Culture, an often intangible and nebulous construct, is nevertheless the reason why digital transformation projects sink or swim.
That’s the view expressed by industry leaders to Which-50 this week in a series of media events and roundtables in Sydney, and interviews with CEOs in the US and Singapore.
“Culture is everything. It’s not just an ambiguous part of the organisation — without the right culture you won’t be successful,” says Marcelo Silva, founder of Singapore-based DTS, a company that scores businesses on their digital transformation efforts.
Transformation is about much more than the mere replacement of legacy technology. Ingrained processes and behaviours need to be re-engineered and staff need to be brought along with the mission. With all the change and uncertainty, that is never easy.
Which-50 spoke with senior digital industry leaders here and around the world about the lessons they have learned when securing buy-in at all levels for transformation or change projects.
Take NAB, for example. The bank is investing $1.5 billion over three years to simplify and modernise its 160-year-old business.
The vision, outlined in November, involves hiring 600 technology specialists and getting rid of 6000 roles over three years. A further 2000 new roles will be created over the same time, relating to AI, data science and automation.
“We have embarked on a transformation that we think will fundamentally change our company, fundamentally change the way we work, and launch us into a new era,” NAB CTO Patrick Wright said at the AWS Summit in Sydney last week.
That new way of working requires empowering individuals to “innovate in their own space”.
But trying something new — which could very well fail — can feel like a big risk when you’re lower down on the food chain, he cautioned.
“You have to overtly grant individuals permission to step into this, and they have to feel like if they do it and make a mistake it will be ok,” Wright says.
“It is very hard as a frontline programmer to make a fatal error — it’s possible but you’ve got to try pretty hard — and most people actually want to innovate in their own space. The more you can overtly grant them permission the more they’ll surprise you almost every time.”
(At a previous role in a British company, Wright used to grant individuals permission to launch new projects by using a plastic sword to ‘knight’ his staff.)
“Most people don’t believe that they are powerful. Especially if you’re one of 4000 people in a company. At the bank where I worked before NAB we had 140,000 people in the company. Many of the people who were six, seven, eight levels down feel, sometimes, helpless.”
“People take on a symbolic gesture like [knighting people]. I’ve had people change their email signatures to Lord so-and-so because they now feel like they’ve got permission to go do it.”
A symbolic gesture doesn’t need to be as theatrical as knighting someone. It could be as straightforward as a few simple words.
“When they get it right, celebrate it. And when they fail it shouldn’t be the end of their career, it should be an act of bravery,” Wright said.
The work of transforming a business is internal, but don’t lose sight of the real goal: making life easier for customers.
Steve Lucas, CEO of San Francisco-based marketing cloud company Marketo, brings a unique set of insights to the question.
He understands it both from the seller side in his current role at Marketo and from his previous job as President, enterprise platforms and analytics, at SAP. But he also understands it from the buyer side as well, as a director of both the American Diabetes Association and email platform SendGrid.
He told Which-50 in an email interview that success starts with designing around your customer.
“Tether the design goals for digital transformation on engaging with and serving customers for life.”
“The most effective transformations are driven by focusing on how you can serve your customer better both now and in the future, using technology to eliminate inefficiency and maximise customer success with your products or services. Which, sadly, is not where most organisations start.”
Lucas said too many organisations begin “transformation” by digitising their front- or back-office business processes without understanding if a specific process is effective or efficient — let alone necessary. “Furthermore, the inherent flaw in simply ‘going digital’ without a customer-centred design implies you are replicating your current business model and not leveraging technology to truly transform an organisation.”
He said that across his career the leaders he witnessed drive lasting and impactful change typically had a number of qualities in common.
They build a vision, he said. “You need to work with your team to create a strong vision for the company post-transformation and rally the organisation around the future state.”
They also design around the customer and they hold people accountable.
“While you’ll need a team whose sole mission is to drive digital transformation, you must create a real sense of accountability throughout the organisation for real results.”
According to Lucas, when it comes to the role of leaders, “above all else, communication will determine the success or failure of digital transformation. From the initial vision to transparency regarding success and failure, a continuous, open dialogue with your team is the fuel to see a successful digital transformation through.”
The Top-Down Approach
Before executives can walk the floor knighting their staff, the CEO needs to appreciate the importance of their own commitment.
Alana Fisher-Chejoski is a business and digital transformation strategist working with executive teams. She says the CEO is in the unique position to influence key stakeholders such as the board, executive team, employees, shareholders and the media.
“I cannot name one successful digital transformation where it was led from the trenches. Change is really hard for many — most — employees and they need to be inspired and influenced on a daily basis,” Fisher-Chejoski told Which-50.
There’s a knack to getting buy-in from the board and executive leadership team, she says.
“As these are senior people, who have often previously spent many years being successful, it can be challenging to help them understand that many of the tactics and strategies they’ve successfully employed in the past will no longer work and that they need to be open-minded, flexible and collaborative within the Board and ELT environment. They need to be seen to talk the talk and walk the walk. ”
Only then can the digital transformation culture change program move down towards the frontlines.
“Seeing this top-down approach overcomes the idea that there is optionality around the need for change. There is a need to crash through ‘the way we do things around here’ — and that’s what creates culture,” says Fisher-Chejoski.
Once Upon a Time
Leaders need to be storytellers, argues Nathan Bush, founder of digital strategy and activation agency 12High, and the former head of digital for Super Retail Group.
“A lot of people who implement a strategy or who are in those leadership positions have been on that journey for a long time and they’ve seen what’s coming. But it’s important to sell that vision all the way through the organisation from the start,” Bush said.
That script should include the message that “We see the disruption in our industry, we understand it and we’ve got a plan for it and want you to come along on the journey.”
During this period of communicating why an organisation needs to change, businesses should involve or consult their staff on the changes by asking, “how can you help build this with us?” he says.
“I’m a little unsure whether people hate change or if people just hate change happening to them. I think there’s people in both camps. There are some people that will never accept it but then there are people who are going to resist because they haven’t had a chance to have any input,” Bush says.
For his part, Ben Sharp, Managing Director of ADMA — whose pedigree includes stints at the helms of AdRoll, Allure Media and Yahoo — said businesses need to explain why the change is being put in place, what the changes will be, and how it will happen.
“In many cases drastic and immediate change will cause a negative impact on a business,” Sharp said.
“I think there needs to be a purpose and a really strong explanation about why the digital transformation is needed inside a business. If there are established operating systems, legacy working processes and people that have been in their roles for a long period of time, the change management is very difficult in that scenario because you have got embedded behaviours.”
Sharp also argues leaders should explain how the changes will benefit staff — for example, with more efficient working conditions, new skills and opportunities for employment.
Not Everyone Is Going To Get On The Bus
The industry leaders Which-50 spoke to acknowledged that staff turnover is an unavoidable part of any transformation, but argued there is a way to manage it.
DTS’s Silva says good organisations address the issue sooner rather than later.
“Not everyone is going to jump on the bus. You want to be transparent, but the reality is people aren’t going to want to change. Most organisations try to address that sooner and then they just get on with it with the ones who are serious,” Silva said.
Fisher-Chejoski agreed, saying “There will always be people who don’t want to buy into the future state of the organisation,” but businesses need to be vigilant that they don’t necessarily lose talent.
“A carefully planned, but flexible, culture change program can significantly decrease the loss of talent through the fears that build very quickly. A well-designed organisation change management strategy should be part of all transformations, as, in the absence of communication, fear turns into rumour,” Fisher-Chejoski said.
“Rumours in transformations are like hot embers blowing in the wind and creating spot fires. It’s notoriously difficult to know where they will start a spot fire and can turn into a destructive wildfire in no time.”
So, where’s the transformation?
According to 12High’s Nathan Bush, you should never sell change without change action points.
“Culture won’t change just by saying you’re changing culture. It’s not this fluffy thing, it is actually the way we do things.”
Bush recommends identifying how you do things and how they should be done differently. That could mean changing the rules about what is or isn’t accepted in an organisation. Or it could be a change to the style of working, but it has to actually be something really tangible, he says.
“It might not look like culture change on the outside because it’s based on projects or actions, but it is very deliberate change to the way we’re working,” Bush says.
Organisations can fall into the trap of just paying lip service to culture or failing to prioritise it.
“They pay it lip service, but never prioritise the change required for successful transformation. Sometimes it becomes a tick-box when the initial DT program is about to move into BAU,” Fisher-Chejoski said.
Whereas digital transformation should have an endpoint, business should aim to create a culture of continuous innovation, Fisher-Chejoski says.
“The world is not standing still, so when change is not considered part of everyday operations, businesses will need to go through another transformation process. This kind of approach usually highlights a tactical rather than strategic approach to culture. The result is an organisation that lacks a foundational operating rhythm and seems to always be playing catch-up.”