Zero One: Company Culture Derails Digital Transformation

Six years ago, Capgemini Consulting asked senior executives, managers and employees at companies across the globe what they considered to be the biggest hurdle to digital transformation. A whopping 55 percent cited company culture.

Given the criticality of digital transformation, you’d think companies would have been working toward overcoming this hurdle. But not much has changed since – in fact, it may have gotten worse. In this year’s Capgemini survey, the figure rose to 62 percent.

The problem can be traced to an internal conflict between the people setting digital transformation strategy and those charged with executing it. It’s a disconnect in the perception of reality that threatens to derail digital transformation.

“Our research shows that culture is either the number one inhibitor or catalyst to digital transformation and innovation,” says Brian Solis, digital analyst and author. “However, many executives believe their culture is already digital, but when you ask employees, they will disagree.”

Too many companies on digital transformation journeys get mired in the technology while giving company culture short shrift. They wrongly think company culture can be massaged simply by a CEO’s speech, a corporate mission statement, or banners hanging on the wall.

The battle cry today is that companies already have a customer-centric digitl culture, but it’s not true. From United Airlines debacle to cost-cutting contact centers, it’s clear employees aren’t always thinking about the customer nor are they incentivized to do so.

“The big moment for an organization is when they have embraced the fact that digital transformation isn’t a technical issue, but a cultural change,” Ian Rogers, chief digital officer at LVMH, told Capgemini.

Related: 2017 Salary Guide: 16 Hottest Digital Transformation Skills

Company culture in the digital age should not be dismissed because of its amorphous nature. Along with MIT, Capgemini defines digital culture using seven attributes: customer centricity, innovation, data-driven decision-making, collaboration, open culture, digital-first mindset, and agility and flexibility.

Companies must make a bunch of changes for each attribute. For instance, in order to drive innovation, a company should have policies for employees to set aside time from core work to innovate. Employees shouldn’t have to deal with bureaucracy to submit ideas, rather they should feel empowered to share their ideas with senior leadership and engage in the implementation of those ideas.

For some digital culture attributes, the gap is especially wide. On the collaboration front, Capgemini says, only 41 percent of employees believe their organization has a collaborative culture, while 85 percent of senior executives feel this is true.

The best companies, which Capgemini calls “front runners,” perform well on all seven digital culture attributes. Most companies, however, still need to evolve their culture. For them, Capgemini offers some advice, such as designing digital key performance indicators focused on behaviors rather than successes or failures, taking a systems-thinking approach to culture change, and deploying change agents.

Bottom line is that companies better be committed to it for the long haul. To put it mildly, culture change is hard – and many companies are failing at it right now.

“Digital technologies can bring significant new value, but organizations will only unlock that potential if they have the right digital culture ingrained and in place,” the Capgemini report concludes. “Currently, that is not happening. Employees are being sidelined and disenfranchised in the culture change journey, and the gap between leadership and employee perceptions is stark.”

Based in Silicon Valley, Tom Kaneshige writes the Zero One blog covering digital transformation, AI, marketing tech and the Internet of Things for line-of-business executives. He is eager to hear how digital culture is impacting your business. You can reach him at [email protected].