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July 10, 2020

Digital Transformation Trends: Culture is the Key to Success

5
Minute Read

Market disruptions no longer allow for corporate cultures to course correct on their own timeline. Digital transformation initiatives will only succeed if companies also launch an equally robust initiative to modernize their cultures.

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In 1956 Peter Drucker coined the phrase “culture eats strategy for breakfast.” Today we can take it one step further -- culture eats strategy for breakfast, lunch, and dinner!

Market disruptions no longer allow for corporate cultures to course correct on their own timeline, which is why for digital transformation to be successful, you must also transform your culture. 

Digital transformation initiatives will only succeed if companies also launch an equally robust initiative to modernize their cultures.

pull quote: Digital transformation initiatives

Corporate Rhythm

In reviewing multiple digital transformation successes and failures; the writings of experts in the field; and my own experiences in transforming our company from a lifestyle firm to a hyper-growth consultancy, one thing has become clear: successful companies have the correct corporate rhythm to execute disruptive changes. 

pull quote: corporate rhythm

So what is a corporate rhythm? It’s the clearly defined and repeatable process that keeps your people committed, accountable, and measured.

In other words, it’s the engine that defines what a company will do, how it will do it, who will do it, and when it will be done. Your corporate rhythm allows your culture to adapt -- or not -- to the strategies you put in place to adapt to market disruptions.

There is a strong correlation between corporate rhythm and business performance. While the right rhythm isn’t the only thing required for success, it’s impossible to succeed without one.

Finding the Correct Corporate Rhythm

There is no one-size-fits-all corporate rhythm. Various leaders and experts provide several excellent models that you can use (check out Patrick Lencioni or Verne Harnish, for starters). 

Yet while each corporation’s rhythm is unique, there are several guiding principles that can help you establish an ideal culture in your own company:

  1. Define the correct corporate structure
  2. Hire the correct people into that structure
  3. Establish processes to build trust
  4. Set priorities, execute them, and measure your transformation 

In a perfect world, you would do this at the organization, program, and operational levels. 

Defining the Correct Structure

Just as each company’s rhythm is unique, so is its structure. Some consistent characteristics of a good organizational structure include:

  • Clearly defined responsibilities (which are far more critical than titles). 
  • Clearly defined ownership (if two people have accountability, no one does).
  • Consistently measured KPIs to determine if services shared across silos are working. 
  • Two mapped structures: your ideal structure if you had no people constraints, and your existing structure. (You won’t get to your ideal, but do your best.)
  • An unemotional basis for assessing people: when restructuring your existing people and roles, ask yourself if you would rehire each person at the same pay, title, and responsibilities that they currently have.

Identifying the Correct People

pull-quote: Identifying the Correct People

While most decision makers report that having great people is important, few companies actually prioritize this.

In order for a company to align their actions with their vision, they must follow three key concepts.

1. The people that got you here won’t necessarily get you there

As difficult as it can be, you must be more loyal to your corporate purpose than to your people. Companies that are trying to achieve digital transformations and adapt to technological disruptions in their marketplace are usually well-established or even legacy companies. 

This means that you have loyal, long-time employees who helped to make the company successful. Unfortunately, navigating modern market disruptions may require different skill sets than what your veteran employees have.

Give your veterans a chance to prove that they can thrive in their new roles, but don’t take it for granted that they can. 

2. You get what you pay for: above-average people demand above-average compensation for a reason

Too often companies think that they can pay someone less without sacrificing too much productivity. While this may hold true at certain positions, the opposite is true for leadership roles. 

Hiring at the top-end of the spectrum leads to at least 1.5x the productivity as hiring an average employee. Pay someone 20% more, get 50% more productivity. This doesn’t even include intangibles such as an enhanced competitive edge, innovations, etc.

Hire the best that you can afford -- and understand that the best will ask for more than average compensation.

3. If you have to prioritize, start with the top-level leadership at your company

When you pair the right leaders with the correct corporate rhythm, your company’s silos will self-organize. 

Start at the top, and look for leaders who will be great at driving internal transformation. These are people who demonstrate: a need for achievement, competitiveness, and confidence and optimism.

Establishing Processes

Once you’ve got the correct structure and people, you’ll need to assess your processes. 

Transformation means change, and change is scary. You’ll need trust as part of your culture to successfully transform. Your processes, which will govern how the people in your organization interact with one another, must be built on a foundation of trust.

As Patrick Lencioni notes, teams must feel a shared purpose, value, and mission -- which is put above ego or ambition. Trust allows for productive conflict, where everyone can share their views, and make commitments to which they can be held accountable. When great people are accountable, transformational results are achieved. 

Set, Execute, and Measure

pull-quote: setting goals

With the right structure, people, and processes in place, you are now best positioned to set goals, execute them, and measure your transformation.

Setting Goals

When setting goals, set strategy goals at the corporate level, set priorities goals at the program level, and set quality goals at the operational level.

With these goals set, you can begin to execute them. Your established processes will help hold people accountable. 

Executing Goals

At the corporate level, the CEO is the most important role in enforcing the corporate rhythm. At the program level it will be the program manager, and at the operation level it will be the line managers.

Typical transformation projects will have several, self-managed siloed teams responsible for specific deliverables. If a program doesn’t fail because of ballooning scope, it will fail because of misunderstood commitments between crucial silos. 

Measuring Goals

It’s not rocket science -- you can’t manage what you can’t measure. How can you know if you’re successful in your initiatives if you aren’t measuring the progress of the completion, and the value delivered?

Track the progression of your key corporate, program and operational initiatives only through the people that you hold directly accountable for their delivery. Ideally, it should be one person reporting back per initiative (though one person will usually own many initiatives). 

The key items you want to track are: initiative progress, initiative health, and initiative quality.

These KPIs require a clear vision of where you are going and why you want to get there. You’ll need to identify that information prior to beginning, so that you can course-correct as needed, and pivot your original ideas if they turn out to be completely wrong. 

There are several tools that you can use to track your KPIs. For example, spreadsheets can handle almost everything you need. If your organization requires more governance, you can look at tools like Jira, Asana, or Lattice to help manage goals and accountability.

Where to Begin?

graphics: standard (34% over budget) and transformational IT projects (68% over budget)

Of the three rhythms (corporate, program, and operational), I consider the corporate process to be the most important one to get right in order to drive digital and cultural transformation. 

However, corporate transformation requires a lot of alignment and commitment throughout the most entrenched parts of the organization. Therefore, I recommend starting with transformation at the program level, or the individual projects that you will take on to achieve your digital transformation. These are your consistent base hits necessary to win the digital transformation game.

Since this is ground zero for most digital transformations, it is crucial that your process for governing programs helps you keep a tight and attainable scope. Standard IT projects typically go over budget by about 34%, but transformational projects often double that number. 

By their very nature, transformational projects require companies to step into unfamiliar territory, which leads to confusion, constantly shifting needs, and no clear north star to guide decisions. The result? The project fails, the transformation loses steam, but the worst part is that people lose confidence in the transformational vision.

By enabling processes at the program level with a focus on prioritization, you will be able to drive and enforce the new culture you need, not disrupt the corporate status quo (just yet), and therefore have a much higher chance of success.

Conclusion

At the end of the day, it all boils down to core components of your company culture. Patrick Lencioni wrote, “Culture lives in the way things get done,” which I think is one of the most elegant and succinct definitions of culture I have ever read.

Culture in and of itself won’t work without being run by people of similar values, a common purpose, and foundation of trust.  

Ready to dive in and further understand, establish, or improve your own corporate rhythms? Contact the team of experts at Object Edge today.

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