Whosoever desires constant success must change his conduct with the times.

Niccolò Machiavelli

As organisations grow, teams and business units begin to segregate. So entrenched is this pattern that anthropologist Robin Dunbar developed a theory about it. He proposed that the number of meaningful relationships a single person can have is limited to 150. In the workplace, this extends to a natural threshold of the number of people able to work together productively. When it comes to running an organisation with thousands of employees, it’s no wonder that ‘silos’ form and trusted relationships falter when groups start to compete against each other rather than collaborate. Some organisations defy this trend, however, unifying their employees despite their differences, structure and scale. Think about companies like Johnson & Johnson, The Walt Disney Company, Amazon and Google. How do they create cohesion and foster productivity? And more importantly, what aspects of great corporate culture do you need to focus on as you build a digitally enabled business?

Company culture is created in exactly the same fashion as a religion or democracy. Behaviours created from the organisation’s inception are reinforced over time by leadership, attracting like-minded people and eventually reaching critical mass to become an accepted ‘truth’. These truths drive performance, priorities, and the countless everyday decisions an employee makes without guidance or oversight. A recent survey conducted by Capgemini found that 62 per cent of respondents viewed culture as the number one hurdle to achieving an effective digital transformation. The pivot points required in chapter 1, and the rethinking of structures in chapter 2, will succeed or fail based on the nature and strength of your company culture. In this chapter, we’ll help you determine whether your current culture will help or hinder your digital transformation. You’ll also discover five cornerstones of a digital culture, and six ways to build a digitally mature team.

Will your culture help or hinder?

Achieving your preferred culture is easier if you know and understand your starting position and spend the time needed to identify what needs to change to support your transformation. One widely used model that helps establish this is the Competing Values Framework (see figure 3.1). Developed by Kim Cameron and Robert Quinn in the 1980s, and based on empirical research from more than 1000 organisations, it identifies two major dimensions of organisational effectiveness:

• the extent to which the organisation has an internal focus and integration versus external focus and differentiation
• its preference for stability and control versus flexibility and discretion.

These dimensions represent competing values for the organisation and form the axes that separate four distinct culture-type quadrants, each with its own set of characteristics. Once assessed, it is natural that over time your organisation develops a leading cultural type, and usually a mix of the four quadrants, in its profile. The balance of profiles can change over time as the organisation matures or is exposed to different external pressures. There is no ‘bad’ culture type, and there is a place for all types of employees across the organisation. The key is to ensure the overall cultural profile of the organisation is able to deliver outcomes needed in its competitive environment and respond when things change.

This framework is often used to map the gap between the current state and the preferred future state for the organisation, in preparation for a significant change or transformation.

Cameron and Quinn conclude that a successful organisation is a flexible one, able to draw on all four culture types from among its ranks as the competitive environment requires. Even a cursory understanding of their model raises awareness of the quantum of cultural change that may be needed to support your organisation’s shift from where it is today to embrace a more digital mindset. As we discuss later in this chapter, transitioning to a digital culture generally requires more emphasis on behaviours and values associated with the adhocracy and clan culture types. This is driven by the speed of the market, the need for self-organisation and autonomy to enable teams to innovate, develop and launch in shorter cycles, and the relentless need to focus on the customer.

At the other extreme, hierarchy cultures that are predominantly focused on stability and control — protecting revenue, highly process driven, with a heavy reliance on senior decision making — will impede transformation efforts unless you intervene. According to Cameron and Quinn, hierarchies are the most difficult cultures to change, as their natural inertia means it’s ‘almost as if gravity takes over’, ossifying structure and process as the organisation matures, pushing it down the matrix towards less flexible, and more internally focused behaviour.

The cornerstones of a digital culture

We believe there are five principles that are critical to establishing a digital culture, and they are intrinsically linked to the other structural issues you need to consider as you transform your business.

FREE FLOW OF INFORMATION

Information and data must be able to move seamlessly throughout the organisation, as well as between your company and your customers. It is imperative that data, new findings and best practice are shared easily so teams can work together to find the best solutions. Information must also flow freely between your business units and customers to ensure your company is customer driven. In chapter 4, we go into greater detail on how to improve the flow of data throughout your organisation.

CUSTOMER FOCUS

If you don’t know what your customer wants, then you may as well pack up now. Understand the difference between their needs and their wants, then execute on their needs — even if they don’t know what these are yet. As Henry Ford said, ‘If I had asked my customers what they wanted, they would have said a faster horse.’ For detail on understanding customer needs, refer back to chapter 2 and the section on building Engine A. If you can deliver what customers want while providing them with a fantastic experience, then they’ll always come back. Just don’t forget that the customer’s expectations never stay the same over time.

AGILITY

With the digital economy moving faster than ever before, your teams have to be able to react to this change. First-mover advantage is critical in the information age to stealing a march on the competition, while moving faster than anyone else ensures you stay in front. Long-winded decision-making processes must be streamlined, and employees must be flexible in the face of change. Your Engine B team, profiled in chapter 2, should champion this new pace and style.

INQUISITIVENESS

Create a culture that is always on the lookout for new opportunities and where failure isn’t considered taboo. Remember, you can only really learn by failing. Companies that are willing to take calculated risks on novel ideas, even though they may require self-disruption, are the ones that thrive in the digital economy. Chapter 7 shows you how to incorporate innovation into your long-term strategy for investment and growth.

EMPLOYEE EXPERIENCE AND ENGAGEMENT

A thriving digital culture must provide teams with an environment in which they are challenged, learn new things and have the freedom to make decisions on their own. A highly engaged team is the most productive, and with recent studies showing that only 33 per cent of the workforce is engaged, getting this right creates competitive advantage. Key to an engaged workforce is the personal connection employees make with their organisation and the sense that their work and individual strengths are valued. This can be achieved through focus on activating purpose, or the ‘why’ of the work as part of your company vision, ensuring clear performance expectations; regular coaching and recognition; and giving employees the tools, environment and autonomy to excel.

Building a digitally mature team

A digital culture is underpinned by a high level of digital maturity. This may seem obvious, but without this maturity, everything remains static. Putting up motivational posters and throwing around buzzwords may give the impression that the company is transforming itself, but in reality, these types of initiatives don’t alter the company’s underlying foundations. Rather, they create confusion and scepticism about the value of, and rationale for, the change that is so desperately needed. Digital maturity is both a mindset and a skillset. Save your campaign for when you have in place a program of systematic leadership, behavioural and process change, and some achievements to acknowledge.

Digitally mature teams understand that what they must do now is different from what they did in the past, which is also different from what they will have to do in the future. Here, we identify six key steps to building a digitally mature team.

START WITH VISIBLE LEADERSHIP

Without a mature digital culture that is defined, championed and modelled from the top down, your organisation will be unable to navigate the relentless waves of change and the gravitational pull of your company’s legacy approach to managing pre-digital disruption, particularly if your predominant company culture type is less flexible and process driven. Digital maturity is not the responsibility of a few individuals in functional roles; it must be led by the CEO and executive team. It requires an acceptance that the traditional roles played by leaders need to change and that new talent may also be required. This is confronting stuff for many who have worked their way to the top through years of pre-digital achievement. Survey findings from Capgemini support this, suggesting that the inability of leadership to acknowledge the degree of culture change needed is a key contributor to failed transformation efforts. Left unaddressed, it can drive a damaging disconnect between leadership and employees, and their perceptions of progress towards a digital culture and behaviours in the organisation.

Defining and communicating the values that underpin your digital culture is critical if you are to build employee engagement and alignment. Leadership must be its most passionate advocate. However, the change also needs to translate into tangible business outcomes, achieved through changes in process, KPIs and recognition systems that reward the right behaviours. For example, there is little point introducing a cultural change focused on collaboration if performance measures contradict and/or discourage teams from working together.

Company culture codes have frequently been developed in the start-up and technology community to identify and drive desired values and behaviours from the earliest establishment phase of a new venture. Recognising that culture will develop regardless, these codes are a transparent and conscious way to establish the expected way of working, similar to the principles applied in determining the preferred future state as part of the Competing Values Framework cultural assessment. These codes are written using simple, dynamic plain speak. Take one of HubSpot’s, for example: ‘We commit maniacally to both our mission and metrics’. Or Netflix: ‘Context not Control’ and ‘Highly Aligned, Loosely Coupled’. Culture codes take a company mission or values statement a step further by broadly describing what they mean for employee behaviour, decision making, prioritisation of focus and employee success. What’s more, as these codes have been developed within digital organisations, they hint at ways of working that you can leverage as part of your own transformation efforts. Luckily, given they support talent attraction, big-tech culture codes tend to be freely shared and published.

Compare the codes of digital organisations with your own mission statements and articulation of company values, and dedicate time as an executive team to make the changes necessary to realign with your digital vision. This requires some soul searching and discussion. An early published version of Netflix’s culture code reflected that Enron’s values were Integrity, Communication, Respect and Excellence, which, although admirable, were completely at odds with the people and behaviours that were rewarded. Plain speak codes help cut through platitude. However, it is how you as a leadership team live it, reinforce it with the decisions you make, and reward those who best represent who you want to be as a digital organisation, that will drive the greatest sustainable change.

BUST THE SILOS

Mini-empires are a huge killer of cultural change efforts. Empires create borders, which create silos, hindering how information travels between teams, leading to varied goals and ambitions. It’s imperative that these borders are broken down and that collaboration between teams becomes the new norm. In short, best practice and capability needs to be shared by all.

One way to bust the silos is to identify the core customer-driven activities that support your value chain. As a simple example, think of customer service support in a company that makes and sells a physical product. The sales team, contact centre, accounts team, and marketing and delivery team all interact with the customer. Some of these steps may even be managed by third parties. Perhaps there is a customer relationship management (CRM) system that keeps track of interactions. Now think about how and where those activities are currently delivered across your organisation. Are all of the people involved in providing service support connected horizontally to ensure communication, knowledge and the best possible service across the value chain? Often employees are not even aware of others outside of their function or responsibility area, what they know or the constraints they have. This can lead to duplication and inconsistency for the customer. Join these people up. Unite them around the customer need, and promote the flow of information between them through shared physical workspaces, virtual collaboration spaces or common goals. This weakens the functional silo, and strengthens the commitment to the broader team and the end-to-end customer outcome. Cross-functional teaming will improve agility, sharing of ideas and removal of bottlenecks. Most importantly, it will build trust across the business, enabling it to grow faster.

EDUCATE

Sometimes resistance to change comes simply from a lack of understanding. When you talk about what digital means, people may nod and smile, but that doesn’t mean they truly understand it. Those who aren’t born digital can learn. As a matter of fact, individuals who immerse themselves in the topic, and turn this foreign concept into their domain, can play a significant role in your company’s digital transformation. Not only do they truly understand the ins and outs of your organisation, but they also understand the implications of digital on the business. And, most importantly, they are capable of surviving change, which makes a truly powerful trifecta that will help steer any organisation through the fog of change.

Therefore, key to driving a digital mindset in any workforce is education, upskilling and action. Encourage a mindset that looks outward. The acquisition of knowledge is no longer restricted to those who can afford it; learning opportunities are everywhere and do not need to be developed in-house. A program combining mobile learning, forums for discussion, speaking events, and encouragement to experiment and apply digital principles to everyday work will go a long way to helping your people along the curve. When it comes to upskilling, add digital competencies to your skills framework and assess your organisation’s maturity. Be prepared to acknowledge that leadership and senior management may have the greatest gap to close. Remember that curiosity and a desire to learn are the most important attributes you can foster in an environment where change is a constant.

Thinking back to the Competing Values Framework, if you are transitioning your organisation from a culture that has been more internally focused, reorienting your teams back to their customers may be more important in the short to medium term than meeting the requirements of the internal machine. Building customer relationships is not just the responsibility of the sales team. A customer experience (CX) strategy across the company highlights the touchpoints and ‘moments of truth’ your customers have with you across your entire business (known as journeys), designed around principles that drive an optimal experience. If you want your teams to transition from process focused to customer focused, developing a CX strategy helps put everything in perspective, and enables you to focus investment and priorities around your customers. Once established, regular feedback loops are important to ensure your teams are working directly with the customer. In many cases, this can mean creating new roles within your business focused on providing more value to them faster, as well as implementing channels for your customers and teams to interact and communicate with one another.

DECENTRALISE DECISION MAKING

Is decision making in your organisation bound by a hierarchy culture and its by-product, the meeting mania of senior leaders? Delaying a decision because you can’t access the decision makers kills agility in your organisation and confirms that you favour process over customer. Key to creating a successful digital culture is decentralising decision making, ensuring that those who are close to your customers and data are able to make decisions autonomously, rather than going through rigorous decision-making processes. Empowering and trusting people to make the right decisions frees your company to move quickly and not lag in the face of change. Over time, this empowerment will perpetuate itself as teams take ownership over their projects and outputs, pushing themselves to provide more value to your customers.

As a leader, you can find it hard to let go, but now you need to rethink your whole decision-making process. Rather than encouraging big decisions that cannot be changed, incentivise your teams to make smaller decisions at a faster pace. It’s also important to minimise the number of decisions that cannot be revoked, which is exactly what digital technology enables you to do through making small investments that can have a big impact. Agreeing on the non-negotiables, such as underlying infrastructure, signifies that everything else is flexible within parameters. Smaller decisions mean less time is required to gather information, which also complements the fast-paced nature of the digital economy. If you have positioned your teams closer to the customer, and provided them with the channels to communicate effectively and collect meaningful data, they should have more than enough information to make smart decisions.

ENCOURAGE TEAM DIVERSITY AND CANDOUR

Changing your culture should go hand in hand with changing how your teams operate. A digital team needs to be stubborn in their commitment to execute, but also open and flexible to pivot at the drop of a hat. This may seem like a paradox, but what it really means is having a concrete vision that everyone believes in, then being fluid in terms of how you achieve this vision.

Diversity within teams encourages new and novel solutions to hard problems. As a leader, you need to be focused on diversity of thinking. Diversity of thinking enables organisations to identify new ways of doing things through varied perspectives working together. It goes well beyond race, gender or age to focus on people’s innate individual characteristics and abilities, creating an organisation that is powered by openness, collaboration and acceptance. Make sure diversity of thought is both applauded and protected. As Kim Scott, author of Radical Candor, puts it, ‘The fastest path to artificial relationships at work, and to the gravitational pull of organizational mediocrity, is to insist that everyone have the same worldview before building relationships with them.’ Do not allow the status quo to dilute or, worse, intimidate and quash fresh perspectives.

To encourage diversity of thinking, identify skill gaps and style gaps, and hire people to fill them. Actively look to hire people who will cause some friction and prompt debate. Through bringing different strengths and ideas to the table, employees will be able to engage and work with one another, while also challenging themselves and their peers, developing new and innovative solutions as your company digitally transforms itself. This can take some time to develop. However, as teams learn to embrace a feedback culture and manage differences respectfully, they also develop high levels of trust. In this way diversity of thinking creates teams that not only embrace change but thrive on it.

FOCUS ON DELIVERY

Digital delivery is a whole new kettle of fish. Cloud enables an extremely cost-effective and quick way to market. This has created a whole new level of software delivery through leveraging the cloud, platforms and data. Monolithic IT projects that traditionally could have taken years can now be broken down and delivered in weeks, at a fraction of the cost. Being able to deliver smaller chunks of value cost-effectively is an incredibly powerful thing. For one thing, ascertaining buy-in from other leaders within the organisation becomes a much easier task, because you are effectively offering them bite-sized chunks of value for small amounts of money, which traditionally was just not possible. That alone is positive, but there are a couple of other benefits associated with this kind of delivery model.

1. Decrease the risk and increase the appetite

At the very beginning of a project, the associated risk is at its highest. Once the project is complete, the risk decreases to zero. Longer projects inherently bring with them more risk as there is more opportunity for things to change and to go wrong. Being able to bring ideas to market quicker, as well as being able to divide larger projects into phases that still provide value, significantly decreases the risk. This means that business cases become much more palatable and projects much more likely to fall within budget, which used to be unheard of in the land of IT delivery.

Now executives no longer have to worry about spending millions of dollars on new software products. As the appetite for digital increases, teams can look to trial more ‘out there’ technologies and ideas that no manager would previously have signed off on, as the risk and price were too high. Key stakeholders within your executive team will suddenly be very interested in piloting new and novel technology, pushing teams and your organisation as a whole to be more creative and innovative.

2. Increase the wins and losses

Shorter project timeframes mean more opportunity for wins. Wins are a massive confidence booster for teams. This creates a delivery flywheel, where teams receive positive feedback from both customer and management through increasing the value they provide, and they are naturally motivated to repeat the success, generating more positive feedback. It’s important that these feedback channels are strong and healthy. Success begets success, and as your teams continue to deliver, momentum will build and your organisation will transform into a digital delivery machine.

As with any culture that encourages experimentation, there will be losses. That’s fine. In fact, it’s beneficial. Failures are the most important source of learning in an organisation. What’s great about delivering in the digital age is that costs are extremely low, and projects smaller and more iterative, so decisions can be easily reverted or rolled back. After any unsuccessful project, run a retrospective to determine the root cause of the failure, then share this finding with your organisation. Treat all missteps as valuable lessons that in the long run will help fuel the wins.