What does it take to create a change in organizational culture?
Whether a company is striving to become more data-driven, customer-obsessed, or “digitalized,” the success of any change initiative is as much a function of the organizational culture as the specific mechanics of the change. Organizational culture reflects the often-tacit values and beliefs shared by employees and key business partners that drive people’s behaviors and choices.
For example, in technology companies, product/technology-centric cultures focus on R&D, feature sets, and product lines. The engineering orientation of technology companies makes it difficult for employees to develop an empathetic view of their customers, to understand the angst customers experience when facing adoption decisions about new technologies. This orientation can reinforce, in both subtle and not-so-subtle ways, processes and styles of decision making that make it seem as if products –rather than customers– are the raison d’etre for the firm.
Or, companies’ orientation may be focused on existing products and markets, causing them to suffer from the well-known incumbent’s (or innovator’s) dilemma. Rather than developing their own disruptive innovations—that may well cannibalize their existing products—they instead work on refining those existing products with incremental innovations. The lack of a culture of innovation can cause “throwing good money after bad,” and ultimately can result in the company’s demise.
Having recently participated in a Digital Transformation Program at the IEDC Bled School of Management (Slovenia) as well as Austria Connect, an event to connect Austrian companies to business opportunities in Southeast Europe with a focus on digitalization and transformation, the importance of culture change is front-and-center in my mind. I was greatly inspired by the session on “Leading Digital Transformation.” Nenad Filipovic, Professor of General Management and Business Ethics at IEDC, presented a study of CEOs in the region regarding their thoughts about digital transformation. Dejan Turk, CEO of AI Slovenia and VipMobile Serbia (two telecommunications companies), also spoke about the urgency of creating a culture of innovation. I have synthesized their two views on driving cultural change here in my own words.
1. Create a sense of urgency/ Estimate the potential drawbacks/damage if the company does not change. I like this initial step, because without a sense of urgency, culture is complacent. This step puts the focus on the cost of status-quo thinking. Instead, most companies focus on the cost of the change, and the risks if the change does not produce the desired/expected results.
