While a robust strategy is crucial for transformative digitization, the execution of this strategy is decisive. One of the main challenges organisations must overcome in digital transformation is the absence of strong cultural change. In one study by McKinsey, one fifth of companies identified the lack of a common understanding of the company culture as a crippling impediment to successful digitization, and a quarter of companies reported risk aversion as an obstacle to cultural change.
THE IMPORTANCE OF AN AGILE BUSINESS MODEL
At its core, digital agility is an organisation’s ability to detect evolving demands from markets and consumers and adapt accordingly. According to Harvard Business School, digital companies that are leaders in their field generate higher gross margins than organisations in the bottom quarter of digital adopters. Agile firms typically enjoy faster time-to-market, attractive cost reductions, entrenched customer-centric values, and an innovative environment that embraces opportunities for growth. Revenue from industry newcomers continues to rise at 17% total global revenue, as digitization enables them to disrupt established markets with newer, more agile business models.
The time for buzzwords and sweeping statements is long over. At a time where digital agility drives almost 50% of firm performance but 7 out of 8 digital strategies fail, businesses of all sizes across all industries should be carefully monitoring their progress towards digitization. A new momentum of relentless cultural change is crucial to enabling a successful digital strategy: it’s time to translate the practical components of digitization into digestible, actionable bites for sweeping cultural change.
It is not enough to merely appoint a chief technical officer. A single person is unlikely to drive the necessary structural change that will allow digital transformation to thrive. Companies will do well to implement clearly defined roles, add clarity in accountability structures, and put in place communication processes to facilitate feedback from all teams across the organization
Achieving sustainable momentum for cultural change will be easier for firms that focus on wholly impregnating their people with the new company vision. Influence works both ways and cultural change requires both a top-down and bottom-up approach. Cooperation between the CTO and the board will also help better align digital strategy and overall business strategy.
INTERNAL AND EXTERNAL DRIVERS OF CULTURAL CHANGE
One approach a company may deploy is to engage a strategic partner with the expertise and resources to drive radical upheaval in digital ecosystems. These partners can also work with companies to set up Centres of Excellence and innovation hubs to reinvent old ways of thinking and encourage movement away from legacy IT and business systems. An external partner is also instrumental in driving a board of directors’ strategy in instances (and there are many) where these directors do not have the required IT competences to lead a digital vision unaided. Only half of companies consider that their existing technological structures can accommodate a new strategy, yet setting up adequate CRM systems, big data analytics, and automation in processes and marketing is a crucial enabler of digital growth. This is why many companies rely on agile, external IT resources to help guide them through their execution.
Just as important as driving external forces are the incremental steps that can be taken within an organisation to help foster an environment that embraces transformation. For example, a company may use employee reviews and promotions to create incentives for change, or it may amend its mission statement or introduce a set of driving principles that capture its new, forward-thinking vision and that resonates across its teams. Another internal tactic is to group teams responsible for end-to-end customer journeys. These ‘floating’ teams, who do not belong to a single department, are small and can adopt changes quickly in a fail-cheap, fail-fast approach. This is especially interesting for those larger companies that tend to be shackled by a global, multi-tier structure, as it allows them to think and behave like smaller, more agile organizations.
BECOME AGILE BY BEING AGILE
In one McKinsey study, an estimated 30% of performance variance for companies within the same industry related to their ability to develop and maintain a culture that embraced digital objectives. Taking the time to ensure that companies embrace a new era of agility is as important as choosing the right software solutions or strategic partner. The first hurdle is making sure that everyone understands what that new vision is, because without the right culture, companies looking to reinvent stagnant business models in favour of agility and competitiveness will find it that much harder to succeed.
About the Author
After completing his training in M&A at Skadden Arps, Anastasios Papadopoulos founded Integrated Management Systems (IMS) in 2016 and played a key strategic role in positioning the company as one of the leading Digital Transformation Agencies in Hong Kong.
He brings with him his experience in M&A and Tech, and also founded IMS Digital Ventures: the innovation, incubation, and investment arm of IMS and Hong Kong’s first corporate venturing firm that launches and invests in disruptive businesses with Asia’s largest corporations.
Anastasios Papadopoulos read Law in France and in the UK and holds a Management degree from HEC Paris.
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