How To Create a Digital Culture in Your Organization

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I’m going to share what I’ve learned about creating a digital culture, based on what I’ve seen from companies around the world.

You can think of culture as the shared values, attitudes, behaviors, and beliefs that characterize and guide a company.

My favorite explanation of culture is from The First 90 Days, where the author says it’s what people do, not what they say they do – as they express their values.

A Digital Culture is simply the shared attributes common across how digital organizations think and act (more on this below.)

Key Insights on Digital Culture

Here are a few of my most important lessons I learned about driving Digital Culture:

  1. Distinguish “Digital Culture” from classic “organizational culture” by defining Digital Culture as the characteristics of a digital organization.
  2. Think of culture change as “behavior change” (just like any Adoption & Change Management exercise – and know the basics of the ADKAR change framework)
  3. Get specific about “behavior changes” that reflect Digital Dexterity (particularly around customer obsession, agility, and innovation)
  4. Create clarity around what Digital behaviors look like – and contrast Analog behaviors and Digital behaviors (see below)
  5. Measure the gap in perception between leadership and employees in terms of Digital Culture (addressing this gap seems to be a smart strategy by savvy culture change artists… and reducing the gap gets leaders and employees rowing in the same direction.)

Culture Can Be the Gate or the Gateway

It’s been said, “Culture eats strategy for breakfast.”

And it’s been said, when it comes to digital innovation, “Change happens at the speed of culture.”

And business leaders around the world rank culture as THE biggest blocker to their digital transformation. Yet, if business leaders don’t change, their business dies.

What the Digital Masters do that the others don’t, is they focus on creating Digital Dexterity by building a Digital Culture. (According to Gartner, Digital Dexterity is the ability and desire to exploit existing technologies for better business outcomes.)

Why Digital Culture (vs. just “Culture”)

In my experience, it helps to create “culture change in the large”, by starting with “culture change in the small”, focused on creating a Digital Culture.

By focusing on adopting a Digital Culture, you set the stage for success in the Digital Era by modeling key attributes of successful digital organizations that have paved the way.

For example, one simple mantra we used at Microsoft was “Mobile-First, Cloud-First” to get employees thinking and acting more like a digital organization.  We also used the phrase, “One Microsoft”, to get employees thinking beyond org boundaries, and to enable innovation at greater speed, and to help wrap the company around our customers.

While you would not call those ideas Microsoft’s culture per se, you could say they helped shift Microsoft in a digital direction, by improving Digital Dexterity, which helped set the stage to hit refresh on “culture in the large”.

Act Your Way to a Digital Culture

In Building a Digital Culture, PwC shares insight into how it’s more effective to act your way there, than to think your way there:

“You can’t change the culture just by trying to convince people of the merits of digitization.  The trick is to focus on the way people act on a day-to-day basis.  John Katzenbach, founder of Strategy&’s Katzenbach Center (an institute dedicated to the development and application of innovative ideas for organizational culture and change), notes that it is much easier to act your way into new thinking than to think your way into new actions.

In many cases, only small changes in operations and actions are required to produce a ripple effect throughout an organization.  A recent in-depth study of retail backroom practices, conducted by Strategy&, confirms the key role that behaviors play.  The study included nine retailers, including a mainly analog, bricks-and-mortar model; highly integrated multichannel operations; and pure online players.  We found that it is possible to orient behaviors toward a digital culture once you identify what distinguishes the analog, or offline, sales environment from the digital.”

Analog vs. Digital Culture

It’s tough to drive to something if you don’t know what it is.  Sometimes the best way to understand something is to use the principle of contrast and compare.

In Building a Digital Culture, PwC shares a view on what an Analog Culture looks like versus a Digital Culture:

Analog Culture Digital Culture
Customers and Demand

  • Pushes products into the market
  • Driven by purchase and supply

Organization

  • Strong hierarchy
  • Slow decision making
  • Defined tasks (“do this job”)

Attitudes and Ways of Working

  • Understands needs of long-standing customers and how to fulfill them
  • Orientation toward status quo, past lessons, and accepting constraints
  • Experienced and stability count
  • Homogenous teams, working within departmental silos
  • Career progression within defined paths
  • Focus on planning and optimization
Customers and Demand

  • Pulls ideas from the market
  • Driven by customer demand

Organization

  • Flat hierarchy
  • Rapid decision making
  • Result and product orientation
  • Empowered employees (“find a way to achieve a goal”)

Attitudes and Ways of Working

  • Understands needs of digital customers and how to adopt new trends
  • Orientation toward innovation, improvement, and overcoming constraints
  • Potential, vision, curiosity, motivation, flexibility and adaptability count
  • Mixed teams working in cross-functional integrated communities
  • Strong collaboration
  • Rapid, unpredictable career progression
    Focus on rapid launch and learn

7 Attributes of Digital Culture

A Digital Culture is simply the key characteristics, or attributes, of how a Digital Organization thinks and acts.

In The Digital Culture Challenge: Closing the Employee Leadership Gap, Capgemini, defines Digital Culture as a set of seven key attributes of digital organizations:

  1. Agility and Flexibility
  2. Collaboration
  3. Customer Centricity
  4. Data-Driven Decision Making
  5. Digital-First Mindset
  6. Innovation
  7. Open Culture

Here is a brief explanation of each attribute according to Capgemini:

  • Agility and Flexibility is the speed and flexibility of an organization to adapt to changing demands.
  • Collaboration is the creation of cross-functional, inter-departmental teams to harness an organization’s collective skills.
  • Customer-Centricity is a focus on the customer to transform the customer experience and co-create new solutions and products.
  • Data-driven decision making is the use of data and analytics to make better business decisions.
  • Digital-First Mindset is a mindset where digital solutions are the default (for example, think “Mobile-First, Cloud-First.”)
  • Innovation is the prevalence of behaviors that support innovation such as risk taking, disruptive thinking, and the exploration of new ideas.
  • Open Culture is the extent of partnerships with external networks, such as third-party vendors, startups or customers (think “plays well with others” and plays in a larger sandbox on the Web).

Are those the only ones? No. Are there variations of above? Of course. For example, you might refer to the idea of “Customer-Centricity” as “Customer-Obsessed”, or “Customer-Obsession.”

if you are looking to improve your ability to survive and thrive in the Digital Era, those labels aren’t the big deal. What matters is the idea behind each of those categories.

It’s those ideas that help you shape a company with more Digital Dexterity.

And in today’s world, it’s not the big that eat the small. It’s the fast that eat the slow.

Keep in mind, the three key values really revolve around customer focus, agility, and innovation.

Digital Culture Habits and Practices

The real key to creating a Digital Culture is to understand the habits and practices to adopt. 

For example, what would it mean to be customer-centric?

Gartner identifies 10 habits of customer centric organizations:

  1. Continuously listening to customers
  2. Consistently following up with customers on their feedback
  3. Acting proactively to anticipate needs
  4. Building customer empathy into processes and policies
  5. Respect customer privacy
  6. Sharing knowledge internally with customers
  7. Motivating employees to stay engaged
  8. Acting systematically to improve the customer experience
  9. Creating accountability for customer experience improvements
  10. Adapting to customer demands and circumstances in real time

See Gartner’s Is Your Organization Customer Centric?

Measuring the 7 Attributes of Digital Culture

If you are clear on the attributes of a Digital Culture, then you can also create clarity around the behaviors that exemplify those attributes.

And once you have those behaviors identified, you can then assess performance against the desired behaviors.

In The Digital Culture Challenge: Closing the Employee Leadership Gap, Capgemini, shares examples of questions they used to assess how well the organization is reflecting a Digital Culture and acting like a digital organization:

  • Innovation and Culture of Openness
    • We can test new ideas, learn and deploy at pace
    • Although lab(s) is in place, innovation is carried out across the organization
    • We have access to a wide ecosystem and co-develop solutions with partners
  • Data-Driven Culture
    • We use analytics to identify new business opportunities and make future predictions
    • We make decisions based on data and analytics
  • Agility and Flexibility
    • Our company encourages bold, rapid and independent decision-making
    • The processes in our company are flexible and adapted as required
  • Digital-First Mindset
    • People naturally think of digital technologies when we consider ways to improve
    • We take advantage of digital solutions wherever possible

The Employee and Leadership Gap in Digital Culture

A great place to focus your Digital Culture efforts is on the gap between leadership perception and employee perception of your company’s Digital Culture.

One of the most insightful things I’ve seen around driving Digital Culture, is the idea of measuring the gap between the leadership and the employees in terms how well the organization is acting like a Digital Culture.

In The Digital Culture Challenge: Closing the Employee Leadership Gap, Capgemini, walks through how they figured out this gap between leadership and employees.  By using simple surveys, and then comparing responses, they could clearly see where the biggest gaps are.

As you can imagine, by exposing this gap, this helps to quickly see where there are challenges in embracing a Digital Culture, and this can help focus your efforts.

The Front Runners of Digital Culture

The Digital Culture Challenge: Closing the Employee Leadership Gap, Capgemini identifies a group of Digital Culture leaders they call the “Front Runners.”

The “Front Runners” outperform the “Followers” and the “Slow Movers.”

They determined the “Front Runners” through a combination of two dimensions:

  1. They have performed consistently well across the seven dimensions of digital culture
  2. Their leadership has largely succeeded in aligning the wider organization to the desired culture

The HOW of Culture Change

The secret of culture change is to focus on behavior change (and “thoughts” are behaviors, too). 

There are lots of tools and frameworks for this (ADKAR, Influencer, Kotter’s 8-Step Change Model, Lewin’s 3-Stage Model of Change, McKinsey’s 7-S model, The Six Boxes Model, etc.)

ADKAR is a nice way to remember Awareness, Desire, Knowledge, Ability, and Reinforcement.

Regardless of whatever framework you use, keep a few key things in mind to help you stay on track:

  1. Distinguish between Current State  (As-Is State) vs. Future State (To-Be State)
  2. Think in terms of people, process, and tech
  3. Reinforce desired behaviors in a positive way (and “thoughts are behaviors, too”)

6 Levers to Change a Culture

In Building a Digital Culture, PwC determined a set of six levers to change a culture.  Three are formal: leadership policies, role definitions, and people processes.  Three are informal:  Key behaviors, role models, and networks.

Here are the six levers according to PwC:

  1. Leadership policies: One hundre percent buy-in from the top of the comany is demonstrated in words and deeds.
  2. Role definitions: Job descriptions detail what people do, and htus give staffers a clear career path that validates both the analog and digital worlds.
  3. People processes:  The human resources deparment understands the needs to hire, train, and reward people based on the corporate goal of delivering the multichannel experience.
  4. Key behaviors: Decision makers pick just a few incremental changes in everyday practice to make a different in introduction digitization.
  5. Role models: Executives identify (or hire) people who epitomize the key behaviors and promote them throughout the company.
  6. Networks: People throughout the company take part in informal networks, such as clubs, and social groups, to spread the word.

7-Step Framework for Digital Culture Transformation

How do you evolve your digital culture?

Capgemini suggests a blend of top-down and bottom-up approaches to evolve a digital culture in their guide, The Digital Culture Challenge: Closing the Employee Leadership Gap:

  1. Deploy change agents and empower employees to drive digital culture
  2. Design new digital KPIs focused on behaviros rather than successes or failures
  3. Make digital culture change tangible
  4. Use collaboration tools to increase transparency
  5. Invest in the digital skills that matter
  6. Take a system thinking approach to culture change
  7. Set a clear vision and have visible leadership involvement

Based on its research and findings, here is how Capgemini suggests going about the change:

  • Organizations need to identify and encourage the employees who can be the change agents or “digital ambassadors.”
  • Shift the focus from outcomes and traditional KPIs that create resistance to culture transformation, to creating performance systems that reward digital behavior.  Questions might include:
    • Are employee collaborating across boundary units?
    • Are they engaging with the wider ecosystem?
    • Are they encouraging other teams to use new behaviors?
  • Leadership and management needs to translate the broader digital vision into compelling and tangible business outcomes that employees can relate to, and feel accountable for.
  • Leverage social networks to connect the bottom and top of the organization.
  • Make a significant commitment to employees to help them retool and reskill, to make it over one of the top hurdles to culture transformation.
  • Enact multiple changes at the same time so that the organization develops reinforcing loops of behavior.
  • Leaders need to visibly live the values they are trying to embed in the organization.

Employee-Centric vs. Management Centric

In The Digital Culture Challenge: Closing the Employee Leadership Gap, Capgemini shares an example to help illustrate the difference between taking an employee-centric vs. management-centric approach, to inspire and nurture innovation:

Tools should be developed and deployed while keeping employee interests in mind.  As Ethan Bernstein, a Harvard Business School Professor explained: 

“Imagine the difference between an employee-centric and management-centric approach: ‘Here is a tool for your to track your steps’ (employee-centric) or ‘Here is a tool for your manager to track your steps for you’ (management-centric).  If you know your manager is tracking performance, you deliver compliance with her or his expectations.  If you are the only one tracking it, you experiment to see how different behaviors trigger different results, yielding improvement and innovation and change.”

The Pain of Culture Change

Here is a helpful blurb from the Netflix Culture guide that helps explain the pain of culture change:

“In many organizations, there is an unhealthy emphasis and not much freedom.  These organizations didn’t start that way, but the python of process squeezed harder every time something went wrong.  Specifically, many organizations have freedom and responsibility when they are small.  Everyone knows each other, and everyone picks up the trash. As they grow, however, the business gets more complex, and sometimes the average talent and passion level goes down. 

As the informal, smooth-running organization starts to break down, pockets of chaos emerge, and the general outcry is to “grow up” and add traditional management and process to reduce the chaos.  As rules and procedures proliterate, the value system evolves into rule following (i.e. that is how you get rewarded).  If this standard management approach is done well, then the company becomes very efficient at its business model–the system is dummy-proofed, and creative thinkers are told to stop questioning the status quo.  This kind of organization is very specialized and well adapted to its business model.  Eventually, however, over 10 to 100 years, the business model inevitably has to change, and most of these companies are unable to adapt.”

Dion Hinchcliffe on Digital Culture Change

Dion Hinchliffe has an amazing visual model of The Stages of Digital Culture Change:

image

4 Types of Cultures

One model I’ve found helpful when looking at “Culture in the large” is the Competing Values Framework.

If for no other reason, it helps you understand why you might feel resistance or like a you are out of place, because of a conflict of values (such as an internal focus vs. an external focus.)

Here are the 4 types of culture according to the Competing Values Framework:

  1. Adhocracy
  2. Clan
  3. Hierarchy
  4. Market

They vary by two key pivots:

  1. Internal focus and integration vs. external focus and differentiation
  2. Stability and control vs. flexibility and discretion

Here is a summary of each:

  • Market
    • External focus
    • High Stability and Control
  • Adhocracy
    • External focus
    • High flexibility and discretion
  • Clan
    • Internal focus
    • High flexibility and discretion
  • Hierarchy
    • Internal focus
    • Low flexibility and discretion

And there is a way to contrast the 4 types of cultures:

  • Externally focused organizations
    • Adhocracies and Markets
    • Adhocracy are more flexible, while Markets are more about stability and control
  • Internally focused organizations
    • Clans and Hierarchies
    • Clans are more flexible, while hierarchies are more about stability and control

Change Agents vs. Change Leaders

As the old saying goes:

“Pioneers take the arrows, settlers take the land.”

Here is something I learned a while back from our seasoned change practitioners:

You need to know when you are driving change, whether you are a change leader, or a change agent.

“The change agent gets fired.”

The reason change agents get fired is because they are changing the system. If you are trying to “change the business” that creates pain for the people who are managing the system and trying to “run the business.”  And when you create that pain, that leads to backdoor discussions about the disruption you are creating in the system.

That was profoundly insightful for me, and explained a lot of challenges I ran into.  I had to learn to be less of a change agent, and more of a change leader, in order to see an organization through the change.

A hack that seasoned leaders do is they will often hire a vendor so that another party can play the role of the change agent.  This helps avoid the internal conflict, and redirect it towards an external force.

Fearless Change Patterns

Patterns are a powerful way to share and scale knowledge, by sharing strategies and giving simple names to problem and solution pairs.

One of the most amazing bodies of knowledge I’ve seen around driving change is from the book Fearless Change: Patterns for Introducing New Ideas by Mary Lynn Manns and Linda Rising:

image

If you are driving change, by equipping your teams with the Fearless Change book, you set them up for success, by helping everybody understand how the game of change works, and how to hack at change in a more effective way.

It contains an incredible collection of Change Patterns.  Here is a list of some of the Change Patterns from the book, to give you a quick sense of the ground they cover:

Ask for Help
Big Jolt
Bridge-Builder
Brown Bag
Champion Skeptic
Connector
Corporate Angel
Corridor Politics
Dedicated Champion
Do Food
e-Forum
Early Adopter
Early Majority
Elevator Pitch
Emotional Connection
Evangelist
External Validation
Fear Less
Group Identity
Guru on Your Side
Guru Reviews
Hometown Story
In Your Space
Innovator
Involve Everyone
Just Do It
Just Enough
Just Say Thanks
Local Sponsor
Location, Location, Location
Mentor
Next Steps
Personal Touch
Pick Your Battles
Piggyback
Plant the Seeds
The Right Time
Royal Audience
Shoulder to Cry On
Small Successes
Smell of Successes
Stay in Touch
Step by Step
Study Group
Sustained Momentum
Tailor Made
Test the Waters
Time for Reflection
Token
Town Meeting
Trial Run
Wake-up Call
Whisper in the General’s Ear

Get Them on Your Side

Hard work and good ideas are not enough.  You need a system for changing the system.

Especially the people system.

Get Them On Your Side, by Samuel Bacharach, is one of my favorite books that explains how to make things happen in a political, corporate arena:

image

Bacharach walks through how to assess allies and resistors, build coalitions, negotiate support, and how to understand the agenda of others.

Even if you don’t like to play the game, this book will help you survive the games that played against you.

If you are an engineer, you will enjoy the simplicity and elegance of the change framework that Bacharach presents.

Influence without Authority

Influence without Authority, by Allan Cohan, is one of the greatest books of all time for learning how to be a change leader.

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As a leader of change, you will find yourself constantly working across boundaries and trying to influence people that don’t report to you.

It’s a beautiful book that you can use to improve your influence and persuasion skills for work and life.

The big idea in the book is really to connect with people and influence them where it counts by speaking in their terms they care about. 

In today’s world, you can’t depend on hierarchies and command-and-control to make things happen.  You need to inspire and set the stage for the changes you want to see.  (Think about “pulling” people toward better ideas, rather than “pushing” them.)

And that’s a Wrap…

We covered a lot of ground.  Let’s recap the big ideas that are important:

  1. Think of Digital Culture as the attributes you can model and learn from successful digital organizations (how to think and act like a Digital Native)
  2. To know a Digital Culture, it helps by comparing to an Analog Culture (by contrasting with an Analog Culture, you will more clearly see what makes a Digital Culture different)
  3. A great way to figure out where to focus your change efforts is to measure the gap between leadership and employee perception in how well you demonstrate the attributes of a Digital Culture

Resources at a Glance

Articles / papers

Books

Visuals

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