Why Company Culture Is Key to Successful Digital Transformation

The definition of “digital transformation” can vary, meaning anything from IT modernization to digital optimization to new digital business models and beyond. But the goal behind digital transformation is usually the same: to increase growth. Most articles you find on the topic, though, focus on the technology, budgets, and logistics, which means they miss one of the most important pieces of the digital transformation puzzle: company culture. Here’s why culture is a crucial part of the process, and how to prioritize it within your own business.

The Impact of Culture

Research firm IDC recently reported that 65 percent of the world’s GDP is set to be digitalized by 2022 and that direct digital transformation investments will total $6.8 trillion between 2020 and 2023. These numbers are a testament to the value and importance of such initiatives. But, that doesn’t mean that they always work out as planned. In fact, research has shown that 70 percent of complex, large-scale change programs don’t reach their stated goals.

Surprisingly, one of the greatest hindrances is company culture: The most common problems reported to hinder success in such initiatives are “a lack of employee engagement, inadequate management support, poor or nonexistent cross-functional collaboration, and a lack of accountability.” In other words, the internal culture isn’t set up to transform. Part of the reason is that it can be very challenging to eradicate long-held mindsets and habitual behaviors, which is what often needs to happen for new technologies and processes to take root.

Almost all of the reasons for the poor results listed above boil down to the first one: employee engagement. If employees feel connected to your digital transformation, they’ll be more willing to hold each other accountable in doing their part. If managers are invested in what you’re doing, they’ll lead with more purpose. If employees are bought into the process, they’ll be more open to collaborate with their peers. But more often than not, “digital transformation” is something that executives tell their teams is happening, rather than something in which they invite them to be active participants. Therein lies the problem.

Increasing Engagement

Instead of the scenario above, make the concept of digital transformation compelling. Gather input from your frontline team from the get-go, and actually listen to their suggestions without defensiveness or preconceived notions. Your salespeople, account managers, and customer support team are the ones who interact with customers every single day; they deserve to be heard.

You won’t be able to act on every person’s individual ideas, but you should give them all consideration. If a course of action seems promising, you could implement the changes in a small pilot program of sorts before expanding it out to the rest of the company. This is a highly effective method that many enterprise companies I’ve worked with have used to vet ideas and discover which ones truly have legs.

Additionally, invite your team members to help you come up with innovative solutions as you embark on digital transformation. Of course, improving on your products or services is always a good starting point, but think beyond this. Encourage your team to explore ways to innovate at a higher level, like in terms of your distribution model or how you’re organized to deliver value.

For instance, maybe you’ve always sold directly to consumers but have recently realized that selling through channel partners will increase revenue and optimize your operations. This type of innovation can be supported by technological transformation, but must start internally. Involving your employees in the process will increase their engagement and interest in seeing it succeed.

Measure Success—the Right Way

If people cannot see the end point, they won’t be motivated to stay the course along any path, especially a new and unfamiliar one. To this end, your team members need to be made aware of how their part in your digital transformation is driving your company story forward. Instead of telling them what technology they need to embrace and which trainings they need to take, make it personal for them. Acknowledge that yes, there will be a learning curve. But also show them that, when all is said and done, they’re going to save time every day and help improve company profitability as a result.

The quality of your metrics is the other piece of tracking progress that cannot be overlooked. Your team must be aligned around the right numbers, or you’ll measure success differently and end up miscommunicating. Unfortunately, many organizations rely primarily on traditional metrics as they undergo digital transformation, but these are often not the ones to watch.

For example, your cost per acquisition (CPA) is likely to rise as you expand into a new market. In many cases, that’s actually OK, because eventually it’ll go back down once you’re established in the area. With a long-term view, you’ll understand this and ultimately enjoy all the returns of expansion. But if you’re short-sighted and stuck on traditional metrics, you’ll likely take reactionary steps to reduce your CPA and potentially miss out on all the benefits of expansion.

So, as you innovate digitally, keep an eye on metrics that actually impact your organization in ways that count. Start by pinpointing the outcome you want to achieve, then adopting change management and program management to bring it to life. Refocus your metrics around meaningful indicators, like the amount of new revenue you can attribute to your digital investments, or measurements of employee productivity, like increases in efficiently resolved support tickets. These are the numbers that mean success or failure with your digital transformation, so zero in on them and put the rest aside. Most of them are just distractions.

Your company culture may not initially seem particularly important to your digital transformation efforts, but in reality, it’s crucial. Unless you adequately prepare your team members for the changes that are coming and the reasons behind them, you can’t expect a rewarding path forward. If you focus first on your internal team, however, your digital transformation will have firm footing and the right foundation to succeed. Involve your employees in your strategy, engage them throughout the process, speak to them openly and realistically about the changes they’ll encounter—and help them envision the promising end results. Together, you can do this. Separately, you can’t. It really is that simple.