Ten years ago, Airbnb turned the lodging industry on its head with a digitally driven model to connect lodgers with homeowners looking to rent out space. Today, the company’s internal valuation is estimated at $36 billion. In a similar timeframe, Uber simultaneously became a noun and a verb, defining a new mode of transportation through an on-demand car-service app that uses software to connect drivers with people needing rides. Today the company is worth over $11 billion.
What do these companies have in common? Of course, they are built upon innovative use of software, but it goes far beyond that. While digital transformation is widely believed to be business transformation driven by software, the fact is, in today’s business environment just about everything is driven by software.
What truly drives a culture of digital transformation requires something less tangible than software, artificial intelligence or other innovative technologies. I believe it revolves around a shared, customer-centric mindset that permeates from its leadership, a flexible organization that embraces change and a willingness to take carefully controlled risk.
In fact, according to a McKinsey report, one-third of key decision makers state that culture is the most significant barrier to digital effectiveness followed by a lack of understanding of digital trends (25%). Further, a joint analysis from MIT Sloan and Deloitte reveals that companies failing to transform digitally generally fell short of their expectations because they “didn’t change mindsets and processes or build cultures that fostered change.”
Digital transformation must begin at the top.
Your organization must have leadership alignment in order to create the cultural shift required to truly become data-driven. This means leaders should not only approve digital transformation initiatives but become active participants in them. Understand that technology should not be deployed for technology’s sake, but as a vehicle to address a major business challenge. This can be accomplished by surrounding yourself with technology experts who acutely understand your business and know how to leverage IT tools to bring about successful business outcomes and happier customers.
Creating a culture of digital transformation isn’t easy. It means looking at new technologies and incorporating them to solve specific business problems, but it’s also about shedding old ways of thinking when they’ve become just that: old.
Create a collaborative team.
Once a company decides to undertake a digital transformation initiative, it’s important to assign a specific team dedicated to the task and clearly communicate who is on this team to the entire organization. When we put together a team to accomplish a specific digital initiative, we consider what types of skill sets and roles are important to the project – from data scientists and software engineers to data specialists to sales, marketing and human resources representatives.
It’s important to not only focus on those people with specific technical skills but also employees who understand the overall corporate goals and business challenges and how to best roll out change to the organization.
Foster the thinkers.
Your businesses should work to attract talent to fulfill both technical and organizational roles, but you must also provide the right training to nurture the skills of their existing workforce. Create a culture of self-learning and offer incentives to individuals for acquiring new, needed skills. This not only helps address a skills gap but also helps employees feel more motivated and satisfied. With automation increasingly disrupting traditional roles and responsibilities, helping employees learn new skills and hone inherent talents can help to create a culture that embraces change.
But what’s key is building a culture where employees feel comfortable trying things that might fail. This also begins at the top echelons of the company, yet also requires breaking down the hierarchy and allowing innovation to happen without major personal consequences for failure.
Put the customer front and center.
But perhaps nothing drives a culture of digital disruption more than the customer. According to the same McKinsey report, “customers increasingly expect companies to respond swiftly to inquiries, to customize products and services seamlessly, and to provide easy access to the information customers need, when they need it.” Today it’s understood that a customer-centric organizational culture requires digital disruption, often through new tools and data that provide insights into customer needs.
Take a digital risk.
Companies that embrace digital transformation are more comfortable taking risks than their less digitally mature peers. Yet, while digital transformation often requires going out on a limb and taking a chance, that can’t be confused with winging it. Companies with a digital transformation mindset always have a plan. It’s important to not only have knowledgeable business and IT champions in house, but also to work with a service provider or software engineer who can offer an outside perspective in building an IT tool bench or rolling-out solutions, such as artificial intelligence or cloud-migration initiatives.
Culture can be the biggest barrier to digital transformation, even for the most technologically advanced companies. Yet it’s possible to create a culture of digital change by starting with the business challenge and working backward to find the digital antidote to treat it.