Digital Transformation – The Cultural shift is paramount

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Digital Transformation – The Cultural shift is paramount

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Last month we met with CIO’s and EA’s to discuss the most important elements of succeeding with Digital Transformation. The first thing we discussed was the definition of a ‘digital transformation’ – to discuss and facilitate the discussion of how to differentiate it from ‘digitalization’. In essence, the following focuses on the transformation, not to mix up the two terms.

As ‘digital transformation’ at the heart it is about data and enabling a new business model, it is also about establishing a new culture. If ‘digital’ loosely means data, and ‘transformation’ means changing shape; then ‘digital transformation’ is about transforming the shape of the business model to use data smarter, i.e. it is about moving the organisation to a new paradigm where existing processes are ‘split’ rather than fitted and optimized to become data-driven.

This also brings us to the main take-away. We can enable a digital transformation faster with proper technology and roadmaps, but at the heart, it is about people and changing culture. To succeed with the transformation, time and space should be challenged, which will impact the culture in different ways  – and it will challenge managers in todays business operations.

This brought us to the second observation, if people are not freed-up to work with the new shapes, they typically drown in day-to-day activities focusing more on lean and continuous improvement. This is why many organisations decide to move transforming development to new sites or do acquisitions, as it seems too hard to change the prevalent culture.  

It brings to the surface the dialog of Schein versus Porter – is it the culture or the strategy that drives the change – What drives what? They main take-away seems to be that the culture shift is paramount to the change, if not, the transformation effort may dilute. If we want to change the culture, we need to consider how this should be ignited, proven and collectively accepted. Hence, the organization may have to challenge itself to step outside the comfort zone and challenge the type of earnings and offerings. A research by Warren Ritchie indicates, that innovation does not take-off by size of the company. On the contrary, most innovation comes from either smaller or very large corporations as they both manage the working culture with slack and innovation focus. But be aware, most large corporations may tell you they have an innovation culture, but they may mix-up the words of a culture of continuous improvement versus that of transforming the paradigm!

To example this, e.g. Spotify and other music streaming services decided not to invent a larger CD; and likewise, Philips who introduced the CD did get royalties from the former music cassette – they both changed the way services could be delivered – challenging the media, space and time. Is it likely that the organisation and culture of Spotify is different from that of the labs building hardware devices in the 90’s? – absolutely.

In a nutshell, different shapes of the business model, offering different services by use of new technology, time and space is the driver of the digital transformation. This will not circumvent continuous improvement of the existing processes of today’s operations, but it is not the same approach and success factors, see post. To succeed with a larger change, the shift of culture is paramount, needs to be addressed, but proper technology and approach may accelerate the pace in which your organisation can succeed. 

We can help you to plan the change, and may with our digital transformation suite accelerate the pace.

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