Click to learn more about author Deborah Soule.
This is the third part of a multi-part series 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.
Digital technologies offer new possibilities for generating value in the form of previously unimagined products, services, and solutions. Making the most of these possibilities comes not just from having access to the right resources, suitable skills, and effective business processes. Research suggests that organizational culture – in the form of values, beliefs, attitudes, and practices – plays an important role in success.
But what are the characteristics that help a digital organization succeed? This article looks at the values and practices that scaffold high performance in our fast-moving and highly connected digital world.
Organizational Culture Shapes Organizational Performance
Shared values and assumptions can be seen in how people in the enterprise dress, act, perform their work, and interact with each other and with the outside world. In a company’s early years, founders can have a strong influence on culture formation by explicitly articulating and embodying values and attitudes. As an organization grows, its culture solidifies into taken-for-granted values, unspoken attitudes, unwritten rules, and routine behaviors as people learn responses that appear to work well over time.
The aphorism that “culture eats strategy for breakfast,” often attributed to Peter Drucker, captures the insight that organizational performance is often due to culture more than to strategy. For example, a thoughtful strategy may be undermined by the beliefs, values, and attitudes of those who must implement that strategy. On the other hand, because culture shapes and guides collective attention, energy, and effort, it can enable a group or an organization to function efficiently and effectively, especially in a familiar and well-understood environment.
Organizational Environment Influences Organizational Culture
The label “digital native” describes an individual who has grown up in a world of ubiquitous computing and connectivity and thus demonstrates a natural and instinctive facility with digital resources. Just as individual “digital natives” are culturally conditioned to navigate the digital world easily, so are “digitally native” companies culturally conditioned to benefit from opportunities arising in the digital economy. The digital economy favors companies that are decisive, innovative, and fast growing. Companies like Hubspot, Netflix, Google, and Amazon, for example, have thrived precisely because they have cultivated cultures to fit the dynamic environments in which they operate.
Because digital technologies and applications are becoming pervasive across industries, all organizations need to adapt to the digital economy. Their effective adaptation to this faster-moving, more-connected environment will require shifting their cultures as well as their strategies and operations.
Our research shows that this cultural system of interrelated values and digitally enabled practices is effective in a fast-moving, connected world because it supports generation of new information, rapid learning, clear feedback, and follow-up action through both machine-driven and people-powered avenues. Just as a “safety culture” raises an organization’s chance of succeeding in an inherently dangerous environment, this “digital culture” positions an organization to thrive in a context of multiple, rapidly advancing, and interconnected digital technologies.