Culture is No. 1 obstacle to digital transformation: Capgemini report

"Culture eats strategy for breakfast" - this phrase by Peter Drucker is true for this report by Capgemini. Corporate culture is one of the biggest hurdles organizations face in their digital journey. A comprehensive research The Digital Culture Challenge; Bridging the Employee-Leadership Disconnect Report by Capgemini, a global leader in consulting, technology and outsourcing services and Brian Solis, a well-known digital analyst found that 62% respondents view corporate culture as an impediment to following the digital path. The data also shows that this challenge for organizations has worsened since 2011 by 7 percentage points – according to the data captured by Capgemini when they began research in this space.

Employees don’t see their company’s culture as 'digital'

The report uncovers a significant perception gap between the senior leadership and employees on the existence of a digital culture within organizations. While 40% of senior-level executives believe their firms have a digital culture, only 27% of the employees surveyed agreed with this statement. The survey asked respondents to assess their companies’ digital culture based on seven attributes: their collaboration practices, innovation, open culture, digital-first mindset, agility and flexibility, customer centricity and a data-driven culture. Insights gathered from the report, and through a series of focus interviews, helped to identify some of the reasons behind this digital culture gap including senior leaders failing to communicate a clear digital vision to the company, the absence of digital role models and a lack of KPIs aligned to digital transformation goals.

Digital technologies can bring significant new value, but organizations will only unlock that potential if they have the right sustainable digital culture ingrained and in place. Companies need to engage, empower and inspire all employees to enable the culture change together; working on this disconnect between leadership and employees is a key factor for growth. Those businesses that make digital culture a core strategic pillar will improve their relationships with customers, attract the best talent and set themselves up for success in today’s digital world”, said Cyril Garcia, Head of Digital Services and member of the Group Executive Committee at Capgemini.

Key report findings show that there is a profound disconnect between leadership and employees on all the dimensions of digital culture:

• Innovation is still not a reality for many organizations. Only 7% of companies surveyed feel that their organization can test new ideas and deploy them quickly. This figure echoes employees’ sentiment about culture of innovation, with only 37% of respondents stating that their organizations have a culture of innovation, experimentation and risk-taking against 75% of senior executives. Organizations need to actively reward risk-taking and create an environment where employees can experiment.
  
  
• There is strong disagreement on collaboration practices. The findings reveal a divide between senior-level executives and employees on collaboration practices. 85% of top executives believe that their organizations promote collaboration internally, while only 41% of employees agreed with this premise.
  
  
• Leadership believes they have a digital vision, employees disagree. The research found considerable differences between what leadership and employees perceive as a clear digital vision. 62% of respondents in leadership positions affirmed they have a well-defined strategy to achieve their digital goals, while only 37% of employees agreed with this statement. 
  
  
• The report highlights that companies are failing to engage employees in the culture change journey. Getting employees involved is critical for shaping an effective digital culture and accelerating the cultural transformation of the organization. Leadership and the middle management are critical to translating the broader digital vision into tangible business outcomes and rewarding positive digital behaviors.

Digital culture leaders set themselves apart

The research identified a group of digital culture ‘front-runners’ (34% of organizations surveyed) who performed consistently well across the seven dimensions of digital culture and whose leadership has largely succeeded in aligning the wider organization to the desired culture. The UK, Sweden and the US have a strong representation of digital culture leader organizations (63%, 60% and 56% respectively), while automotive (43%), consumer products (38%), and telecoms (32%) have the highest proportion by industry sector.

These digital culture front-runners tend to hire differently than their digital slow-moving counterparts, consciously looking for behavioral traits such as creativity and autonomy when recruiting - 83% of front-runners compared to 29% of the digital slow moving counterparts; adjusting role descriptions and KPIs to align with overall digital transformation (75% compared to 17%) and aligning their compensation structure to digital transformation objectives (70% compared to 13%).

How to create a digital culture?

Creating a digital culture and affecting change requires patience, tenacity and constant vigilance. The new report sets out some key elements needed for organizations to adopt a digital culture:

• Deploy digital change agents and empower employees to drive a digital culture
• Design new digital KPIs that focus on behaviors
• Make digital culture change tangible
• Invest in the digital skills that matter
• Clearly communicate a digital vision and have visible leadership involvement
• Use digital collaboration tools to increase transparency and to reach out to employees
• Take a systems thinking approach to culture change

“To compete for the future, companies must invest in a digital culture that reaches everyone in the organization. Our research shows that culture is either the number one inhibitor or catalyst to digital transformation and innovation. However, many executives believe their culture is already digital, but when you ask employees, they will disagree. This gap signifies the lack of a digital vision, strategy and tactical execution plan from the top”, said Brian Solis. “Cultivating a digital culture is a way of business that understands how technology is changing behaviors, work and market dynamics. It helps all stakeholders grow to compete more effectively in an ever-shifting business climate.”

The report was based on more than 1,700 respondents in 340 organizations across eight countries.