By Thomas Davies, CEO of Temporall

It’s no secret that the business and financial world is changing faster than ever. Increasing innovation, new technologies and political upheaval around the world – whether it’s due to Brexit, US trade policies or China’s economic slowdown – mean it is increasingly hard to know what a market or competitor landscape will look like in just a couple of years’ time.

This means traditional business strategy is in crisis. More and more companies are looking to digital transformation projects to help them to keep up in today’s fast-paced, disruptive world.

These projects are designed to make companies more adaptable, more aligned, more innovative and more agile, and there’s no doubt that the businesses of the future will need these qualities to survive. But the unfortunate reality is that 70% of all digital transformation projects fail, costing an estimated US$900 billion in 2018 alone. Why?

Look to your company culture

Thomas Davies

Digital transformations may have the perfect theoretical strategy, but if this isn’t implemented well throughout the organisation, make no mistake – it will fail. Company culture is the key. Harvard Business Review thinks that “culture eats strategy for breakfast” – and it’s right.

Successful digital transformation must include recognising culture as a strategy. Research by Temporall via Think with Google shows a strong correlation between having a deep-rooted, clearly communicated culture and business growth: the 7% companies who had the strongest cultures enjoyed huge average revenue growth of 46% every year.

A study by McKinsey in 2018 showed that executives know their team’s response to tech changes can derail transformation. Leaders identified “cultural and behavioural challenges” as the top difficulty in meeting digital priorities. So why isn’t it being addressed?

Untangling the web: what culture really means
Culture may be crucial to business success generally, and digital transformation in particular, but it is commonly misunderstood and neglected by leaders and employees alike. And if executives don’t understand clearly what culture is, let alone how to measure it, then it will be impossible to change.

Many wrongly believe culture is restricted to inclusivity or that it is a wooly, intangible idea about employee engagement. They couldn’t be further from the truth. At its most basic, culture is “the way we do things around here”. It’s the approach people take to get work done within that particular organisation. There are four interlinked aspects which determine what this approach is:

1. Values: the broad grounding principles that the company believes are important
2. Behaviour: how values are expressed in day-to-day actions
3. Process: how behaviours are standardised throughout the organisation
4. Systems: how processes are made repeatable, manageable and integrated

When these elements are well-considered, correct and communicated, they form a self-reinforcing and repeatable company culture that can weather many storms. Successful digital transformation is not just the change of day-to-day systems, it’s ingraining the behaviour, process and values into those systematic changes.

Cultural insensitivity

Poor company culture is the main reason why digital transformations fail, and many leaders even know that this is the case. But when it comes to their own business, there is a gap between what leaders think they do and how employees see it. Outside of the boardroom, many staff members think that there are big deficiencies in most leaders’ understanding, awareness and communication of the company’s culture.

More than one in three employees say that their company does not have a strong mission and purpose that’s clearly communicated by their leadership. Even more worryingly, less than a quarter strongly agree that their leaders are aware of the impact of their behaviour on the company.

It’s clear: leaders think they are doing a better job of managing culture than they really are.

Step up to save your digital transformation

In disruptive times, digital transformation is no longer optional if businesses want to survive, and culture is often the make-or-break factor in determining whether it is successful or not. So how can you make sure your transformation is in the 30% that succeed?

1. Use Culture Analytics to track and improve your company culture. To know if your company culture is ready to deal with radical change, you need to measure it. Look for the weak spots, make improvements and track the positive and negative results.
2. Integrate your tech department so that they are in-step with the company’s broader culture. Too often, technology departments are detached from the rest of the organisation. Siloes cause efficiency problems at the best of times, but when technology departments are tasked with driving change it’s vital they are engaged and on the same page as everyone else.
3. Keep communicating: make sure your staff know what culture really means, and reinforce company values clearly and regularly. And remember that communication goes two ways: listening to your employees will give you invaluable insights about what is working well and what isn’t.

To survive digital transformation and drive sustainable growth, business leaders need to get to grips with how to measure, adapt and maximise their company culture. In the era of digitization, where companies need to embrace collaborative innovation and constantly update how they operate, those who fail to do this simply won’t make it.