I’ve been writing about the disparity in digital transformation progress among countries and regions. Those areas that are earlier in their journey, such as many European nations, can learn from the U.S., which is further along with its digitalization path. As you consider your transformation, this article will focus on one of the most important lessons to be learned: the need to transform culturally, not just technologically.
Digital transformation is usually discussed in terms of issues like streamlining processes, gaining insights, improving customer relations, or whatever the case may be for each company. But there’s more to digital transformation than just moving information faster. Or at least there should be when a manufacturer understands and commits to both digital and cultural transformation.
What is cultural transformation? We can start with what it isn’t. It’s not throwing technology at the processes and organization you have now, because that’s just automation at best or “paper on glass” at worst. Rather, cultural transformation means rethinking the productivity of your people, processes, and organization by augmenting them with technologies that improve efficiencies and develop a connected environment.
Cultural transformation is instilling a culture that supports the change while enabling the company’s overarching strategy. Embedding a digital culture in an organization is doable, but it takes a clear methodology and a disciplined effort.
Simply put, there are new ways of doing business in a digital world that most manufacturers should be cashing in on but aren’t because they haven’t transformed themselves culturally.
The limits of digital transformation
Take data monetization as an example. A survey from NewVantage Partners found that only 50% of the F1000 executives said they treat their data as a business asset. In other words, digital technology has provided opportunities for making more money and expanding their business at little risk, yet half the executives haven’t done anything about it. Those who have are Digitally Determined and those who have not are Digitally Distraught.
It’s not that technology transformation alone doesn’t yield benefits. It certainly does, and a good example is Artificial Intelligence (AI) which is now widely used for big data analysis and reporting. A few years ago, most companies said they had realized little or no value from their AI investments. But this year, a new survey reports that 92% of companies have seen positive returns on their AI investments. Digitalizing information systems has a lot of inherent value.
Nevertheless, despite the progress, many companies that have advanced their technology are still leaving money and opportunities on the table because they’re bumping into the limits of digital transformation. And according to MIT Sloan Management Review, cultural changes are what’s holding them back.