Cultural issues number one obstacle to digital transformation - report

Corporate culture is one of the biggest hurdles in the journey to becoming a digital organisation, according to research by consulting services company Capgemini and digital analyst Brian Solis.

As a result, companies risk falling behind the competition in today's digital environment.

Furthermore, the data shows that this challenge for organisations has worsened since 2011 by 7 percentage points when Capgemini first began its research in this area.  Employees don't see their company's culture as 'digital' The Digital Culture Challenge: Closing the Employee-Leadership Gap report, which includes more than 1,700 respondents in 340 organisations across eight countries, uncovers a significant perception gap between the senior leadership and employees on the existence of a digital culture within organisations.

While 40% of senior-level executives believe their firms have a digital culture, only 27% of the employees surveyed agreed with this statement.

The survey asked respondents to assess their companies' digital culture based on seven attributes: their collaboration practices, innovation, open culture, digital-first mindset, agility and flexibility, customer centricity and a data-driven culture.

Insights gathered from the report, and through a series of focus interviews, helped to identify some of the reasons behind this digital culture gap including senior leaders failing to communicate a clear digital vision to the company, the absence of digital role models and a lack of KPIs aligned to digital transformation goals.

Capgemini group executive committee head member of Digital Services Cyril Garcia says, "Digital technologies can bring significant new value, but organisations will only unlock that potential if they have the right sustainable digital culture ingrained and in place.

"Companies need to engage, empower and inspire all employees to enable the culture change together; working on this disconnect between leadership and employees is a key factor for growth.

"Those businesses that make digital culture a core strategic pillar will improve their relationships with customers attract the best talent and set themselves up for success in today's digital world.

Key report findings show that there is a profound disconnect between leadership and employees on all the dimensions of digital culture:

·        Innovation is still not a reality for many organisations. Only 7% of companies surveyed feel that their organisation can test new ideas and deploy them quickly. This figure echoes employees' sentiment about the culture of innovation, with only 37% of respondents stating that their organisations have a culture of innovation, experimentation and risk-taking against 75% of senior executives. Organisations need to actively reward risk-taking and create an environment where employees can experiment.  ·        There is strong disagreement on collaboration practices. The findings reveal a divide between senior-level executives and employees on collaboration practices. 85% of top executives believe that their organisations promote collaboration internally, while only 41% of employees agreed with this premise.  ·        Leadership believes they have a digital vision, employees disagree. The research found considerable differences between what leadership and employees perceive as a clear digital vision. 62% of respondents in leadership positions affirmed they have a well-defined strategy to achieve their digital goals, while only 37% of employees agreed with this statement.   The report highlights that companies are failing to engage employees in the culture change journey.

Getting employees involved is critical for shaping an effective digital culture and accelerating the cultural transformation of the organisation.

Leadership and the middle management are critical to translating the broader digital vision into tangible business outcomes and rewarding positive digital behaviours.

LVMH chief digital officer Ian Rogers says, "The big moment for an organisation is when they have embraced the fact that digital transformation isn't a technical issue, but a cultural change.

Digital culture leaders set themselves apart The research identified a group of digital culture 'front-runners' (34% of organisations surveyed) who performed consistently well across the seven dimensions of digital culture and whose leadership has largely succeeded in aligning the wider organisation to the desired culture.

The UK, Sweden and the US have a strong representation of digital culture leader organisations (63%, 60% and 56% respectively), while automotive (43%), consumer products (38%), and telecommunications (32%) have the highest proportion by industry sector.  These digital culture front-runners tend to hire differently than their digital slow-moving counterparts, consciously looking for behavioural traits such as creativity and autonomy when recruiting - 83% of front-runners compared to 29% of the digital slow moving counterparts; adjusting role descriptions and KPIs to align with overall digital transformation (75% compared to 17%) and aligning their compensation structure to digital transformation objectives (70% compared to 13%).  How to create a digital culture? Creating a digital culture and affecting change requires patience, tenacity and constant vigilance.

The new report sets out some key elements needed for organisations to adopt a digital culture:  ·        Deploy digital change agents and empower employees to drive a digital culture ·        Design new digital KPIs that focus on behaviours ·        Make digital culture change tangible  ·        Invest in the digital skills that matter ·        Clearly communicate a digital vision and have visible leadership involvement ·        Use digital collaboration tools to increase transparency and to reach out to employees ·        Take a systems-thinking approach to culture change "To compete for the future, companies must invest in a digital culture that reaches everyone in the organisation," Brian Solis says.

"Our research shows that culture is either the number one inhibitor or catalyst to digital transformation and innovation. However, many executives believe their culture is already digital, but when you ask employees, they will disagree.

"This gap signifies the lack of a digital vision, strategy and tactical execution plan from the top", he says.

"Cultivating a digital culture is a way of business that understands how technology is changing behaviours, work and market dynamics. It helps all stakeholders grow to compete more effectively in an ever-shifting business climate."