Digital transformation has become fixed in the business and technology lexicon. For most, it’s no longer a matter of “should your organization undergo digital transformation” but “when will it.” In fact, many organizations have re-prioritized strategic digital transformation as an enterprise-wide movement rather than something that is relegated solely to the IT department.
Organizations are now going all in, using digital innovation as a way to enhance internal and external business outcomes. And it’s paying off. According to Insight’s 2019 Intelligent Technology Index, 89% of IT decision makers report their digital innovation investments have been “moderately or very successful.”
Still, despite the mass adoption of digital innovation, it’s not without its challenges. While IT supply chain management remains a top concern, a more pressing concern is gaining internal buy-in. Mixed priorities, deep-rooted viewpoints and resistance to change create misalignment among teams and can be the death knell of any transformation effort.
That’s why step one on the path to digital innovation is to breed a culture of innovation.
Primary Drivers Of Digital Transformation
For most organizations, the decision to foray into digital transformation is primarily driven by increased competitive pressures or growth opportunities. In more recent years, the need to keep up with regulatory standards in data security has become another precursor to seeking out digital transformation efforts. But growth and market threats continue to remain the top drivers.
As such, the majority of transformation efforts are focused on improving the business infrastructure as well as the customer experience. In 2019, 52% of IT decision-makers reported primary objectives for digital innovation in their organizations were to improve operations and business procedures, according to the aforementioned Insight report. Just behind that, at 47%, was to enhance the customer experience and customer relationship.
But, as most organizations are finding, these two are inextricably linked. Internal operations have to be aligned before you can deliver a quality customer experience at scale. Still, this remains a primary pain point for most organizations.
Challenges Continue To Stall Transformation
We’ve come a long way in the digital innovation process, but as with any overhaul of the infrastructure and platforms, there will be challenges each organization will have to navigate. These include security and data privacy concerns, upfront costs and acquiring the knowledge and skill sets internally to ensure a return on investment. The biggest challenge, however, remains gaining organizational buy-in.
And this is where culture comes into the picture — more precisely, developing a culture of innovation. This is commonly overlooked by organizational leaders when it comes to transformation endeavors, however.
It’s a natural inclination to prioritize building the tech stack first, but by putting a plan in place to develop a culture of innovation, it will set the proper foundation for a successful digital transformation initiative.
Culture Is The Foundation To Transformation
True transformation cannot occur if your people are not fully invested in it. If they are resistant to change, particularly when it comes to new technology and a new set of processes, it will result in adoption challenges, inefficiencies and a poor return on the transformation investment.
The team has to rally around a shared vision. Purpose has to be emphasized over profit, and the leadership team has to commit to putting that into practice every day. Transformation through innovation has to be woven into the fabric of the company’s culture for the team to be able to connect the dots between the vision and their work. When they do, it will begin to create a cultural shift and will guide their commitment to digital innovation.
How do you begin to establish a culture that is ripe for innovation?
1. Show them how to get there. One place to start is with an innovation training program based on core values and principles that champions new approaches to problem-solving. For our team, this included:
• Starting with why.
• Converting problems to opportunities.
• Embracing failures as part of the process.
• Encouraging new ideas.
• Welcoming some risk-taking.
Keep in mind, digital innovation will also challenge your team to reprogram engrained thought processes and behaviors. Be prepared to train your team on new methodologies they can adopt to stimulate innovative thinking.
2. Get the team’s buy-in. Get the team to rally around a shared vision and set of core values. This will make getting them on board for digital transformation an easier sell, as they’ll be able to see how it directly ties into the vision and serves the deeper purpose. Starting with “why” is key, and it will also empower your leadership team to clearly define transformation goals and success metrics.
3. Create a culture of learning and growth orientation. At the core of any digital transformation is change management, which involves people adapting to a new set of methods and policies. By instilling a culture of learning and growth orientation (fixed mindset vs. growth mindset), you can create an environment that is receptive to adopting new approaches.
4. Establish an innovation rhythm. This could be in the form of internal idea-generating competitions, hackathons or instilling a policy for innovation time like Google does. At my company, we started with an idea-generation competition. We predetermined six areas of focus and encouraged employees to submit their ideas for innovation within those areas. There was a deadline and an additional motivation: The top three ideas would receive an award and company-wide recognition.
Innovation is becoming an integral part of many organizations’ strategies. In fact, Prophet’s 2019 The State of Digital Transformation report found that nearly 50% of respondents reported building in-house innovation teams. To compete, organizations will have to think about their internal innovation strategies, especially if they are planning to undergo a transformation endeavor. But keep in mind, a culture of innovation doesn’t happen by accident. It requires deliberate steps and it has to become a part of your organization’s core processes and fabric for it to take root.