To successfully transform into a Digital Enterprise, an organization must exhibit its readiness across Four Dimensions. Organizations will only be ready to transform themselves into true Digital Enterprises when they possess:
- Operational Sustainability – Your organization has a stable operational base
- Organizational Agility – Your organization can quickly adapt to change
- Strategic Agility – Your organization can anticipate change
- A “Disruptive” Culture – Your organization is receptive to implementing change
In the first three articles in this series, we discussed the foundational dimension of Operational Sustainability, then Organizational Agility, and finally Strategic Agility. In this article, we examine the last and very unique Dimension of Digital Enterprise Readiness, Disruptive Culture.
The first three layers of the Digital Enterprise Readiness Framework create the structural support within the enterprise to enable the transformation into a digital enterprise. But a final cultural transformation is critical to becoming a digital enterprise. The digital enterprise requires a “Disruptive Culture” that is willing to challenge the status quo, embrace innovation, experimentation and “fast failure” and which is perpetually focused on what’s coming next. The culture must permit continual disruption in every facet of the organization, including: technology, business models, industry dynamics, offshoring and outsourcing strategies, regulatory management, etc. They must also, however, possess the discernment to only execute disruptive change that results in competitive advantage. A Disruptive Culture spans the entire Framework and quite literally surrounds all Dimensions, as a foundational enabler of each Dimension and as an outcome of the other three Dimensions. Therefore, specific culture markers are built into the Framework at each Dimension.
An Operationally Sustainable culture needs to be free to work within the bounds of good operational and business processes to allow innovation to flourish without the shackles of onerous, and sometimes unnecessary, processes. The culture should avoid strict adherence to rules that could lead to a “destructive culture.” Rather than give the impression of process immaturity, a destructive culture exhibits characteristic of malicious compliance. Operational Sustainability enables “intelligent disobedience” of process when it makes sense to do so.
Organizational Agility is marked by a culture of continual service improvement and management support for the “business application of creativity.” The creativity can be put into place through the demonstration by top management of “visible and consistent support for change,” enabling the organization to adjust quickly.
Strategic Agility is characterized by a culture that has a set of beliefs that put the customer’s interests first and is part of an overall, but much more fundamental, corporate culture. This broader culture is one following agile values like proactivity, responsiveness, trust, support of proposals and decisions of employees, and the handling of change as opportunity and chance. A culture of Strategic Agility also provides a common digital space where all stakeholders freely share experiences and ideas across organizational boundaries.
The nine attributes of Disruptive Culture are:
Evidence-based decision making is making decisions based on data rather than what one can remember and examining other alternatives or procedures rather than relying on one’s own experiences or only knowledge that is readily available.
Evidence-based decision making requires that managers and their organizations use enough empirical and objective data to generate informed and intelligent perspectives as an organizational culture norm. This attribute is characterized by the organization relying on written Information or verifying unwritten information by another source before it is considered, as well as having a natural skepticism over information that supports an existing position or long-held belief.
Further, it is a cultural norm to actively seek and consider all information for decision making even though it may be hard to find or is unstructured. Additionally, information that does not conform to existing knowledge is not only sought but considered equally, and contrary opinions are considered even if they call into question past decisions.
A culture of Evidence-Based Decision making seeks to avoid common mistakes such as “Groupthink” and The Abilene Paradox, and uses Delphi Techniques to prevent bias. Simply put, the benefit of Evidence-Based Decision-making is that it improves the quality and outcomes of decisions.
Continual Operational Reassessment Bias
Continual Operational Reassessment Bias means the organization is biased toward continuous change, celebrating change efforts and questioning any operating model, structure or process that has remained unchanged for an extended period.
Continual Operational Reassessment Bias is the natural cultural skepticism of the status quo. Therefore, there is continual alignment and re-alignment of services to the changing business needs with resulting identification of additional changes and improvements
When considering a change, success is not assumed, the possibility of failure is considered, and there is tolerance of a possible failed outcome. However, after a successful change effort, there is not the assumption the next change will be successful or even relatively easy. As a result, in Continual Operational Reassessment Bias the culture does not to believe that a single instance or a small sample size is representative of the entire organization.
In a culture of Continual Operational Reassessment Bias the organization allows free-time or autonomy for staff to consider and propose innovation and there is a system in place reward employee suggestions or change proposals. This allows the organization to innovate through the natural skepticism of its staff.
Critical Thinking and Analysis
Critical Thinking and Analysis is where one learns from others’ successes and failures. One does not accept the status quo and constructively challenges everything. You can suspend your beliefs long enough to consider other points of view.
While Continual Operational Reassessment Bias is an organization-wide objective cultural perspective, Critical Thinking and Analysis is more an individual subjective perspective. As a result, Critical Thinking and Analysis is examined through the lens of personal habits and traits.
For example, one who practices Critical Thinking and Analysis exhibits the following traits:
- You organize and categorize concepts so that you can better interpret them, and you examine the context of the event
- You examine both the pros and cons of an idea before rendering an opinion and if you do not understand something, you ask questions until you do
- Before drawing a conclusion, you examine whether you had to make any assumptions to support it
- You try to find ways to resolve two apparently conflicting conclusions
- You question both your reasoning as well as the reasoning of others and you can remember a time when you questioned one of your long-standing beliefs or assumptions
- After an event has occurred, you resist seeing the event as having been predictable, despite having little or no objective basis for predicting it.
Critical Thinking and Analysis is, in short, self-directed, self-disciplined, and self-monitored, allowing the organization the agility to self-correct.
Management Innovation is where management actively supports the “business application of creativity.”
To foster Organizational Agility, there must be a Management culture that has discovered, practices, and encourages entirely new ways to organize, lead, coordinate, or motivate staff. Critical Thinking and Analysis is an organization-wide individual cultural perspective, but Management Innovation is a cultural practice that pervades the culture of the Management layer.
For example, Management exhibits the following traits:
- Management encourages innovation and risk taking and does not punish those who challenge norms
- Management rewards employees for developing new ideas and challenging traditional ones and considers the culture in decision making as opposed to making decisions independent of culture
- Management pays attention to the well-being of employees rather than focusing on the task performance or profit.
- In a culture of Management Innovation, change is the norm rather than management protection of the status quo and the organization values excellence rather than “good enough.”
Therein lies the opportunity. You can wait for a competitor to stumble upon the next great breakthrough, or you can become a management innovator and find it now.
Organizational Innovation is when the organization displays a culture of continual service improvement.
Continual Operational Reassessment Bias is the natural cultural skepticism of the status quo; however Organizational Innovation is the affirmative and proactive encouragement and rewarding of innovation that challenges the status quo. To improve, the organization needs to know its baseline. Consequently, periodic training and communication of policies and procedures is foundational to Organizational Innovation.
With that foundation, Organizational Innovation then practices proactive encouragement and rewarding of innovation. For example, there is evidence of periodic meetings to motivate, inform, or educate team members on customer service which may launch pilot programs to test customer service ideas or initiatives. Furthermore, the organization encourages team member participation on customer service initiatives and requests team member feedback on customer service initiatives. Finally, there is evidence of rewards programs to encourage feedback or innovative ideas.
An organizational mindset of Continual Service Improvement is an engine for innovation and thus Organizational Agility by focusing on staff ideas for customer service.
Organizational Leadership is a “visible and consistent support for change” from top management.
Organizational Leadership is a higher form of Management Innovation in that it is more proactive and organizationally pervasive by encompassing both the formal and informal Leadership. Here, the Leadership builds on overall innovation and continual service improvement to support and lead the organizational changes necessary to support agility.
Managers and Executive leadership encourage seeking the perspectives of others across the organization and the Organizational Leadership culture facilitates agility of new ways to structure the organization to achieve business goals. Furthermore, the Organizational Leadership Culture creates the expectation that leaders consider the organization-wide impact of decisions
Building relationships that cross organizational boundaries are encouraged by management and executive leadership, and there is an expectation that leaders will not only seek the input and perspective of subordinates or team members, but lobby on behalf of those ideas and suggestions. This leads to a sense of ownership and accountability for overall performance which makes leadership of change and Organizational Agility an organic effort.
Agile Values is where the organization has a culture of following agile values like proactivity, responsiveness, trust, support of proposals and decisions of employees, and the handling of change as opportunity and chance.
Agile values are the degree to which the people of an organization share the intrinsic or well-learned mental prerequisites of an agile culture and to what extent the organization establishes the required technological prerequisites to support agility. For example, the organization views and accepts change as a tool to gain competitive advantages.
Specific Agile Values are: the organization accepts and supports decisions and proposals of employee and staff are ready to learn and are prepared to constantly access, apply and update knowledge. Furthermore, the organization is supportive of experimentation and the use of innovative ideas from staff.
Staff are, in general, always willing to continuously learn from one another and to pass their knowledge to others, as well as being able to sense, perceive, or anticipate the best opportunities which come up in the environment. Finally, the organization can exploit change to gain a competitive advantage because it prefers market-related changes (e. g. new competitors, preferences) to generate news opportunities. An organization with Agile Values facilitates a well-directed approach for improvements and continuous assessment of actions taken.
Collaborative Digital Storytelling
Collaborative Digital Storytelling is where the organization facilitates organizational change by emphasizing a joint effort by multiple stakeholders in a common connected space.
Foundational to Collaborative Digital Storytelling is either a private or public digital online space for small groups to collaborate where staff can share organizational experiences via text, audio, or video. Staff can use digital online space at a flexible time that is convenient to them as well as use it asynchronously (e.g., an elapsed time between two or more people) or synchronously when everyone is at the same digital space (not necessary physical space) at the same time (the latter important for global companies operating in multiple time zones).
Collaborative Digital story-telling invokes creativity in individuals and fosters a sense of engagement and community to a shared experience where staff share their narratives under an identified common goal that is important to the growth of the organization. Individual expressions are a source of a collective wisdom that can lead to a shared vision to address.
Collaborative Digital Storytelling allows reflection around an organization’s shared assumptions; particularly those that are unhelpful, impede smooth functioning, and interrupt the sustained competitive advantage of an innovation.
Customer Orientation is when the organization exhibits a set of beliefs that put the customer’s interests first and is part of an overall, but much more fundamental, corporate culture.
Customer Orientation is a conscious effort to be more customer-focused than your competitor and emphasizes developing new products, features, and services. Customer Orientation is being more customer-focused your competitors. Competitive advantage is based more on understanding of customer needs than any other factor.
This is the Cultural “glue” that holds the organization together: a commitment to innovation and technological development and a strong emphasis on being cutting-edge, trying new things, and prospecting for opportunities. The organization emphasizes high consensus, openness, collaboration, and participation and is a very dynamic place and staff are always willing to stick their necks out and try new things if they believe it will better serve the customer experience.
Often, this leads to providing more capability than the customer expected. An organizational culture that exhibits this Customer Orientation can cause “overshooting” or “overprovision” scenarios resulting in competitive advantage based on deeper understanding of customer needs. These tendencies are drivers to competitive positioning, which leads to differentiation and market share.
Gartner estimates that over 70% of transformation initiatives fail and Forbes reports that 84% of Digital Transformation efforts fail. Digital Transformation efforts usually focus on implementing Digital practices, such as Agile, Lean, or DevOps; or implementing Digital Technologies such as Public Cloud, Big Data, or Predictive Analysis. Additionally, many organizations erroneously think of a Digital Transformation as integrating Digital Technologies. This is merely an IT transformation and is directed at optimizing IT performance for business or organizational needs and outcomes.
True Digital Transformation is more than just implementing Digital Practices and Digital Technologies. Digital Transformation rightly targets optimizing business or organizational effectiveness via digital investments and IT services. Transformation occurs when business strategies or major sections of an organization are altered. This can be quite disruptive and stressful for an organization. The plans may be great, but the lack of Readiness for Transformation, presents additional and unnecessary risk. There are a range of issues that provide the basis for a successful Transformation, including of modicum of operational maturity, the culture of the organization and human reaction to change, all of which are interdependent with the organization’s ability to be agile and adapt. In short, Transformation efforts fail because organizations are not “Ready” to Transform by exhibiting Operational Sustainability, Organizational Agility, Strategic Agility, and finally a Disruptive Culture.
Chief Scientist & Institute Fellow
Dr. Frank Granito is Chief Scientist and Lead Fellow at the Institute for Digital Transformation. He has over 40 years of experience in the Information Technology field and has successfully implemented IT Service Management transformation solutions for Government and Commercial clients. Dr. Granito holds a Doctor of Management from the University of Maryland University College with a thesis on Organizational Culture.
As Lead Fellow, Frank selects current transformational topics and leads the monthly discussions with all of the Institute Fellows, parts of which are available on our YouTube Show “Digital Transformation Unplugged“. In his role as Chief Scientist, Dr. Granito created the analytical model that is the basis of the Digital Enterprise Readiness Framework. He designs, creates and produces the analysis of our Rapid Research. He is also the principal author the book Digital Transformation Demystified.
In his spare time, Frank is also a Professional Chef and you can follow his culinary exploits on Instagram @pasticciogranito.