Leadership, culture key to successful transformation: study

digital transformation leadership culture
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A new academic study from Singapore says it has confirmed a link between culture, organizational readiness and willingness to change when it comes to digital transformation.

Put another way, the secret to successful digital transformation is largely a matter of people, not technology.

The study – “Cultural Transformation in the Digital World”, launched by Singapore Management University – Executive Development (SMU-ExD), Tata Communications, DBS Bank and KPMG in Singapore, in partnership with Trompenaars Hampden-Turner (THT) Consulting – looks at the digital transformation journeys of major businesses with the aim of providing a deeper understanding on how business leaders view their journeys towards digital transformation, the culture within their organization and what challenges they encounter as they seek to propel their businesses forward in the digital age.

The study found that leader effectiveness is directly correlated with perceptions of organizational readiness for digital transformation, and that transformation initiatives will only succeed if they are championed by the actions – not the words – of an organization’s leader.

According to the report, 87% of respondents agreed that culture created bigger barriers to digital transformation than technology and 70% agreed that their leaders had the ability to lead on digital transformation, but only 50% believed that they were appreciative of implementational challenges.

CEOs must assume the role of ‘chief evangelist’ of digital transformation to persuasively, persistently and convincingly articulate and communicate the “why” behind each initiative and champion changes, to create positive business impacts. Teams will only embrace change if they understand why transformation is needed and if they have faith in their leaders.

All of the 48 C-suite level executives participating in the study agreed that digitalization is the “new normal”, with a universal belief that embracing digital transformation was urgent and critical for the organization to survive and thrive.

Furthermore, 80% of C-Suite interviews highlighted the importance of purposefully focusing on ‘people aspects’ during digital transformation journeys, suggesting an emphasis on the importance of inclusiveness.

“Readiness” was perceived to transcend well beyond technological readiness into the realm of organizational culture, new mindsets and leader behaviors. The “readier” the organization was perceived to be for digital transformation, the greater the need was felt for cultural change and for embracing conducive leadership behaviors.

Common cultural attributes: open, flexible and agile

Each transformation journey is unique, but the research suggests common cultural attributes for those who are successful: openness, flexibility and agility. Today’s winners are focused on incremental change, flatter structures and experimentation. Over 70% of mid-level respondents acknowledged that they needed to adopt new leadership behaviors including agility, risk-taking, accountability, leading change and digital adoption.

The creation of small, agile, nimble-footed teams that are highly empowered to drive digital transformation, as opposed to making large-scale enterprise-wide changes that could be intimidating for employees, is a preferred implementation tactic. However, only 41% of those surveyed believed they had the skills that are necessary for the digital age, suggesting there is a pressing need to increase access to training to plug the ever-present skills gap.

“There are so many changes happening in our current times that are linked to the introduction of ever more powerful digital tools and machines. Our focus is often technical and there is not so much attention devoted to the human and cultural side of digitalization,” said Dr Fons Trompenaars, founder of THT Consulting. “I think that this research will reveal many of those insights and also how they relate to the technical side of digitalization.”

Dr Katharina Lange, executive director of SMU Executive Development, observed that many leaders described the digital age as another change phase. “Interestingly, the digital change process forced them to eventually address the many challenges that sometimes get pushed aside in daily work life: integrating more diverse views, becoming truly customer-centric, reconciling cultural dilemmas, speeding up innovation cycles. The underlying binary code of the digital age shapes the way humans and machines work together. Managing the interface of human machine interaction becomes critical for future success in business– and life in general.”

Vinod Kumar, managing director and CEO at Tata Communications, said the research shows that business leaders must lead from the front and focus on building an innovation culture, where staff can become life-long learners. “Today’s transformation leaders have focused on sparking a change in mindset by championing cultural traits like openness, flexibility and agility. As a result, they have more engaged teams that are better able to flex to market trends, spot opportunities and react fast.”

The study is based on quantitative and qualitative insight from 48 C-suite leaders and 401 anonymous executives. A copy of the report is available here.

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