The Importance of Culture Change in Digital Transformation

 

More and more businesses are seeking to digitally transform their organisations to meet the ever increasing demands and expectations of the modern, technically sophisticated customer. But few are prepared for the internal disruption this causes throughout the entire enterprise, which is why culture change and change management is so important.

 

For digital transformation to be successful, businesses need to adopt agile methodologies, processes and working practices. Becoming an agile business requires a cultural change. Similarly, as digital transformation is largely driven by the changing demands and expectations of customers, customer-centric strategies are a must and successfully developing and implementing these new approaches requires a more integrated and fluid organisation.

 

Laying the Foundations of Digital Transformation

 

Businesses whose digital transformation projects fail are usually guilty of failing to lay solid foundations:

 

Agile

Customer-Centric

Omni-Channel Experience

Laying these foundation stones requires huge culture change within the organisation and managing this process is challenging. Unfortunately, if your organisation wants to be successful, it is unavoidable.

Culture Change

 

Due to the ever changing and ever evolving nature of the modern world, businesses need to cultivate a culture of perpetual revolution.

 

The days of businesses setting a strategy for the next 5 years, then waiting for the business execute that strategy, are long gone. Setting a 5 year strategy is still important, but the need to be able to rapidly pivot that strategy at will is fundamentally important to the long-term strategic success of the enterprise. Most businesses, especially big and established companies, are difficult to turn and this is why aggressive new market entrants are able to sweep in and digitally disrupt industries, markets and supply chains. Established companies are too slow to respond and by the time they have mounted a meaningful response, the new entrant has established a strong position in the market and is almost impossible to remove. Companies need to be able to pivot quickly to respond to new market entrants and changes in the competitive landscape.

 

Similarly, as new technologies emerge, customers and other major stakeholder group's demands and expectations change. The innovation roadmap you are following today could be redundant in weeks or months. Agility enables quick pivoting of development roadmaps, rapid transformation of customer-centric strategies and the re-engineering of omni-channel customer experiences.

 

All these cases cause enterprise wide disruption and with the frequency of these disruptions rising, a culture of change and constant revolution is a must.

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Why Digital Transformation Is Private Equity's Sharpest Tool

 

Private equity groups are always looking for the sure thing - it's part of their culture. It's not surprising they've been so slow to embrace Digital Transformation, but money is usually pretty conservative. So here's a wake-up call for anyone in private equity - you need to take Digital Transformation seriously and make it one of the tools of your trade.

 

Private equity has to create value in its acquisitions. That's pretty obvious and we know the common strategies. In the past, a private equity firm would acquire a business with the intent of growing it and hopefully acquiring another, putting them together and building greater value for both companies. Part of that process would involve creating efficiencies within the new company through economies of scale and instituting better practices for sales, marketing, supply chain and operations.

 

That's what Digital Transformation is all about - creating greater efficiencies and best practices - but for the digital age - not the steam age. Private equity has to realize scale is not the only efficiency - from customer management systems (CMS), to building out robust e-commerce engines, to exploding a brand, Digital Transformation can turn around an undervalued company and absolutely smash competition with just a bit of digital vision.

 

Digital Transformation affects all aspects of a company - and each aspect represents another potential growth point for private equity. Think about this: private equity firms always worry about losing key employees after an acquisition. A well executed Digital Transformation always includes a clear digital vision delivered to the company first - and always considers how to improve its employee's work experience by utilizing every chance to supercharge internal processes and efficiencies. Think how that will affect morale during a take-over - and help improve ROI.

 

In fact, private equity firms would all be wise to initiate a Digital Transformation within their four walls. You can't just pound your chest like a gorilla - you have to rip the antiquated doors off your own walls. Sure, hedge funds are computerized out the yin/yang but private equity firms struggle. In addition, how well do they manage their own digital presence and their public digital profile - their leadership casting? Are they active on the social media front? Are they providing opportunities for top talent to share their vision - and build their digital profile? Everyone in PE firms know a sharp suit is important for first impressions - so help your firm, and your people, look sharp on the web.

 

These are just a couple of examples of how Digital Transformation can affect both the efficiency and culture of a company - before it even addresses creating greater revenues and new markets. Every PE firm in the world should be making Digital Transformation part of their tool set before they are the ones that get out transformed!

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Digital Transformation - What It Means for Global Enterprises

 

Fundamentally, a business enterprise would exist in a 'going concern' to make profits and maximize the shareholders' value. To be able to deliver business results consistently then becomes most important objective. There could be a number of strategies, programs and policies that an enterprise would practice to deliver business results. Digital transformation is one such innovative strategy that an enterprise could look to practice in a structured and time bound manner.

 

Here is an important dimension that I would like to highlight, and to put it simply, digital transformation would bridge the gap that always existed when Digital (in business parlance this would mean Information and Communication Technologies) became necessity for efficiency, but remained a huge cost center and avenue of change inertia for a majority of times. It is all about getting closer to transforming this cost center to a revenue center, by consistently and selectively applying Digital to get closer to customers and stakeholders alike to make difference to the way they live, or do business, or collaborate.

 

For global enterprises what this means is that when its digital interests are driven by keeping its customers at large in focus they can be construed as making significant strides in their digital transformation strategy. Depending on what stage of technology adoption they are into (1st, 2nd or 3rd generation) the DT intensity would vary. For instance, recently I wrote an article on how GRC solutions can be revenue enablers - GRC then becomes a part of a broader digital transformation strategy.

 

A majority of new age business enterprises would have made substantial investments in implementation of most grass root enterprise systems. That is a whole reasons why from the technology provider ecosystem do we get to hear about mobile, analytics, social and cloud most of the times when it comes to digital transformation, which is a contemporary articulation. The fact remains that it is up to the CIO and other CxO executive team members to figure out what would be a right beginning of their digital transformation program and what would its life cycle look like in their company. In other words, an enterprise could really be ready for digital even if they aren't talking about social, analytics and mobility, similarly, even if a relatively new enterprise (such as a start-up) can still be talking of massive investments into DT even if they do not use large enterprise systems, for instance an ERP. As we said, the key to remember, and hence to derive most benefits of amazing digital transformation program, is to know how and if digital investments made by an enterprise are taking it closer to a customer to make difference to the way they live, or do business, or collaborate.

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