Can we preserve Strategy and Culture in the new Digital Economy?

Despite growing acknowledgment of the need for digital transformation, most companies struggle to get clear business benefits from new digital technologies. They lack both the management temperament and relevant experience to know how to effectively drive transformation through technology.

Even companies where leadership has demonstrated it can effectively leverage technology can run into challenges with new digital technologies. Today’s emerging technologies, like social media, mobile, analytics and embedded devices, demand different mind-sets and skill sets than previous waves of transformative technology.

There is no one factor that impedes digital transformation. Lack of vision or sense of urgency plagued many companies, culture at others, and organisational constraints problems at still others.
Too often a company’s strategy, imposed from above, is at odds with the ingrained practices and attitudes of its culture. Executives may underestimate how much a strategy’s effectiveness depends on cultural alignment.

A strategy that is at odds with a company’s culture is doomed. Culture trumps strategy every time.

Some corporate leaders struggle with cultural intransigence for years, without ever fully focusing on the question: Why do we want to change our culture? They don’t clearly connect their desired culture with their strategy and business objectives. Many times when I have been asked to review a dysfunctional board or company operations, we reviewed issues in attitude for cultural traits: non-collaborative teams and communications, no-innovation, lack of risk taking, unfocused on quality, and more.

When choosing priorities, it often helps to conduct a series of discussions with thoughtful people at different levels throughout your company to learn what behaviors are most affected by the current culture—both positively and negatively.

It is always tempting to dwell on the negative traits of your culture, but any corporate culture is a product of good intentions that evolved in unexpected ways and will have many strengths. If you can find ways to demonstrate the relevance of the original values and share stories that illustrate why people believe in them, they can still serve your company well. Acknowledging the existing culture’s assets will also make major change feel less like a top-down imposition and more like a shared evolution.

One of the best-known, and yet most misunderstood, examples of cultural backsliding took place at the Arthur Andersen accounting firm.

With practices in more than 30 countries, it was once the envy of professional service firms. Then in 2002 indictments during the Enron investigation forced Andersen into bankruptcy. At the time, many believed that a single client relationship had brought the firm down for largely legal or regulatory reasons. In fact, its fall stemmed from declining cultural erosion that had begun decades before the Enron debacle.

At least that was the conclusion of analyst and journalist Charles Ellis, who studied the Andersen failure in depth and described it in an unpublished manuscript, “What It Takes”. “Arthur Andersen, once the world’s most admired auditing and professional services firm, descended through level after level of self-destructive decline to its ultimate death,” he says. Ellis traces the firm’s decline to the 1950s, when its leaders shifted their focus from quality and integrity to beating other firms’ revenue numbers and market position.

As Andersen expanded around the world, it abandoned practices geared toward professional excellence, such as a rule that all accountants had to spend two years in auditing and the use of a global profit pool that ensured that all partners had a stake in one another’s success. Each new measure, while defensible, made it a little easier to compromise the firm’s values. The cultural deterioration also made it easier to ignore many warning signs, including the 1973 bankruptcy of Four Seasons Nursing Centers of America, in which the founder pleaded guilty to securities fraud and Andersen, as the auditor, was indicted. By the time Enron became a key client in the late 1990s and insisted on using only individual accountants and auditors who accepted its questionable practices, the accounting firm’s professional culture had already declined past the point of no return. A few modest interventions might have preserved the firm’s commitment to integrity and avoided a very public and embarrassing demise.

All too often, leaders see cultural initiatives as a last resort, except for top-down exhortations to change. By the time they get around to culture, they’re convinced that a comprehensive overhaul of the culture is the only way to overcome the company’s resistance to major change. Culture thus becomes an excuse and a diversion, rather than an accelerator and an energizer.
But cultural intervention can and should be an early priority—a way to clarify what your company is capable of, even as you refine your strategy. Targeted and integrated cultural interventions, designed around changing a few critical behaviours at a time, can also energize and engage your most talented people and enable them to collaborate more effectively and efficiently.
Coherence among your culture, your strategic intent, and your performance priorities can make your whole organization more attractive to both employees and customers. Because deeply embedded cultures change slowly over time, working with and within the culture you have invariably is the best approach. The overall change effort will be far less jarring for all concerned. Simply put, rather than attacking the heart of your company, you will be making the most of its positive forces as your culture evolves in the right way.

Before you can change the company culture, you have to decide what you want the company culture to look like in the future. Different companies in different industries will have different cultures. Look at what kind of a culture will work best for your organization in its desired future state. Review your mission, vision and values and make sure the company culture you are designing supports them.
Here are some characteristics of company cultures that others have used successfully. Decide which work for your company and implement them.

§  Mission clarity
§  Employee commitment
§  Fully empowered employees
§  High integrity workplace
§  Strong trust relationships
§  Highly effective leadership
§  Effective systems and processes
§  Performance-based compensation and reward programs
§  Customer-focused
§  Effective 360-degree communications
§  Commitment to learning and skill development
§  Emphasis on recruiting and retaining outstanding employees
§  High degree of adaptability
§  High accountability standards
§  Demonstrated support for innovation

In summary, if you are an executive leading a company looking at these technologies, you need to lead the technology — do not let it lead you. You will want to think about, how is your company going to be different and implement a framework, so that you are not just buying technology, you are actually pushing your company forward in a different way, because the technology is taking you, your company and your culture into the digital economy.

Henna Inman once said:

“Authentic leaders inspire us to engage with each other in powerful dreams that make the impossible possible. We are called on to persevere despite failure and pursue a purpose beyond the pay check. This is at the core of innovation. It requires aligning the dreams of each individual to the broader dream of the organisation.”