaviors.  Further, the executives we interviewed repeatedly credited customer requirements and demands as a top motivation for digital transformation:
  • Customers’ are adopting digital technologies and changing their online behaviors faster than many companies can change their business processes and models to compete.
  • Customer demands are interrupting organizational priorities, budgets, strategies, investments and plans.
  • Digital transformation is unevenly distributed and some customer and industry segments are far ahead of others, which creates opportunities and competitive advantages for fast movers.

Our research revealed a need to purposefully monitor and develop our digital mindsets. Accept that digital technologies and a connected world are here to stay, and that the path to business success resides in and through them. Understand digital technologies and their capabilities, and rethink every aspect of our business with a digital mindset.  Recognize we don't control our digital customers and we cannot dictate their behaviors.  Our role is to observe, support and align with them faster than our competition.

Our research revealed a need to purposefully monitor and develop our digital mindsets. Accept that digital technologies and a connected world are here to stay, and that the path to business success resides in and through them. Understand digital technologies and their capabilities, and rethink every aspect of our business with a digital mindset.  Recognize we don't control our digital customers and we cannot dictate their behaviors.  Our role is to observe, support and align with them faster than our competition.

Our organization's culture plays a big role in our ability to compete in the digital age.  Our leadership, institutional and customer cultures all have an impact.  It's important to purposely develop a digital culture built to support the continuous and rapid changes that comes with the Fourth Industrial Revolution.

If you find these articles valuable, I am available to provide in-house workshops and analyst briefings.  Visit my website at the Center for Digital Intelligence.

Read more from the Center for Digital Intelligence here:

  • Digital Technologies and the Compression of both Time and Distance
  • Patterns, Platforms and Automation
  • Making the Hard Decisions in Digital Transformation
  • The Center for Digital Intelligence Interview Series: Hitachi's Rob Tiffany on Industrial IoT Platforms
  • Digital Transformation and the New Rules for Start-Ups
  • Digital Transformation and Leadership Development
  • Digital Transformation and Competitive Decision-Making
  • Combinatorial Nature of Digital Technologies and Legos
  • Digital Transformation from 40,000 feet
  • Winning in Chaos - Digital Leaders
  • 13 Recommended Actions for Digital Transformation in Retail
  • Mistakes in Retail Digital Transformation
  • Winning Strategies for the Fourth Industrial Revolution
  • Digital Transformation - Mindset Differences
  • Analyzing Retail Through Digital Lenses
  • Digital Thinking and Beyond!
  • Measuring the Pace of Change in the Fourth Industrial Revolution
  • How Digital Thinking Separates Retail Leaders from Laggards
  • To Bot, or Not to Bot
  • Oils, Bots, AI and Clogged Arteries
  • Artificial Intelligence Out of Doors in the Kingdom of Robots
  • How Digital Leaders are Different
  • The Three Tsunamis of Digital Transformation - Be Prepared!
  • Bots, AI and the Next 40 Months
  • You Only Have 40 Months to Digitally Transform
  • Digital Technologies and the Greater Good
  • Video Report: 40 Months of Hyper-Digital Transformation
  • Report: 40 Months of Hyper-Digital Transformation
  • Virtual Moves to Real in with Sensors and Digital Transformation
  • Technology Must Disappear in 2017
  • Merging Humans with AI and Machine Learning Systems
  • In Defense of the Human Experience in a Digital World
  • Profits that Kill in the Age of Digital Transformation
  • Competing in Future Time and Digital Transformation
  • Digital Hope and Redemption in the Digital Age
  • Digital Transformation and the Role of Faster
  • Digital Transformation and the Law of Thermodynamics
  • Jettison the Heavy Baggage and Digitally Transform
  • Digital Transformation - The Dark Side
  • Business is Not as Usual in Digital Transformation
  • 15 Rules for Winning in Digital Transformation
  • The End Goal of Digital Transformation
  • Digital Transformation and the Ignorance Penalty
  • Surviving the Three Ages of Digital Transformation
  • The Advantages of an Advantage in Digital Transformation
  • From Digital to Hyper-Transformation
  • Believers, Non-Believers and Digital Transformation
  • Forces Driving the Digital Transformation Era
  • Digital Transformation Requires Agility and Energy Measurement
  • A Doctrine for Digital Transformation is Required
  • Digital Transformation and Its Role in Mobility and Competition
  • Digital Transformation - A Revolution in Precision Through IoT, Analytics and Mobility
  • Competing in Digital Transformation and Mobility
  • Ambiguity and Digital Transformation
  • Digital Transformation and Mobility - Macro-Forces and Timing
  • Mobile and IoT Technologies are Inside the Curve of Human Time

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    Kevin Benedict
    President, Principal Analyst, Futurist, the Center for Digital Intelligence™
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    ***Full Disclosure: These are my personal opinions. No company is silly enough to claim them. I work with and have worked with many of the companies mentioned in my articles.