When talking about digital transformation, the emphasis is on how a business can be reimagined by leveraging technology to create new products, services and business models across industries.
Cultural transformation and change management are the overarching themes that underpin all digital transformation initiatives and ensure these changes are correctly implemented, understood and embraced.
Why cultural transformation needs to happen
According to Birje, there are three key dimensions that underpin why cultural transformation needs to happen. These are based on how enterprise teams must adapt and evolve to new ways of working to make digital transformation a success.
- Business and tech team collaboration
Increasingly, business teams—who understand business processes, products and services—need to work more closely and collaborate with technology teams, who build the platforms and run the IT functions within an organization.
"The proximity of these teams has fused. To deliver tangible business results and deliver IT and new technologies continuously, these teams have to ideate and innovate together. This way of working is facilitated by agile operating models, where both business and technology units have a more frequent collaboration and empathy for each other,” adds Birje.
- Globally distributed teams
The pandemic accelerated the virtual collaboration of globally distributed teams within the enterprise, as well as externally with partners and consumers. Enterprises had to drive and support this collaboration.
In this environment, organizations need to support their employees in adopting new ways of working, such as new communication norms, asynchronous working hours, collaboration tools and interaction with other cultures.
“The ability to collaborate virtually and effectively has become an important cultural change needed for effective digital transformation,” says Birje.
- Cross-dimensional teams
Digital transformation has led to the need for cross-dimensional and cross functional teams that intersect across many areas of an enterprise.
Birje explains: “There are design teams that look at user experience and design of business processes, and technology teams that deliver those designs, or business processes teams and data teams that are helping to create insights that can help innovate the business. These are very different streams and capabilities and yet the teams need to collaborate and deliver on business outcomes together.”
He adds: “This cross-cultural collaboration in a virtual world is taking place at a higher pace and frequency than ever before. Often it is a lack of agility that is creating a cultural barrier to change for a lot of enterprises.”
The main blocker to cultural transformation
In large enterprises, the biggest blocker to cultural transformation is change resistance or even perhaps the realization of the need for this change.
In large and complex organizations with siloes, it becomes more complex to adopt change, because siloed teams don’t have visibility on the common benefits of digital transformation. This causes friction and a resistance to change.
Ineffective and inconsistent communication can have the same effect. If everything is changing, employees need to understand the reason for the new ways of working, as well as the benefits. If this is not communicated effectively by the leaders, change resistance will infect the workforce.
“One of the biggest mistakes that leaders can make is to be inconsistent with messaging about their vision for digital transformation and the benefits that it will bring,” says Birje.
Overcoming change resistance and bringing everyone on the digital journey
In digitally progressive enterprises, a significant success factor in digital and cultural transformation comes down to the leaders.
This starts with the CEO, CIO, CTO and heads of business identifying that cultural transformation or organizational change is an integral part of digital transformation success.
"This aspect often gets neglected and becomes an afterthought. It needs to be run as a program within the digital transformation journey,” says Birje.
He adds: “There are digital transformation consulting firms, like HCLTech, that offer organizational change management programs to drive cultural change along with technology transformation. However, progressive digital enterprises should also adopt organizational change management capabilities within themselves.”
To overcome change resistance and bring everyone on the digital journey, the need to define the digital aspirations of the enterprise, and what success looks like, is also vital.
Is the enterprise’s aim to improve product and service experience to its end users, partners or internal employees? Is the priority to launch new products and services faster and in a more agile way? Or is the focus on transforming the core of the business and gaining operational efficiencies?
These questions must be clearly answered and effectively communicated.
Continuous and consistent communication of results on the digital transformation roadmap is a third way to ensure cultural transformation is achieved.
Birje says: “Digital transformation is continuous, and leaders need the ability to continuously demonstrate results using matrix KPIs, industry frameworks, OKRs or data frameworks that help leaders define the benefits in various metrics, from business to IT, technology and effort outcomes.”
Consistent messaging for change adoption: Digital acceleration in action
There are many examples of where consistent messaging has helped enterprises achieve digital acceleration, while improving employee’s participation and receptiveness to change adoption.
One of HCLTech’s largest customers is a leading global retail bank in Europe. Over the last five years, it has embarked on a continuous digital journey. Within this, the bank has increased the adoption of digital banking services, launched a digital platform ahead of the launch of physical retail branches in new countries, improved fraud protection through its loyal customer platform organization and cross-pollinated products to give customers more personalized offerings.
"At every stage of change, they communicated this to their employees. They communicated the progress, the benefits and the velocity of change,” says Birje.
Another customer is a large retailer of furniture and home furnishings. It was able to improve last mile deliveries by accelerating its digital agenda, including the platforms and the technologies it used for warehouse management. Adopting these changes sped up the ability to deliver lower cost points to the company’s end customers. This increased the adoption of the digital platforms by the end customers for procurement and for last mile deliveries.
“Constant communication of the benefits to the employees, partners, and end customers ensured change adoption with minimum resistance,” says Birje.
The continuous journey of cultural and digital transformation
Traditionally, enterprises approached digital change through a waterfall methodology, where transformational change tasks and processes are completed in a linear fashion.
Today, digital change produces high velocity or disruptive results. Looking at digital natives—such as Uber, Airbnb, Wayfair and Tesla—they use technology to continuously innovate and deliver change constantly. These companies are creating transformative change in their markets and in fact, the whole of society.
Traditional enterprises have been inspired by this trend and are seeking to replicate continuous change in their organizations.
"Over the last six years, large enterprises have focused on identifying the areas of their business processes that differentiate them in the context of their market. There is now a realization that whatever differentiates the enterprise needs to be in a continuous change journey,” explains Birje.
He adds: “To satisfy their brand, all of the individual enterprise differentiators need to be in a constant velocity of change, which means the business will always seek to tweak, innovate, ideate and change parts of the differentiation process.”
Moving away from the waterfall methodology to the adoption of continuous change requires a holistic cultural transformation that champions change adoption.
This will provide forward-looking enterprises the ability to; reorganize team structures between business and technology units, identify and deliver value chains with a composable business and technology architecture, quickly move away from monolithic systems and technologies that limit change and continuously take insights from business data to ideate and state the impact of the digital changes to employees, partners and customers.