Why Cultural Transformation is so Difficult for Companies to Implement

I recently wrote about how Cultural Transformation is key part of Digital Transformation.

I received some great feedback and questions on how to implement cultural transformation, who is responsible for it, and what are “best practices” on it. These are good but difficult questions to answer.

Let’s take a step back and discuss the context (Digital Transformation) a bit more before getting into the cultural side. As mentioned in the previous article:

Digital Transformation is not simply about digitizing existing services, but about embracing technologies to create innovative, new products and services, more efficient ways to meet customer needs AND to compete more effectively in existing and (ideally) new markets.

While this sounds (relatively) simple, it can be actually quite complex, involving many types of changes in a company. There are many different areas to change when thinking about Digital Transformation (DT). This article from MIT Sloan lists 3 major (and 9 minor) aspects of DT. Their 3 major aspects are:

1. Transforming Customer Experience
2. Transforming Operational Processes
3. Transforming Business Models

Some of the 9 minor areas are customer understanding, worker enablement, top line growth, and new digital businesses. Oddly, none of their 9 minor aspects even touches on culture.

And yet there is the famous quote, sometimes attributed to Peter Drucker, sometimes to former Ford CEO Mark Fields:

“Culture Eats Strategy for Breakfast”

which basically states that organizational culture ENABLES strategic success, but when the two are not aligned, or if the culture is dysfunctional, your strategy is likely to fail.

There are clear examples of this right in front of us.

Compare Southwest Airlines and United Airlines

Southwest is known for their truly customer-centric culture and their ability to turn the difficult task of efficiently transporting large numbers of people from city to city into a (generally) pleasant experience for passengers and staff.

United Airlines is quite the opposite. Despite hard working staff, United is (unfortunately) known for breaking guitars and sometimes even breaking passengers. I once had a United Airlines staff member actually plead with me to report the problems with a flight cancellation and misplaced luggage to United, because as he said “they don’t listen to employees”.

Needless to say, despite whatever United claims about “flying the friendly skies”, their culture is broken and renders their strategies ineffective.

Implementing Digital Transformation

I view the main areas of transformation as follows:

I use this representation, because the areas are inter-related. Simply listing them from first to last could imply a linear relationship which is not accurate. Strategy is at the top because it is the first aspect of DT to decide on and drives actions and goals of the others.

I won’t go into each of these in detail here, but looking at the list of 6 items, 5 of them have something in common. They are all items that virtually every business already actively manages and tracks with systems and processes.

Company strategy, technology stack, organizational dynamics, operational processes, and of course business model are very clearly defined, implemented and tracked in most, if not all organizations. Any C-level executive worth their salt thinks about these things constantly and focuses resources to improve them as needed.

Is ANYONE actively managing Culture?

• But how (if at all) is culture being managed?
• How many companies have a Chief Culture Officer (or equivalent)?
• What culture-centric metrics are tracked on an ongoing (e.g. quarterly or even annual) basis?
• Could any C-level executive give a crisp assessment of the culture(s) in their organization based on fact vs. opinion?
• Is departmental or business unit culture something that VPs or GMs even understand or are measured on?

The reality is that in most companies, NO ONE actively manages culture. In most companies, it is often an afterthought, if a thought at all. Most of us have worked in companies that performed employee culture surveys, often in response to major change events or CLEAR evidence of signifiant employee dissatisfaction. But in the end, what did they accomplish?

How is Culture being Measured?

First, given the nature of culture, it’s unclear if those surveys are even accurate measurements of company culture. And secondly, how many companies ACTUALLY use that information to make meaningful changes and then measure cultural improvement as a result of those changes?

Culture cannot be embodied in procedure manuals or process documents. You can’t “re-org” your way to a better culture. Dictating top-down change from the C-suite alone won’t work. Branding and messaging exercises cannot change culture.

Culture is embodied in the fundamental aspects of how a company operates, how it views and treats employees, how the employees view their own value within the company, and how everyone (C-suite on down) lives up to the ideals the company espouses.

As this HBR article on changing company culture states, a core tenet of culture is the answer to the question:

“Why do we exist?”

As mentioned in my previous article, when Steve Jobs returned to Apple, that question was answered by the “Think Different” campaign. At Zappos, it’s embodied in the phrase “Deliver Happiness”.

Answering the question is only the starting point. Instilling that across the organization is where things can be difficult, so it is often ignored.

And yet, we constantly hear how many of the most successful companies have great cultures: Google, Apple, Wegmans, Disney, Genentech, Adobe, P&G etc. Their cultural practices have been built over time, with focus and effort.

So when embarking on Digital Transformation, and making changes to strategy, technology, process, organization and business models, it’s understandable that cultural changes may be left behind. But transformation means CHANGE. You can’t change the company without changing how the employees view the company and their roles and value in that company.

Feed the culture from the start, so it doesn’t eat your strategy later on.

Tell me what you think in the comments.