The culture of digital transformation

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REYNALDO C. LUGTU

Thousands of professionals and executives from various organizations, large and small, flocked to the recently held DIGICON 2017 to learn about digital transformation. This year’s theme, “The Culture of Digital Transformation,” is just but apropos as the people and the culture of organizations are the ones responsible for the execution of the transformation.

I was honored to be one of the presenters and facilitators of a workshop under the People and Organizations segment, which integrated all the concepts that the attendees learned during the past two days of the conference. My session was titled “Demystifying Digital Transformation,” in which I attempted to concretize what it was.

I first asked the audience of more than 200 participants, “Do you get different definitions of digital transformation?” I saw a unanimous nod across the room like the proverbial dancing swans on a lake.

Then I gave my usual definition: “the acceleration of business activities, processes, competencies and models to fully leverage the changes and opportunities of digital technologies and their impact in a strategic and prioritized way. These activities and processes are composed of four pillars – optimizing your operations, transforming your products, engaging your customers, and lastly and most importantly, empowering employees who form part of your organization’s culture that will ultimately carry out the transformation initiatives.

As business leaders, how do we drive the digital transformation of our companies into high-performing organizations that can compete successfully in the midst of disruptions? The answer lies in the kind of culture that we propagate and promote.

Organizational culture is a collection of core values and beliefs of the members of the organization, and the policies and practices that go along with them, such as the treatment of customers and employees, and the rules on employee behavior. Thus, the effectiveness of an organization’s culture depends on the success of the business leader in translating core values and beliefs into policies and practices that help the organization capitalize on the opportunities and ward off threats in the competitive environment.

It has been well established in management literature that organizational culture drives performance. But what kind of organizational culture supports digital transformation? The seminal work of Deshpande, Farley, and Webster identifies four types of organizational culture – clan, adhocracy, hierarchy and market.

Let’s look at the first two – clan culture promotes cohesiveness and teamwork, while adhocracy promotes innovation, creativity and risk-taking. Both culture types contribute to spontaneity and flexibility in an organization. The two others are hierarchy culture, which is all about order and rules; and market culture, which is furthering competitiveness and goal achievement.

My hypothesis is that clan and adhocracy culture types mainly support digital transformation success in the Philippine context. To test this, I administered a mobile survey among the conference participants to evaluate the current individual culture profiles, as well as the desired profiles of participants to drive transformation.

Not surprisingly, all the 107 participants who answered the survey showed their highest scores in clan and adhocracy for desired cultures that will support digital transformation. That was followed by market culture, which will also naturally help. This means that the participants desire cultures of innovation, risk-taking, and teamwork to drive transformation in their organizations.

These results are supported by a 2014 research from NetStrategy/JMC, which surveyed 300 organizations across the globe. It showed that organizations that support digital transformation display culture that is characterized by a strong shared sense of purpose, freedom to experiment, distributed decision-making, and is open to the influence of the external world.

But interestingly and sadly, the survey I conducted during the conference showed the lowest in adhocracy for the current culture of the audience. This may mean that many organizations in the Philippines, led by their owners and executives, do not promote creativity, risk-taking, and entrepreneurial ventures in their organization. This supports my observation that many organizations in the country are not even starting their digitization initiatives; and this demands us to ask – how can our small and medium enterprises compete in this global competitive arena?

Business owners and leaders need to embrace the kind of culture that promotes innovation and risk-taking to support digital transformation of their businesses, because their employees desire such environment.

The opinions expressed here are the views of the writer and do not necessarily reflect the views and opinions of FINEX.The author may be emailed at reylugtu@reylugtu.com. The author is president of The Engage Philippines and Hungry Workhorse, and co-founder of Caucus Inc. He is the chairman of the ICT Committee of the Financial Executives Institute of the Philippines (FINEX). He teaches strategic management in the MBA Program of De La Salle University. He is also an adjunct faculty of the Asian Institute of Management.





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