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Demand & Supply Chain Management Evolution




27 Jun 2018
Donít let a digital culture perception gap stall your digital transformation journey

Chirag Thakral
Capgemini

For organizations that have embarked on their digital transformation journey, developing a sound digital culture can prove to be extremely important.

A firm’s corporate culture is the collective experience of employees, including employees’ perceptions and valued attributes. Leadership, organizational purpose, and day-to-day vision implementation are corporate culture cornerstones. Developing the right corporate culture is critical for organizations today as culture can act as an enabling catalyst or a roadblock as organizations undertake major initiatives to keep pace with the changing times.

Based on Capgemini Digital Transformation Institute research in partnership with the Massachusetts Institute of Technology (MIT) – and what we consider to be the components of a digital organization – we define digital culture as a set of seven attributes:

  1. Customer centricity
  2. Innovation
  3. Data-driven decision making
  4. Collaboration
  5. Open culture
  6. Digital-first mindset
  7. Agility/flexibility

A thriving digital culture is critical for companies seeking to drive innovation and change through smart technologies and data. However, as the Chief Digital Officer of a global consumer products company recently said, “culture change is a prerequisite of digital transformation.”

For most companies – particularly financial services firms – cultural issues present a significant obstacle to digital transformation. In 2011, 55% of respondents to a Capgemini Digital Transformation Institute survey stated that culture was the number-one hurdle to digital transformation. By 2017, the figure had risen to 62%.[1]

When we break down the survey by sector, nearly 59% of banking/insurance respondents report that culture is one of their top-two hurdles.

Participant responses to digital transformation hurdles

Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March–April 2017, N = 1700, 340 organizations.

 

What do employees think about their firm’s digital culture?

There is a significant perception gap between financial services (FS) senior leaders and employees when it comes to the existence of organizational digital culture. While 41% of senior-level executives claim that their firm has a digital culture, only 34% of employees agree.

Digital culture alignment: FS leaders versus employees

Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March–April 2017, N = 1700, 340 organizations.

Uniting the entire organization behind a clear vision is vital to achieving digital transformation goals, but most financial services organizations fail to engage employees enough. We found considerable differences between what leaders and employees believe constitutes a meaningful and achievable vision. The reasons behind this disconnect indicate that FS leaders are not adequately laying out a digital vision that is tangible enough for employees to relate to in their day-to-day work lives.

Not surprisingly, this incongruity between employees and leaders was consistent in all seven dimensions of digital culture, with pronounced gaps in collaboration and innovation.

Digital culture dimensions: Disconnect between FS leaders and employees

Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March–April 2017, N = 1700, 340 organizations.

Employees appear to believe that collaboration is a myth, while leaders believe a robust collaborative environment exists. In FS organizations, fewer than half the surveyed employees (44%) said that they thought their organization supported a collaborative culture, while 90% of senior executives said the culture is collaborative.

A significant pain point exists because although employees attempt to leverage the power of collaboration, they continue to be managed through traditional hierarchical norms and operational silos. Innovation exists in theory, but not necessarily in practice. In financial services organizations, approximately 78% of senior executives believe that they have a culture of innovation, but only 39% of employees agree.

For innovation to take root, banks/insurance companies must flexibly encourage risk-taking and innovation (even if it fails) to foster a thinking-outside-the-box environment and experimentation – thereby facilitating commercialization of ideas.

Our research indicates that the behaviors, processes, and systems that germinate in a culture of innovation exist in only a few organizations.

 

Beware of these failure factors

Our research confirms that leadership action or inaction plays a significant role in defining corporate culture. Moreover, FS senior executives have room for improvement in several areas. They can:

  • Articulate a cultural vision that outlines a standard of work for managers and employees
  • Adapt corporate goals that support digital transformation
  • Act as mentors and role models to achieve overarching cultural ambitions
  • Convince middle managers that executive leaders embody the new behaviors the organization advocates
  • Adjust employees’ and managers’ KPIs or incentive structures to align with the transformation goals or embed desired behavioral changes in core value statements.

Financial services firms are not effectively engaging employees in the cultural change journey. Getting employees involved is critical to shaping a robust digital culture and accelerating an organization’s cultural transformation. Decisions undertaken by executive leaders (and middle managers) are critical when it comes to translating the broader digital vision into tangible business outcomes and in rewarding positive digital behaviors.

In our next blog in this series based on The Digital Culture Challenge report, we will further analyze the dimensions of digital culture and the preparedness of Financial Services firms.

# # #

[1] Capgemini Digital Transformation Institute, “The Digital Culture Challenge: Closing the Employee-Leadership Gap”, June 8, 2017, https://www.capgemini.com/consulting/resources/the-digital-culture-challenge/, accessed June 2018

 

 

 

 









 
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