Creating a Culture of Digital Transformation

Creating a Digital Transformation Strategy and Culture

January 2018 | By Professors P.J. Guinan and Salvatore Parise

Estimated reading time: 4 minutes

Key Takeaways

  1. Successful organizations must incorporate the impacts of digital disruption in their strategic thinking and business models, including how different technologies can create new value propositions for their customers and operations.
  2. Develop an iterative methodology that includes all key stakeholders, from both IT and the business, in identifying, developing, implementing, and measuring digitally based projects.
  3. Leverage user-centric, lean, and agile design principles to quickly build meaningful prototypes, learn from experiments and hypotheses testing, and iterate quickly.
  4. Know how to “pitch” to leadership and key sponsors to get funding to support continuous digital experiments and products.
  5. Provide servant and transformational leadership to attract, hire, retain, and cultivate talent that is needed in a new digital transformation environment.
  6. Consider additional innovation metrics along with the tried and true such as customer involvement, number of new products, and launches.

One of the single largest differentiators for our economy today is the link between business opportunities and digital applications, such as cloud, data analytics, social, and mobile applications. Forward thinking executives are now looking to their current IT professionals to play a different role in the organization. No longer seen as just a back-end service provider, IT teams are shifting into the spotlight as active problem solvers and innovators. IT professionals are now expected to create customer-centric solutions, while still managing the company’s infrastructure needs.

We conducted an in-depth research study which examined the levers that enable an innovative digital culture. We define digital transformation as using digital technologies, data, people, and processes in new ways to create business impact in an increasingly disrupted business world. Traditional IT cultures have rewarded technical skills such as the ability to code, or to manage and deliver complex IT projects on time and on budget. Today, the types of organizational demands that are being placed on the technical professional require a broad set of behaviors including technical aptitude, effective interpersonal skills, deep domain knowledge, and the ability to innovate..

We used three approaches in the research: fieldwork at five company sites, 130+ semi-structured interviews, and 100+ surveys to gain deep insight into digital innovation levers. Our results suggest that business strategy, entrepreneurial processes, and talent management are the three major drivers of digital transformation.

Business Strategy

For many years, researchers as well as practitioners have recognized the importance of agreement between what the business needs and what digital technology has to offer. Now, the demands on the business have changed and the IT professional needs to anticipate and define the opportunities for business growth. How is this done? We heard from several companies that their IT governance structure now includes a corporate venture group along with the more traditional IT portfolio approach. Organizations in our sample also had many governance mechanisms, including embedding innovation activities throughout the business, as well as having separate divisions for innovation, typically referred to as innovation hubs or centers of excellence.

Entrepreneurial Processes

So much of what we need to know today about digital innovation—rapid iteration, experimentation, learning from mistakes—comes from methods that entrepreneurs have been using for years. For entrepreneurs, this was born out of a lack of resources to build out full solutions, and not knowing future customer needs. IT organizations have not been known for their entrepreneurial approaches, instead they often are regarded as process-oriented, rigid problem solvers, and unwilling to take risks. Companies in our sample worked against this stereotype, using entrepreneurial-type processes such as Scrum/Agile development, design thinking (storytelling, extreme user scenarios, journey mapping), and open and collaborative work spaces.

Talent Management

Tomorrow’s IT professionals must be digital innovators. They must be cognitively ambidextrous; able to think and act with a prediction approach to problem solving as well as creation logic. This requires both deep analytical and creative skills, as well as the ability to switch back and forth depending upon the situation. In addition, digital innovators must exhibit transformational leadership behaviors; providing a vision, proactively engaging in problem solving yet heavily encouraging self-management, taking calculated risks and learning from mistakes, and listening to and entertaining new ideas.

Digital disruption provides the opportunity for the IT group to become a leader in this transformation. Winners and losers will be determined not by the technologies themselves, but rather by the culture of digital innovation that is a signature of most successful organizations.