The Role of Culture in Digital Transformation
While driving a digital transformation programme, we often focus on the visible components of an operating model framework and how these elements, in their current state, are inhibitors to a successful delivery of a digital business. Too much focus on frameworks and models result missing some key elements in the business which plays a role in bringing about the desired change.
Digital transformation is not something that can be steered and driven within an organisational silo. And face it, your sins are very real. “Digital Transformation” must begin with an organisational philosophy that is embedded from the Board on down, and there should be a realisation that such a transformation would not happen overnight. The good news is that we all understand the underlying rationale to digitalisation and the benefits it brings to member experience and our ability to drive our bottom-lines. Digital transformation should evolve as a philosophy and its principles and insights should weave through all aspects of the organisation. Digital is the “cord” that runs through to ties to each experience (whether customer or user), be it marketing or servicing.
To me, the culture plays a very important role in the success of any organisational change. Culture, by its very nature, is intangible, subjective and hence it is difficult to quantify. I wonder, if this has been the reason why this has been consciously left out of a typical business model.
In this blog, I will try to explore the ‘what’ of an organisational culture in the context of business model design. I am no expert on this, and my view is largely based on my observations during the implementation of operating models where I was involved, and, of course, a bit of reading on the subject.
There are three types of cultures in an organisation:
- A Desired Culture
- An Espoused Culture, and
- An Enacted Culture
The Desired Culture is typically, the vision and objectives. The state which an organisation wishes to achieve in the future. Typically, they are found in the mission statements, vision documents and hanging in big glossy posters in the board rooms and cafeteria.
The Espoused Culture is one which an organisation ‘professes’ to follow while preparing for the desired culture. Typically, the instances of this culture type is found in the policy documents, the rule books, and employee guides.
And finally, the Enacted Culture is one which is real! It is how the espoused culture is actually interpreted and acted upon by the employees in their day to day operations. This is what you as a colleague and customer see being enacted before your eyes.
To state the obvious, there are gaps between the three culture types in any organisation. Organisations work towards narrowing the gaps between the three.
Digital transformation, per se, is a cultural change within the organisation. Digital engagement challenges the core ‘philosophy’ and ‘operational culture’ of an organisation. It represents a paradigm shift in the way an organisation viewed its customers, their needs and how they had gone about meeting those needs. To this effect, digital transformation is a cultural change and any discussion about digital transformation should include the cultural change elements in an organisation.
Change in an organisation culture is effected through three levels and any attempt to bring about an organisation change need to include interventions at all the three level. First level is the Cognitive change. It relates to thinking and understanding. The second level is the Behavioural change, which is what I practice, my actions. And the third level is the Emotional change which is the ‘buy-in’ thing. Emotions do not mean personal emotions, it is the collective emotion in an organisation. My acting on an issue happens when the thinking, emotions and actions synchronise. In other words, I know what I am doing, I am fully bought into the change and my actions correlate to what needs to be done. Depending on the organisation, you can start at any level - but the three need to come together to deliver an effective change. For example, defence organisations start at the behavioural level and having done that for a number of times, they share the reason why something needs to be done.
Most organisations - including financial services - start at Cognitive level. Any organisational change would begin with thinking processes - meetings, brainstorming, discussions and scenarios. There’s nothing wrong to being at the cognitive level, so long there’s a realisation that there are other two equally important elements of organisational change that would need equal attention. However, in reality, the other two elements do get ignored. With the result that you will reams of wonderful documents but no interventions at emotional and behavioural levels. Sounds familiar? I tried to research if there is any recommended approach for organisation change using the three elements. But so far, I have come across none. I guess a lot depends on the maturity of leadership to understand how these three elements come together to deliver the change that they seek. So on one hand you have organisations which focus on cognitive element of cultural change (as above); there are others who focus on behavioural elements. In the latter, you will find a number of activities happening across the organisations - teams, departments and groups working on one or the other aspect of organisation change, but the impact of change remains elusive. And again, because the actions are not based on a thought process to provide direction and guidance and there’s no emotional attachment to the change. People act because they have been asked to do so, without believing in the change.
To emphasise again, for an organisation culture to change, and for the change to succeed, interventions need to be built around the three elements of Cognitive, Behavioural and Emotional in the organisation. Using this lens, it becomes easier to understand why change (any change for that matter!) fails to deliver in an organisation. And why a pan-organisational change such as digital need to be thought through on these elements.
