Why Corporate Culture Matters for Digital Transformation
An interesting study came out this summer from the teams at the MIT Sloan Management Review and Deloitte Digital. It looked at what led to the success or failure of digital transformations at large enterprises.
These were the high-level results:
87 percent of respondents believe digital technologies will disrupt their industries.Only 44 percent believe their organization was prepared to handle those disruptions.
Researchers then took a look at the more digitally mature companies and what they are doing to make digital transformations successful. This is their first observation and the one we want to take a longer look at:
“Creating an effective digital culture is an intentional effort: Digitally maturing companies are constantly cultivating their cultures. Nearly 80% of respondents from digitally maturing companies say their companies are actively engaged in efforts to bolster risk taking, agility, and collaboration. Only 23% of companies at the early stages of digital development are doing so.”
It’s an interesting observation, and one that I’d argue is almost right. Yes, a digital transformation relies on a digital culture for success, but that’s not enough. It’s bigger. Successful digital transformation relies on a strong corporate culture.
What makes a strong corporate culture?
Digital transformation works only if you can get buy in from your employees. Buy-in comes in two parts. You need your employees to understand why the transformation is necessary at the beginning of the process. Then you need them to change behaviors and actually adopt these new technologies and new methods once changes are made.
You only get either of those if you’ve taken the time necessary to build a solid corporate culture.
Culture is not ping pong tables, nap pods, and free lunch every day. Those things can contribute to happier employees, and happier employees are more likely to become invested in a company, but their mere existence doesn’t create a great corporate culture. If they did, you wouldn’t see headlines asking why Google employees are so disloyal, or why the company is suffering a brain drain.
Perks like these are great benefits, but the problem with great benefits is that they are something companies can compete on. You have free lunch? Well we also do breakfast. You pay for 100 percent of employees’ healthcare? We also cover their entire family.
Culture is about intangibles. It’s built on things that are unique to that company. It’s everyone in a company — top to bottom, and it starts at the top — sharing the same vision and values. Vision and values are soft terms, so what do we mean?
Shared vision: Vision has to be more than revenue numbers and product launches. Vision is emotional. It’s the business’ core. It’s why you do what you do at a very high level. It’s the thing at the core of the business that caused you to start the business or join the company. And it’s something that has to be shared. Your employees — top level executives all the way down to the part-time seasonal help — have to be on board with that vision. It has to be their vision too. Simon Sinek made the case for starting with why a few years ago, and while you may be tired of hearing about it at this point, he wasn’t wrong.
Shared values: If vision is the why a company does what it does, the values are how that vision is realized. Values shape the way people work, the way decisions are made, and the way a company is perceived by the market. I took a very slight shot at Google earlier, but the Big G actually does a good job of explaining it values in its “10 Things We Know to be True” document. This is how the business is run, and it includes items like “It’s best to do one thing really, really well” and “You can make money without doing evil” and “You can be serious without a suit”.
Why is culture so important?
Culture before execution!
Culture is critical because a great culture is an indicator that everyone in a company is on the same page. All employees understand the company mission. They approve and support the way the company operates and approaches decisions. When a company’s culture is strong, transformations — digital or otherwise — can happen because everyone is already bought in. Lower level employees trust the executives to make decisions that will best serve the interests of everyone. The executives know that they can push for something like a digital transformation because they have the people in place who will embrace the change.
A culture that isn’t aligned, where the executives are cocooned off from the employees below them, is going to struggle with any kind of transformation. There’s no why for the employees to buy into. There are no values being shared. So a new digital initiative is announced, and the executive team has high expectations. But for the employees who will be asked to modify how they work to accommodate these new measures, they have no motivation to do so because the end goals haven’t been communicated. They don’t see how what feels like one more corporately mandated initiative will benefit the company or benefit them. The transformation dies.
How do you build a strong corporate culture?
Top down monologue doesn’t work
Building a strong corporate culture relies on something we’ve been talking about this whole time: Communication.
Executives need to be talking to employees. And more than sharing just vision and values, share everything. Talk about company performance. Talk about expectations. Talk about what you want to try to make sure those expectations are met, and talk specifically. Talk about why you think that will work. Talk about other avenues explored and why this one was appealing.
Then, after you’re done talking, be ready to listen. Encourage other ideas from employees. Encourage them to ask questions. Encourage them to share concerns. Communication is about dialogue.
And this idea of open communication — talking and listening — isn’t just feel-good chatter. The team at MIT’s Human Dynamics Laboratory did a research a few years ago into the dynamics that make an effective, high-performing team. Their study was into smaller teams inside an organization, but the findings still hold since a successful business is really just one large team. This was the key takeaway that they identified in their study: “Everyone on the team talks and listens in roughly equal measure, keeping contributions short and sweet.”
Digital culture is great. Corporate culture is better.
The teams at MIT and Deloitte that conducted the initial study we mentioned aren’t wrong in their conclusion. Intentionally building a digital culture is critical for a successful digital transformation. But building a digital culture before you build up the corporate culture is setting your transformation up for failure. All the encouragement to shift to digital initiatives or creating a digital focus will be for naught if there’s not a strong corporate culture running underneath those transformations. So before you transform, start sharing your vision and values.
Zach Piester is the Co-founder, and Partner of Intrepid Ventures. Intrepid invests in, designs, builds and scales blockchain powered companies.
Zach focuses on helping Fortune 500 companies leverage the innovation of startup disruptors in blockchain, fintech, distributed ledger, & emerging technologies. Bringing together strategic, creative, & technical skills to help industry leaders understand how innovation, digital capabilities, & organizational design can help transform and sustain their positions at the forefront of their industries.
I’m always interested in meeting leaders who are creating transformational products and solutions, so please feel free to contact me by email at zach at intrepid dot ventures.