From one industrial revolution to another: the importance of culture to digital transformation

culture of digital transformation PACT

At the beginning of the nineteenth century, a fictional character called Ned Ludd became a rallying point for many textile workers in England. Factories across the country had begun to introduce automated textile equipment, designed to improve and speed up the way that factories produced cloth. However, workers angrily objected to the introduction of this machinery, fearing that they would become less valuable and could even lose their jobs to cheaper, less skilled workers. Under the banner of Ned Ludd, these workers rose up, destroying factory equipment and even battling the British Army. The ‘Luddites’ continued to wage guerrilla warfare against the factory owners and government until 1817.

This was a complex moment in time, with many factors at play including economics, class and cultural change.

But although it was hundreds of years ago, and part of the first industrial revolution rather than the fourth, the Luddites serve to illustrate an important fact about digital transformation today. Successfully introducing new technology depends on much more than the technology itself.

A PACT for progress

This is why in 2017 we have conducted research into digital transformation and specifically why digital projects fail and what is needed to make them work. The results have been startling. We have found that in the past two years, 1 in 4 global organisations have experienced a failed digital project – at an average cost of €555,000. Across the board, businesses are struggling to deliver on People, Actions, Collaboration and Technology: the four elements needed for a successful digital transformation PACT.

As our report shows, many factors are important to digital transformation, but I will focus here on business culture: the approach organisations are taking to digital transformation, the line between official and unofficial projects and why failing more can actually bring you greater success.

A rosy picture of transformation

Actions – the way a business behaves around digital – are key to the success of transformation programmes. And fundamental to that is a well-defined digital strategy, which looks to entwine technology within the business and its objectives. Encouragingly, nine in ten business leaders say that they have a clearly defined digital strategy – with the vast majority (82%) saying that the rest of the organisation understands what it is.

These digital strategies are supported by a culture of innovation throughout the business; luckily 87% of business leaders agree that that is the case. Even more positively, 88% of respondents say that their senior management team has full oversight of all digital transformation programmes. So far, so good.

Once projects are underway, 91% of business leaders say that they have a clear process in place to evaluate them. From many of the responses, it would appear that businesses have a clear digital strategy, supported by an innovative culture across the business, with clear processes in place to ensure that projects are monitored and evolved as they progress.

It’s an almost utopian vision of transformation. So, what’s going wrong?

The problem with failure

When you look a little more closely at the results, business leaders’ confidence fails to ring true. Although leaders believe that they have visibility of every project, that appears to only apply to “officially sanctioned” programmes – there is in fact a secondary layer of “unsanctioned” projects. Consequently, three in four business leaders say that digital projects are often not linked to the overarching digital strategy, while 69% say that shadow digital projects are a serious problem for their organisation. The majority (72%) even admit that shadow digital projects are the only way for parts of the organisation to deliver meaningful innovation.

So why does shadow IT remain the spectre lurking behind digital transformation? It seems that business culture does in fact remain an issue – and in particular, organisations’ attitudes to failure. 68% of our respondents said that fear of failure is a serious hindrance to digital transformation projects, while 67% say that the cost of failed projects has put them off pursuing them in the future. It may very well be that this fear of failure is keeping digital projects in the shadows, as teams choose to implement technology themselves, under the radar.

But this means that businesses are not only at risk of losing money on projects unrelated to their strategy – they’re also failing to benefit from their innovations. All in all, business culture is preventing businesses from reaching their full digital potential.

A new digital culture

Businesses must consider an entirely new approach to failure, to not only limit the amount of money lost on failed projects but ensure that they are able to take advantage of the innovative ideas already within their organisation. Business leaders should consider encouraging smaller digital projects, using an agile strategy – where teams can try new digital projects, constantly evaluate their progress and then scale up the projects that work well.

If teams are able to not only fail fast, but fail forward – taking their learnings and building on what has been achieved to date – then businesses will lose less money on expensive failures, and be able to harness the creative ideas of team members to truly grow.

Introducing new technology is about much more than new tools: it’s a cultural change. Like the factory owners centuries ago, the businesses that master this process will be the ones to truly succeed in this fourth industrial revolution.

Read more about the fail fast, fail forward approach here:

For the full Digital Transformation PACT findings, visit the report site:

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