Because everyone seems to be talking about digital, I previously outlined the three elements required for a true digital transformation: a new customer experience, a new business model, and a new value creation model. These three elements are the outputs of a successful transformation. However a digital transformation requires the right inputs as well: C-suite support, digital technology, and careful prioritization.
All of these ingredients are important but the right culture might be the ultimate x-factor. One of my favorite quotes is “culture eats strategy for breakfast” but in this digital economy it might be more appropriate to say that culture is the secret sauce in digital success. I believe the three most important cultural characteristics we can cultivate to encourage and sustain successful digital transformations are:
- Risk Tolerant: A September 2015 McKinsey survey uncovered a strong positive link between digital performance and a risk-taking culture. This type of culture not only understands that exponential rewards come with increased risk, but that failure (at least fast failure) is a powerful learning opportunity. Just like learning to ski, bike, or skateboard – if you never fall down, you’re not going to get any better.
Tips: As a manager, you already know to reward successful outcomes, not just hard work. It’s also important to ensure you don’t punish failure; in fact give room for some experimentation and document what doesn’t work for others. As an individual, I’ve personally found the writing of John William Gardner inspiring – work up your “courage to fail.”
- Rapid: A digital culture values speed over perfection. The oft-cited phrase “No plan survives contact with the enemy” applies to products and customers as well. Rather than spending inordinate amounts of time researching a market and developing a complete product, a digital culture embraces a minimal viable product with rapid iterations. This goes beyond a first-mover advantage leading to higher market share; digital cultures operate at a higher frequency than more traditional businesses (e.g. weekly product releases, hourly sales forecasts, 30 min response times to customer inquiries).
Tips: As a manager, consider your KPIs. If you only set yearly targets, you cannot measure progress monthly or even weekly. And make sure you measure performance appropriately: a grading system that value speed over perfection considers 85% attainment as good performance. As an individual, let go of your perfectionism. Good enough is good enough.
- Receptive: Digital transformation requires change and established companies are naturally resistant to change. Just like humans are designed to fight off foreign bodies like infections, organizational antibodies often arise to combat new initiatives. Digital cultures thrive on feedback, even feedback which is contrary to conventional wisdom. This is why startups are prone to pivot and large companies know that strategy shouldn’t be static.
Tips: As a manager, you should be hiring people with diverse backgrounds; heterogeneous groups are more likely to be receptive to new ideas. Be sure to practice management by walking around – you don’t even have to leave your desk. And, of course, consider yourself – you likely have an open door policy but do you have an open mind policy as well? As an individual, be a life-long learner – at any level of the organization, never stop being a student. Especially as a student of your customers.
So, embrace a digital culture – be brave, be fast and be open. It’s the key to being successful in the digital economy.
Do you have any additional tips you can share for cultivating the cultural characteristics required for a successful digital transformation?