The advancement of the Internet over the past two decades hasn’t taught us anything if it hasn’t taught us that we must run our organizations differently for our businesses to survive. For the last three to four years, the related trendy topic has been “digital transformation.” But what does this mean, and how do we as leaders prepare for this?
What is digital transformation?
Digital transformation is the use of technology at a rapidly accelerated rate to analyze vast amounts of data quickly to change the trajectory of a product, market, or service. While the term has been around for a few decades, more recently there has been increased talk of digital transformation as companies grapple with big data and increased acceleration of market changes.
On the surface, most of the conversation seems to be about the technology. Big data. Cloud computing. Shared apps. The reality, though, is that if large organizations want to successfully embrace all of this to drive change, they also need to change the culture of their companies. Plenty of executives dismiss cultural change as the “soft fluffy stuff” with which they cannot be bothered. Yet, people in organizations are the ones who are called upon to learn and use these technologies to accelerate the pace of business. You cannot separate organizational culture from your ability to successfully embrace these trends to drive your business.
Specialization enabled mass production
In the late 1800s, Frederick Taylor pioneered the idea of specialization to speed production. Prior to his vision, companies employed craftsman to build one product at a time. That is: One craftsman would see the construction of a product through from preliminary fabrication to final assembly. This was slow, tedious, and drove enormous variability in the quality of the end products.
Before Henry Ford became famous for his assembly lines, Taylor began to drive greater efficiency through organizational structure and discipline. No one person produced a product any longer. Through a highly structured organizational design, different workers had responsibility for small components of the product’s fabrication and construction. In time, this led to greater structure throughout the organization. Payroll clerks computed payroll check amounts, but accounting wrote the paychecks. Order-takers received phone calls from customers who wanted to place orders, a warehouse clerk prepared the product for shipment, and a transportation clerk shipped the product to the buyer. All this structure drove phenomenal efficiency. In one example with which I am familiar, a Fortune 150 company drove $160 million of annual cost out of their supply chain through these efficiencies. Throughout most of the 20th century, organizations employed Taylor’s ideas to drive more and more cost out of their production.
Then the digital age hit.
I was there in the early 1980s when traditional IT folks said that personal computers were just toys and they’d eventually go away in favor of the monstrous machines that had become all too familiar. Little did they realize that over the next 30 years those personal computers would become faster and faster, able to store more and more data in less and less space — all at phenomenal reductions in cost. This, in turn, opened the floodgates to tens of thousands of apps, social media, and the ability to handle volumes of data at breakneck speed. This meant that organizations, previously concerned with becoming more efficient, now had to become more and more effective in addressing the massive, head-on competition that this brought.
Specialization without silos
Before Alan Mulally took the helm at Ford, he led the launch of the Boeing 777, arguably the most successful airplane in commercial aviation history. In 2009, when Chrysler and GM were on the verge of bankruptcy and begging the US government for bailouts, Ford remained quietly successful, endured no imminent bankruptcy, and certainly did not fly to Washington asking for money. Mullaly’s secret sauce was his approach to organization and culture. He believed in people first – including everyone — a clear and compelling vision and strategy, aligned leaders, positive attitudes, trust, respect, and having fun.
There are several elements here, but perhaps most compelling was his focus on one team with one plan and a great deal of communication. Contrary to Frederick Taylor’s wildly successful approach to efficiency, Mulally saw that the more people could effectively work together across the organization, the greater the probability of success. It’s almost as if we were headed back to the days of individual craftsmanship.
Mulally was a pioneer in reducing the impact of what I have come to call cross-functional dysfunction. Instead of vertical silos of people doing one specific task each and not communicating well (if at all) with others, Mulally expected people to work across the organization. As a result, more information was shared, and employees had a bigger and better picture of what was required of them to drive phenomenal success.
This represents a huge shift in the way employees are expected to work with each other. This is the essence of the organizational culture shifts leaders must make. To achieve success in a marketplace driven by greater and greater digital transformation, cross-organizational interaction is an absolute must. It is a matter of survival.
Transform leaders first
In making the case for shifting culture for organizations to become more successful in their quest for competitive advantage in the age of digital revolution, here are specific things leaders must do to develop an organizational culture that is equipped to move forward successfully in this new world.
As with any successful transformation, shifting your culture starts at the top with you, the leader. To prepare for this there are two things you will do to set the stage for success:
- First, be clear with yourself about the cultural change you desire. It comes down to minimizing the impact of hierarchical adherence and encouraging employees to work freely across the organization. Be clear also on the outcomes of this cultural change. Are you seeking to become more innovative, have world-class customer service, or something else? Perform your own analysis of the current state as well as the blockages created by the current structure and behaviors. Determine the target behaviors you believe are critical for your organization to successfully implement the new culture.
- Second, be introspective. Identify the behaviors you exemplify that drive your ability to successfully implement the new culture. Also identify your behaviors that might slow success and determine what you need to do every day to demonstrate that you are changing these less helpful behaviors. For example, do you expect to be involved in every product design decision? Your role-modeling is essential to your success. When your employees see you making the change you expect them to make, the impact is phenomenal.
Once you’ve prepared yourself, you are ready to prepare your organization.
It boils down to coaching
With your own transformation underway, it’s time to drive it with others in your organization. The next step is with your leadership team.
With your entire leadership team together, you will first achieve crystal clarity on the transformational purpose you’ve developed, the impacts to outcomes in each of your leaders’ respective departments, and the behavior changes you will collectively need to be successful. I’ve written dozens of pieces and spoken with many organizations about how to do this. Once this is done, you are ready to start coaching each of your leaders.
As a professional executive coach, I’ve learned that you absolutely need to have a target for coaching. Since you just completed identifying target behaviors for the leadership team, it’s up to you to help each individual leader achieve this change. Your coaching sessions with them will now go beyond the nature of your past one-on-one meetings. Previously, you likely had more dialog about achieving tangible business results such as production volumes, sales quotas, fill rates, or any one of myriad business metrics.
While your focus on these should not completely change, you will now want to ensure your one-on-one meetings include progress checks on changing behaviors, such as increasing open communication, improving trust, engaging in healthy debate, positively challenging each other, or holding other leaders accountable to their commitments. Note that every one of these suggestions implies greater cross-organizational interaction. Remember, that’s what you are driving for.
Not only is it important for your leaders to demonstrate these new behaviors with each other; they also need to visibly set the example for employees throughout the organization. I find that when one leader has a town hall with her employees and invites one of her peers to present to her group, it is an effective way to demonstrate this example. One note of caution: While you want to demonstrate healthy debate, you will want to gauge your organization’s readiness to observe two leaders having that debate. If two leaders go too far, too fast in front of an employee group, it could backfire. Regardless, clear, open, and honest communication with the group is essential.
One effective tool I’ve used to coach executives is a targeted 360 assessment. The feedback from these surveys provides useful fodder for you to coach your leaders. They also help validate your own observations regarding your leaders’ performance.
Coaching the entire organization
Now you are ready to start enrolling the balance of the organization in this cultural change. Ideally, you will empower each of your leaders to coach their managers and train your managers to coach front-line employees. This sounds like a great deal of work and can take a protracted amount of time to accomplish. While there is some sequence required to work top-down, there are things you can do to speed up the process. After all, there is some sense of urgency to drive this cultural change, and most importantly, the best way to move to a greater cross-functional culture is to demonstrate it while you build it.
Here are a couple of techniques I’ve used successfully to move an organization’s culture forward.
These can be extremely effective if well facilitated. The leader must be present for these, although she can delegate the facilitation of the meeting to someone more experienced at facilitating large groups. The leader’s role is to articulate her purpose for the transformation and describe outcomes she expects as a result. Of course, all of this was developed during the sessions with the senior leadership team.
The facilitator runs the meeting through a simple agenda that contains, at minimum, two key elements. This first is to allow the audience time to express concerns. Let them describe every possible way that this won’t work, why it’s a bad idea, and how disruptive it will be to their work. That’s okay. You’ll learn a great deal from what appears to be resistance. The other key element is to then empower the team to drive constructive comments defining leadership, organizational, and individual requirements to adapt to the new culture. Take time for the group to prioritize these and select the top two or three most impactful recommendations. During the meeting, you as the leader must engage in this discussion by asking questions, but do not engage in advocating any position. This is your time to hold back. Once team members have identified recommendations, implement them and report back.
I have found these are especially useful when enrolling middle managers. It is, after all, the middle managers who will ultimately be responsible for driving and tracking performance. Given their vast experience running the current organization, who better to define adjusted metrics to assess the performance of the new culture?
These meetings are facilitated in a manner like the employee focus groups described earlier, but with a focus on measures. Once you’ve presented your case for change, give managers the opportunity to describe which measures will be impacted and how. Let them express why this is good or bad. Then, shift the meeting toward describing the new measures that are important. Some examples I’ve seen are increases in innovation, such as the number of patents per employee, or reduced unfavorable attrition rates. Again, give the managers an opportunity to discuss and describe these new metrics, as well as their recommendations for implementation.
Moving into the digital future
Digital transformation is inevitable. For organizations to successfully move into the future, they need to strike a balance between organizational hierarchy and cross-functional coordination. While there still needs to be accountability for results, organizations need to be able to move faster to achieve these results. Driving toward a culture that eliminates cross-functional dysfunction and embraces greater, more effective cross-functional dialog and work will help you achieve this balance.
This article was originally published on Culture University.