Insights into the Cultures of High-Performing Digital Organizations

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Click to learn more about author Deborah Soule.

This is the fourth part in a series of articles on digital transformation. Read Part One titled Where is Your Organization on the Digital Transformation Journey? Part Two is titled Stages of Transition in Becoming a Digital Organization. Part Three is titled Learning from the Cultures of High-Performing Digital Organizations.

A study of successful digital firms reveals cultures that support organizational performance in a data-intensive, highly-connected, and fast-changing environment.

It is common to think of cultures in terms of their more visible artifacts like buildings, offices and facilities, style of dress, and recognizable logos. For instance, much attention focuses on the fancy corporate office complexes, bright, colorful, and open workspaces, free personal services, upscale cafeteria food, and casual jeans-and-hoodie uniforms. Although these visible organizational features may make life more comfortable for employees, they are not the source of new ways of working or higher levels of performance. More important are the organization’s underlying values, which may be manifested through these visible markers. Values lie at the root of distinct practices that, in turn, influence performance.

We analyzed cultural accounts of both high-performing digital firms and high-performing digital units of traditional firms. We characterize a “digital” culture in terms of values and prominent behavioral practices (values-in-practice). Our analysis uncovered a small set of common values, which collectively shape subsequent choices and practices throughout these organizations.

These successful organizations all place high value on impact, speed, openness, and autonomy.

Impact: Achieving Customer Intimacy and Immense Scalability

Valuing impact means having big aspirations to change the world by reaching and responding effectively to millions of customers. Value for impact is reflected in two complementary values:

  1. Customer responsiveness
  2. Scalable design

Firms like Amazon and Hubspot use language like “obsessing” over customers, demonstrating how intensely they value customer responsiveness and service. Amazon talks about being “the earth’s most customer-centric company.” Many digital firms put huge effort into analyzing the behavioral patterns of customers to better understand their individual needs and market to them more intimately. At the same time, high-performing digital firms value the ability to scale this level of intimate service to millions of customers.

In the past, companies typically had to choose between scale and intimacy. Operations might have varied on the spectrum between job-shop and batch processing, delivering relationship-based customization or consistency at speed, but rarely both. It was almost impossible to offer high customization at both high speed and large scale. But this trade-off need not persist in the presence of a digitized, real-time, and connected data foundation and with the application

of artificial intelligence and automation. In valuing both customer intimacy and scalable design, high-performing digital firms develop practices that position them to achieve and sustain a huge impact in the world. Recognizing the immense scalability of digital solutions, they typically focus on creating social impact and assume profit will follow.

This pair of values draws attention to the complementarity of designing for scale and being able to deliver with sensitivity to ‘a market of one’ in the digital world.

Speed: Acting Fast and Iterating to Improve

A value for speed means valuing an action orientation, preferring to move fast and iterate rather than waiting to have all the data or all the answers before acting. Value for speed is reflected in two related value choices:

  1. Speed over perfection
  2. Improvement over success

High-performing digital firms have a strong action orientation, preferring to decide or act quickly, even in the absence of complete information. In dynamic environments, perfection is not an option; there will always be uncertainties, making it impossible to know exactly what will happen or what will be the best action. On the contrary, taking some initial action can generate new insight to help guide future action. For example, firms like Uber, AirBnB, and Amazon moved rapidly into different markets and regions. These proactive moves triggered responses from regulators and communities as well as consumers, but the new information helped these companies adapt and fine-tune their offerings.

By necessity, choices of action often produce incomplete or temporary solutions, and a tendency to “rest on one’s laurels” can undermine the ongoing learning through necessary action. High-performing digital firms value rapid, repeated improvements more than success – because even clear successes can be temporary in dynamic environments.

These dual value choices focus attention on rapid execution and ongoing learning as essential and complementary capabilities in the digital world.

Openness: Learning from Machines and Humans

Valuing open and broad engagement with diverse sources of information shows in two seemingly opposite but complementary choices:

  1. Data over intuition
  2. Talent over title

High-performing digital firms increasingly value data and its analysis over the intuition and experience of senior managers. The emphasis on data and analytics is unsurprising. Digital businesses capture immense amounts of data about customers, operations and products, and robust analysis of this data can help to identify novel insights, improve decision-making, predict longer-term outcomes, and guide future actions. Also, in certain domains, relying on past experience may no longer be appropriate because exponentially improving technologies are driving novel and complex relationships between events and outcomes.

At the same time, high-performing digital firms place huge value on having the right talent to advance their innovation goals. They recruit aggressively and are selective in their hiring, but also value key skills and expertise regardless of role, title, or formal affiliation. Their rich digital resources augment human skills, enabling individuals to access information, follow conversations, discover needs, and contribute specialized knowledge to issues – independent of their location or discipline. When firms value openness and sharing rather than secrecy, they work at integrating diverse sets of specialized knowledge and perspectives and benefit more from the collective power of their human capital.

With this combination of values, high-performing digital firms get the best of both worlds. They become skilled at using analytics and automation in situations where data is abundant and skilled at cross-boundary collaboration in novel situations that are (still) beyond the power of machine learning and automation.

Autonomy: Linking Independent Authority and Transparent Accountability

A value for autonomy means valuing the independent actions of individuals while holding them accountable for those actions. In the digital context, value for autonomy links two ideas:

  1. Independent authority
  2. Transparent accountability

High-performing digital companies typically allow their employees great latitude in their work because the ability to engage flexibly in productive and experimental activities is a major advantage in an environment where speed is important. Delegating authority and high levels of discretion are also consistent with showing value for individuals’ unique expertise and skills. In these firms, individuals might choose what to work on and with whom. They might self-select into team projects, make major decisions independently of bosses, or work flexible hours and locations. Extensive digital resources support flexible but productive engagement without the need for formal controls and formally structured coordination.

But digital resources both enable more autonomy and reveal the results of that autonomy. Digital firms already have unprecedented visibility into digitized operations that they can monitor and analyze in real-time. Complete transparency of individual decisions and actions becomes inevitable when outcomes can be traced back to the actions or interventions of a specific individual. It is hard to hide from digital results. Accordingly, many high-performing digital firms choose to value rather than avoid accountability. Instead of managing performance through bureaucratic reviews a few times a year, they adopt the ongoing use of transparent goals and performance metrics at all levels of the organization. The consequences can sometimes seem harsh to outsiders, but clear expectations and explicit consequences and benefits can guide insiders to do their most effective work.

This combination of values draws attention to how high-performing digital firms attract and retain highly engaged and self-directed workers who are motivated to achieve the results to which they commit themselves.

The values described above are collectively evident in a set of digitally enabled practices, which are regularly and frequently presented in high-performing digital firms.

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