Transforming Organizational Culture

(Chapter 3 from Transform: A Rebel’s Guide for Digital Transformation)

It is your opportunity

This is a revolution and transformation that is primarily being driven from the outside by customers, or from the bottom or middle of organizations, not from the top. It is a revolution of employees and customers. Yes, leadership matters but like in Liberia, the broader networks are the crucial drivers. Everything is connected. Getting to a new model culture will take years and the efforts of every unit in your organization. It will be a massive collaborative effort. It has to start somewhere.

The transformation begins not so much by thinking outside the box / silo, but by linking the boxes, by reaching out and finding others who want to be part of the transformation. The old model was a hierarchy full of silos and egos. Digital culture is network culture. It is multidisciplinary culture. Don’t wait for your leadership to get it and then lead the way.

Lead your leadership. Help them get it, because it is you who see the future far better than they do. Leadership is often disconnected, set in its ways, and out-of-touch when it comes to understanding the opportunities and threats that we face. But we cannot move forward without senior management. The challenge is to educate them and bring them enthusiastically along.

Empathy for the customer

Customer experience is the spear point of change. The hardest thing is to feel for others. To think about other people’s needs. To live in other people’s shoes. Hierarchy and silos are all about tribes. The tribe has a powerful pull. It is comforting and ego-rewarding. Your group, your peers, your design, your content, your code.

To reach out and see the world from outside-in goes against gut instinct. That’s the hardest skill. And it is the most essential one because the customer has become so much more powerful. Because if you don’t focus relentlessly on the customer, they will leave. If you don’t focus relentlessly on the employee, they will leave. And if they can’t leave because you’re a government or some sort of monopoly, they will refuse to use or read whatever it is you have created. They’ll call you on the phone if they have to. Or they’ll fill in the form with lots of mistakes.

One way or another they will find a way to rebel and make your life difficult. Everyone will get frustrated and annoyed. Value and opportunity will be lost for everyone. The customer has radically changed and we must change with the customer.

Focus on customer outcomes

We must change how we measure things and how we reward organizational behavior. Otherwise, nothing will really change. We may have one foot in the new model but practically all our management metrics measure old model inputs. We measure the production — the more of it the better — of things, whether they be products, projects, content or code. We measure websites and webpages and apps. How many did we launch? How much did we create?

Wrong metrics! New model metrics measure customer outcomes. They measure consumption, impact. What happened? What was the customer able to do? How long did it take them? How easy was it for them? Did they leave with the wrong answer? We must move to outcome-based consumption metrics.

Use evidence, use Big and Little Data

Opinion and gut instinct will slowly be reshaped as evidence and data grows. Digital leaves a record that can be analyzed. At every step of the transformative process, you must show it, prove it, do it. What’s Big Data except evidence of what happened, what people did, when they did it?

The best way to transform an organization to a new model culture is by using the Web as a laboratory of human behavior, where you are constantly testing and evolving hypotheses. You use evidence of what people actually do, not what they say they do. You test and test again and test again. If we do it the old way, show the results you get. If we do it the new way, show how you get much better results. Move forward with evidence. The path to the new model is paved with evidence of what your customers and employees are actually doing. Leadership from below can only succeed if it is driven by the evidence of what customers are doing.

The Top Tasks approach, which will be explained in later chapters, is a model of continuous improvement that, first and foremost, establishes what is most and least important to customers. It is about managing ongoing customer use. You manage the task, not the channel, not the format, not the content, not the code. You do this based on constant feedback from your customers. This feedback is the most valuable thing you can get. Thus, it’s vital that you design and evolve within the environment of the customer. That means going live with the website or app as quickly as possible.

Digital is the never-ending experiment. The longer you keep it inside the silo, the less chance it has of success. Connect it up, let it loose. Get it out into the customer ecosystem and evolve it based on use. Don’t build to last. Build to change. Find a product, or a section for a product, an area, a small place within the larger organization. Launch the new model and gather data. Test and refine, test and refine, test and refine. The new model will grow and over time replace the old model.

Digital Transformation Score

A giant meteorite was the extinction event for the dinosaurs. The Web is the digital extinction event for old-model organizational dinosaurs. The Web extinction event smashed all those old certainties. The organizational dinosaurs are not all dead by any means, but their future is far from bright. Unless they can find it within themselves to transform.

Organizations are not healthy. Whereas people’s life expectancy has gradually increased over the last sixty years, organizational life expectancy has halved.

Life expectancy of people and companies: 1955 to 2015

The preceding chart, compiled from UN and S&P data, might in fact be an overly rosy picture from a company perspective. Professor Richard Foster from Yale University estimated that in 2015 life expectancy of companies had dropped to 15 years, a 50-year decline on what they had been in the 1920s. Today’s rate of change “is at a faster pace than ever”, he told the BBC.

“Bureaucracies are honed by the past and almost never can they deal with the future,” biologist Leroy Hood has stated. So, what do we do? We must create a new model, as Richard Buckminster Fuller stated: “You never change things by fighting the existing reality. To change something, build a new model that makes the existing model obsolete.” The new model puts the customer at the center. It organizes around the customer and measures success, first and foremost — based on customer success.

This change of model from organization-centric to customer-centric will not be easy. “Growth creates interdependencies, interdependencies create conflicting constraints, and conflicting constraints create slow decision making and, ultimately, bureaucratic gridlock,” Eric D. Beinhocker writes in his book, The Origin of Wealth. “The politics of organizations are such that local pain in particular groups or departments is often sufficient to prevent the organization from moving to a new state, even if that state is more globally fit … The virtual nonexistence of excellence that lasts multiple decades (again, less than 0.5 percent), and the extreme rarity of repeated excellence (again, 1 percent), brings us to a brutal truth about most companies. Markets are highly dynamic, but the vast majority of companies are not.”

One thing is for sure. In the world digital is building, you will switch jobs many times during your career — and you will likely switch careers many times too. You need to know if your organization is a new model one — or at least if it has the potential to become one. Otherwise, you need to move to an organization that wants to be part of the future. Over the years, through feedback and research, I’ve developed a list of the core characteristics of new and old model organizations.

Score your organization by placing a 1 next to the factor that best reflects how you feel about it. (For an online version, visit www.digitaltransformationscore.com)

Digital Transformation Score

Read the next chapter: Golden Age of Digital Designers

Read the previous chapter: Transforming a Culture

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References

Beinhocker, E. The Origin of Wealth: The Radical Remaking of Economics and What it Means for Business and Society, Harvard Business Review Press, Aug. 2007

Boag, P. Digital Adaptation, Smashing Magazine GmbH, Germany, 2014

Gittleson, K. Can a Company Live Forever? BBC, Jan. 2012