In our Digital Transformation philosophy, we believe that strategy creates competitive advantage, people and a culture of innovation sustains it and technology and communications are the means by which it is delivered.

Culture is ‘how we do things around here’.

A company’s culture is the environment in which people operate, ideas are born, people are hired, work is done and people interact with one another.  Culture is experienced in the way we do everything in our organisations; how we hire, how we motivate, how we reward, how we talk to one another, how we communicate our ideas, how we dress, how we organise our teams and hierarchies.  Our culture is not usually consciously created, but evolves over time as particular ways of doing things become normal and accepted. Over time our culture becomes embedded into every practice in our organisation and the form our culture takes can either help or hinder the transformation process.  In fact, some organisations don’t need to change their culture if their culture already supports engagement, innovation and flexibility.

Good culture vs bad culture?

When it comes to Digital Transformation, we are seeking to create successful, profitable organisations with highly engaged staff and customers, that are innovative, great places to work in and great to do business with.

There is no one ‘good’ or one ‘bad’ culture.  There are endless possibilities for how we do things, but a ‘good’ culture is one that supports our goals, enables our people and is aligned with our values.  A bad culture in the digital age is one that stifles creativity, disempowers people and feels cumbersome and inflexible to work in or do business with.

How does culture support Digital Transformation?

Culture is important for achieving three key outcomes:

1. Implementation of strategy
2. Engaging with staff and customers
3. Creating Innovation

Implementation of Strategy

Culture is the environment in which work is done and people operate.  If the culture is not aligned, then the seeds of change that our strategy has sown simply will not germinate and grow.  Our culture needs to support and sustain our strategic plans if they are to come to fruition. It falls to the leadership to create strategy; strategy in turn sets the direction of travel and culture influences how bumpy or smooth the path to reaching our destination is.  If the road is too difficult to travel and there are too many obstacles in our way then people get lost, they give up and eventually our plans are abandoned.

There are two potential pitfalls at this juncture – either we have a culture that won’t support our strategy or we just have a bad strategy.  A bad strategy is a vision without a plan of action as to how to get there or it’s a target that appears to be plucked from thin air.  When it comes to creating a digital business strategy, we would of course recommend you start with the 7 Principles of Digital Business Strategy.

Engaging Staff and Customers

Customer engagement is quite the buzz term du jour.  It is generally understood to be ‘a good thing’ for businesses to engage with their customers more.  But what does it really mean and how do you go about it?  Engaging people (whether they are staff or customers) does not mean talking at them more.  Broadcasting your message at people on email, social media, blogs, videos and any other channel does not lead to engagement.  People are constantly bombarded with pictures, messages, adverts, emails, pinging devices, ringing phones, chatter, distraction and noise everywhere they go. Digital technology has made communications faster, cheaper and almost impossible to escape from when we carry our smart phones everywhere we go.  Although there are undoubtedly tremendous benefits to be had, there is are limitations.  There is a finite amount of content or information that people can physically consume. If you want your voice to be heard, you either need to spend a fortune shouting more loudly and more often or have a message people want to hear.

If you want people to actively engage with you, you must give them something that they want.

When it comes to engaging the people in your organisation, that means meeting their individual hierarchy of needs.  In its most simplified terms, that means giving them the means and opportunity to do something they are good at and reward them for it.

Creating a culture where people are engaged requires that they fully understand their role and the parameters under which they operate, it means that their own personal values are aligned with those of the organisation and it means that they can achieve mastery and autonomy in performing their tasks.

Creating a culture of engagement with customers means giving our customers something that they want – something that helps them to perform their tasks, that solves their problems, relieves their pains or provides unexpected pleasures.  See Osterwalder’s value proposition design for brilliant insights into how to do this.

Strategy is the bridge between cultural alignment and people engagement.  Our staff need to understand where we are going, how we are to get there and what their role is in this process.  Our culture should be aligned to achieving these strategic goals at the same time as it meets our people’s needs for work that gives them a sense of mastery and autonomy and a sense of belonging in a place that values what they value.

Why do we need a culture of innovation?

Established businesses in every industry are being disrupted as we speak.  New businesses are coming along and nibbling away at their profits, stealing portions of their customers and carving out their own niche in the marketplace.  Standing still in the digital age is a dangerous position unless you are so large you can afford to let your business slowly erode…

Innovation is the solution to the problem of disruption.  Continuous innovation is the answer to staying ahead of the game and maintaining a competitive advantage therefore fostering a culture of innovation within your organisation is essential in the digital age.

Creating a culture of innovation requires engaged staff and customers.  Why would anyone contribute an idea that could potentially make the company richer if there isn’t something in it for them?  Why would your people not just go and start up a new business themselves and keep all the glory and all the profits?  Simple.  The payoff for staying and contributing needs to be higher than the perceived pay off for leaving and becoming an entrepreneur.

For your staff in particular, coming up with innovative ideas requires more commitment, more energy and more of themselves than turning up, performing tasks and going home. If you want this high level of engagement from your staff, you need to be providing more than just a salary.

Managing, planning, scoring, implementing and discarding innovations requires skilled leadership.  Innovations must be aligned to our strategy, they must be tested quickly and allowed to fail without negative consequences, they must be fairly and transparently tested, implemented and discarded or adopted.  The business processes must allow innovations to flourish and die and for everyone to understand why.

Creating a culture of innovation requires strategy, leadership and engagement.  Employee engagement helps with closed innovation – innovation that comes from within.  Better engagement with customers and employees will allow for collaborative innovation – innovation that is co-created with customers or partners.  High levels of engagement allows for open innovation – innovation that can come from anywhere and can be adopted, tested and implemented by the organisation.

Having an open and transparent method of scoring innovations means staff can understand why some ideas are taken on board above others.  The system should be scored to encourage speed, ease of adoption and alignment with strategic goals.

Of course, creating an innovative culture means great change for some organisations.  How do you go about it creating the necessary changes for innovation to flourish?

Creating Culture Change

For change to happen, first we need to create a need or impetus for change.  Change doesn’t happen without force behind it or in front of it and this is where strategy comes into play.  A good strategy will identify an opportunity that can’t be missed which should then be communicated to the whole organisation as well as the need for change – what are the consequences if we don’t?

Then we need to dedicate some resource to our innovation cycles.  We need to create cross functional teams who are responsible for testing our ideas.  These teams should sit outside of the normal hierarchies and structures and be given budget, time, sufficient powers to carry out their tasks and we need to ensure their individual hierarchy of needs are being met.  It needs to be understood that this team is not for business as usual – a name dedicated solely to the team or space set aside just for them will help.

The people that lead the team should be ambassadors – people who are intellectually and emotionally engaged with the task at hand.  This ambassadorial role is important for success.  If they are emotionally engaged much more than intellectually engaged you will get poorly directed, enthusiastic but ultimately unproductive activity.  If you choose people who have neutral thoughts and feelings about the project (bystanders), they just won’t put the required energy into the project and it will fail.  People who are against the idea emotionally and intellectually will sabotage the process and it will fail.

Moreover, the ambassadorial role is important for the future culture we will create.  The way in which these people go about their task will eventually become the culture that the entire organisation adopts.  Choose these ambassadors with care and make sure that they display the behaviours and values that we wish the entire organisation to display.  Think of them as tribal leaders, or a prototype of your ideal employee.

In any case, the people we choose should be volunteers.  Culture change cannot be enforced; it needs to be co-created in order to be adopted.

The role of the leadership then is to remove barriers and enable the work of our team to be done.  The leadership should encourage and ensure that momentum is generated and maintained by generating short term wins, quickly responding to their needs and accelerating change.

Kotter International have created a process for instituting culture change which we think is quite brilliant.

To sum up…

A culture of innovation is one of the pivotal change blocks to achieving Digital Transformation and critical to success in today’s fast paced, rapidly changing world.  Innovation is the antidote to the disruption that is happening across every industry and every profession.

Strategy, culture and innovation are inextricably linked.

Good strategy creates competitive advantage and ensures that our business provides products or services that are valued by our customers.  The more our product or service is valued by our customers, the more likely they are to engage with us and the more likely it is that we can innovate again by understanding their needs even better.  If we have a product or service that is truly innovative and changes peoples’ lives for the better, they will do our marketing for us by telling everyone about it.

Our culture needs to be aligned to our strategy. Our innovations need to be aligned to our strategy and facilitated by our culture.