When we think about digitization, we think about technologies, processes and business models. We rarely consider the importance of the “human factor” in the digital transformation process.
The Cultural Status Quo
Modern businesses have evolved into efficient operations, where high-achieving managers work to meet clear Key Performance Indicators (KPIs) every quarter. Most businesses are also divided into “business units”, to create clear lines of accountability – each with their own KPIs. Leaders who succeed in this environment are successful because they have a relentless focus on their KPIs – whether they be top-line growth or bottom line savings. However, the traditional culture creates some significant barriers to innovation.
Collaboration
When each business unit is intensely focused on its KPIs, this leaves little room for collaboration. Even if smart leaders see the benefit of collaboration, it rarely occurs – unless the business units involved can guarantee their KPIs will improve.
Risk Taking & Fear of Failure
In the traditional KPI-driven environment, risk taking is simply a bad idea. Making a decision which results in failure can cost a leader their job – so taking risks is a big gamble.
Entrepreneurial Drive
Business unit leaders are often incredibly driven – but not entrepreneurial. Instead, their drive is to achieve their KPIs – and which often requires strong leadership, focus and discipline. However, these qualities overlap with the qualities of a great entrepreneur – which is good news for businesses looking to become more innovative.
The Way Forward
Numerous studies have shown that the single biggest barrier to successful digital transformation isn’t just technology – it’s culture. The only way a business will succeed at digital transformation is if they create digital entrepreneurs – who have the necessary skills and mindset to drive innovation.
So how do we take people along? How do we address their worries about their jobs? How do we build a culture that embraces innovation – and can successfully face the challenges of the digital age?
How to Face the Challenge
Shed Light on the Topic!
Most resistance towards innovation arises out of ignorance. Employees and leaders simply do not understand the changes in today’s business context – arising from the combination of new technology, changing customer expectations and disruptive competition. So, it is essential to build awareness around your company’s digital initiatives – and to give your employees and leaders the opportunity to be part of future.
Communicate!
Create transparency around your leadership’s vision – and your specific plans for your company’s digital transformation. Openness around future plans and inclusiveness in the digital transformation process will allay your employees fears – and remove key barriers to progress as a result.
Take Action!
- Explain how today’s unpredictable marketplace drives the need for a much more agile and entrepreneurial mindset – based on an openness towards technological change, the use of methodologies such as design thinking, scrum for agile project management, a willingness to take risks, and a change in the company structure to a network organization.
- Build a digital transformation curriculum – covering innovation and transformation processes, agile methods, social collaboration, big data, individual information management, recruiting and retention, etc.
- Build a “reverse mentorship” program – whereby your young “digital natives” teach less digitally-savvy leaders how to master digital devices and tools.
- Identify projects and build an environment where the new methodologies can be put into practice – and digital competencies be built.
- Build a learning culture – by analyzing failures, and making the learnings available for others – instead of sweeping them under the rug.
- Drive creativity and experimentation by organizing company hackathons, “unconferences” and “barcamps”. Give your employees the space to be innovative, and give them the opportunity to develop their entrepreneurial skills and mindset.
- Create new KPIs to incentivize your executives and employees– such as the number of new ideas that have to be developed in their teams.
Build and Grow your Group of Digital Evangelists!
There are always eager early adopters and pioneers – who cherish the opportunity to try new things.
- Foster their hunger for innovation, and incentivize them to encourage others.
- Allow them to spend time on new challenges – and to use new approaches and technologies.
- Publicize their achievements – so they become evangelists in your company, and help push transformation further
Unblock Your Leadership Team!
- Spend time educating your leadership team. It is absolutely critical they buy into the new concept of leadership. Their roles have evolved from transactional to transformational leadership – and they have to deliver results.
- Prioritize the adoption of transformational leadership ASAP. This requires a move away from a “command and control” approach, and a move towards more trust in your employees’ ability to make decisions in the company’s best interest. To achieve this, your leaders must make information transparent and easily accessible for employees, create a working environment where risk-taking is rewarded, allow employees to work in their own space and move at a fast pace – but keep them tightly aligned with your vision and goals.
Build an “Ambidextrous Organization”!
- During the transition period from a traditional company to an innovative organization, your business will need to become an “ambidextrous organization”. This means that there will be an innovative segment of the company, where employees and leaders use the entrepreneurial mindset every day. The other segment – the parts of your organization that still must focus on traditional KPIs – will be kept informed of new developments and working methods, and these will be transferred step by step. Over time, all of your employees should transition to the new mindset – acquiring skills that position your business as a winner in the digital economy
Conclusion
Building an innovation culture is mission-critical for your business – and it is an initiative you should put into motion ASAP. If the challenge is beyond capacity of your own team, don’t hesitate to reach out to an experienced partner – who can guide your team through the transition.