Why isn't digital transformation happening faster?
Sure, there are some pretty notable successes. But for every one digital transformation success story, I could name a dozen that failed. Many spectacularly.
So what gives? There's no doubt organizations are prioritizing these initiatives. There's plenty of good advice on how to make it happen. Harvard Business Review has published nearly three dozen books, case studies, webinars and articles on "digital transformation" in the last 12 months alone!
To paraphrase James Carville: It's the culture, stupid.
It's so obvious in retrospect that I wonder why we don't talk about it more. Maybe it's just easier to talk about user desirability, or total available market or technical feasibility. Those things might be challenging, but at least they're objective.
The problem with ignoring the realities of organizational culture is that we fool ourselves into believing we have a winning digital strategy when we really don't. To paraphrase again, it takes an organization to transform a business. We need to throw back the curtain on the true root causes of the failure of digital transformation initiatives and tackle dysfunctional organizational culture head on.
But how?
Organizational culture isn't as squishy as it might seem. That's not to say it won't be challenging, but if we take it step by step, it doesn't have to be impossible.
To tackle the issue of digital transformation, my favorite tool is Kim Cameron and Robert Quinn's Organizational Culture Assessment Instrument (or OCAI, for short).
Cameron and Quinn found that competing values produce tensions inside an organization — like magnets pulling toward the North and South Pole. They found that the most predictive tensions in defining organizational success are "flexibility vs. stability" and "internal focus vs. external focus".
Stay with me here. Now imagine these two tensions on a graph. The two polarities form quadrants resulting in four broad cultural archetypes:
• Clan culture (internal focus and flexible): A friendly workplace where leaders act like parental figures.
• Adhocracy culture (external focus and flexible): A dynamic workplace with leaders that stimulate innovation.
• Market culture (external focus and controlled): A competitive workplace with leaders like hard drivers.
• Hierarchy culture (internal focus and controlled): A structured and formalized workplace where leaders act like coordinators.
You can find many different subcultures inside any large organization, but I'll bet you can place your organizational culture into one of these four general categories.
The OCAI model gets useful for us when we map "digital transformation readiness" on top of it. Digital initiatives tend to fall into three broad categories: (1) Innovation and new product development; (2) Approach to customer, marketing and business development; and (3) Operational excellence. As you might expect, different cultural types handle different types of digital initiatives better than others.
As an example, if you're trying to revamp innovation and product development, adhocracy-oriented cultures tend to handle this type of digital transformation quite well. Strong personalities in those organizations push through initiatives through force of will. Other types of cultures will struggle with that.
Let's say your digital transformation instead involves your approach to customer, marketing and business development. Market-oriented and clan-oriented cultures tend to do that quite well. Market cultures are inherently externally focused, so that type of transformation is more natural for them. While clan cultures may be more internally focused, they tend to rally around their leaders when they perceive external threats.
If your digital initiative involves operational excellence, a hierarchy-oriented culture will serve you well. A hierarchy's strength is its process discipline and clear metrics. Change may be slow, but it is likely to be robust once implemented.
I think you get the idea. Each culture has its strengths and weaknesses when it comes to digital transformation initiatives. Put another way, your digital transformation initiative is likely to fail unless you begin with an honest assessment of the organizational environment and match that against what aspect of digital transformation you are trying to accomplish.
That's not to say that a non-ideal cultural archetype can't take on any digital transformation initiative, but you had better recognize the challenges up front. If you do, you can face them. If you don't, prepare to waste a ton of money. To paraphrase for the last time, Peter Drucker was right: Culture eats (digital) strategy for lunch. Fail to address organizational culture at your peril.
Jason Voiovich is chief customer officer at Minneapolis-based Logic PD, where he is responsible for strategic account acquisition, retention and profitability.
