Amidst all the gloom and doom of the COVID-19 crisis, a significant change that quietly crept into our lives in 2020 was the massive adoption of digital platforms. With unprecedented lockdowns and restrictions on movement, ‘digital’ offered the only route for survival. Almost all companies, big and small, were pushed into the online mode virtually overnight.
The digital transformation that CIOs and business leaders had been trying to achieve for a long time was suddenly accelerated and how. However, despite such high levels of digitisation, the kind of digitally smart world that should have emerged seems nowhere in sight.
Why is it that so many companies are struggling with their digital initiatives and many are itching to get back to their old ways of working? What is it that makes an organization more digitally successful than others?
Studies have shown that as much as 70% of digital transformation initiatives fail to achieve their desired objectives. The reasons behind such a high failure rate could be many: internal resistance, change management issues, existing work structures or other people-related issues. But the fact is that most organisations lack the maturity to drive a transformation of this scale. In a recent HBR survey, 95% of companies said their drive for digital transformation has grown in importance in the last two years; however, only 20% rated their transformation strategies as effective.
An effective digital strategy is not about implementing technology for the sake of becoming more digital but also involves an overall transformation in the organisational structure and working styles of people. In a hurry to get onto the digital bandwagon, many just start implementing technology without proper planning or preparation. As a result, even after getting the best systems in place, they are unable to become truly digital’ in thought and action.
Creating a digital culture
IT leaders often fail to realise that high investment in technology would not necessarily yield the desired results unless the organisation creates a strong foundation by cultivating a digital culture among its people. The culture of any organisation is usually driven by the vision and management style of its senior leadership. Besides the overall work structure and approach to doing things, the collective experience and capabilities of employees also play an important role.
It is often seen that the existing structures and old ways of doing things are so deeply ingrained in the system that it becomes a challenge to bring about any large-scale transformation. Professor Deborah Ancona of MIT Sloan School of Management shares her own experience of working with clients on digital transformation: “The leadership neglects, underestimates or misunderstands the importance of culture in their digital transformation planning. “Peter Drucker’s quote, “Culture eats strategy for breakfast,” continues to be relevant as always.
While the younger employees (digital natives as they are called) are more digital in their temperament, the older ones might find the new ways risky or complicated, sometimes even ‘hindrances’ in their productivity. This could lead to an internal tussle or lack of commitment among the people. Moreover, the leadership usually does little to empower or incentivise employees to shift to new models.
In order to achieve any meaningful progress in a digital transformation drive, it is essential to ensure that all the employees are well aligned with the digital vision of the organisation. People should be ready to discard obsolete processes and old habits and must have the willingness to adopt new work structures.
The organisation, on its part, must also invest in nurturing talent and developing the required skills among its employees. A digital mindset has to be gradually built-in. Unless the people are motivated to using technology unless the key business functions are driven by IT, achieving a truly digital organisation would not be possible.
A big factor that comes in the way of digital transformation is also the disconnect between leadership and employees, states a recent survey by Capgemini on Digital Culture. At times leaders believe they have created a digital culture, but employees may disagree. For example, in the survey, just 41% of employees believed their organisation had a collaborative culture, while 85% of senior executives felt that the culture was collaborative.
Some of the key attributes where digital culture can be embedded into the working of an organisation include data-driven decision making, cross-functional collaboration and use of technology for networking with partners and customers, innovation, and creation of new products.
The ‘maturity’ factor
According to Deloitte’s 2020 Digital Transformation Survey, companies with higher levels of digital maturity reported higher revenue growth and profit margins (45%) as compared to those with lower maturity (15%). Higher digital maturity ensures better financial performance through greater business efficiency, customer satisfaction, and employee engagement. It also allows companies to focus better on innovation, thereby impacting product/service quality and overall business growth.
An oft-cited example here is the case of Volvo Cars that is known for its engineering excellence and high-quality products. The company’s digital strategy not only focused on improving its core business of building new cars, but also brought about changes in how it approached design, innovation, collaboration with partners, and governance. This result: a highly connected car that provided customers much greater flexibility to accommodate new enhancements and applications.
Deloitte enlists several factors or ‘digital pivots’ that reflect an organisation’s digital maturity level. These include flexible and secure infrastructure, data mastery, digital savvy open talent networks and intelligent workflows, unified customer experience, and business model adaptability.
A majority of digitally mature companies are already using digital solutions to improve their productivity and performance across different business functions. In fact, being digitally mature enabled Volvo to wade through the Coronavirus pandemic as it already had the right systems and processes in place. Digitally maturing companies intentionally cultivate their digital cultures in support of critical business initiatives, says Deloitte.
Microsoft is another example of how a company can completely switch to a digital mode without hampering its business activities. During the Covid-19 crisis, the company not only fast-tracked its own digitisation efforts but also actively supported customers and partners to adapt to a world of remote everything’. CEO Satya Nadella has often talked about the need to collaborate and to adopt a growth mindset and continue refining business practices for remote work. However, Nadella has also expressed his concerns about the problems that may emerge by doing all work remotely.
While the COVID-19 crisis forced companies to operate completely on a remote work format, it would be more prudent to have a balanced or hybrid structure in the long term. Developing a digital culture an ongoing process and will continue as companies continue to grow and evolve. What is important is to ensure an inclusive, agile and open work environment that has the maturity to adapt to changing market situations.
Shweta Verma, former Executive Editor, Dataquest, and an independent content development consultant