Comment: Developing culture alongside digital transformations

However, with 80 per cent of digital transformations falling short of their intended ROI, and a McKinsey study revealing that 33 per cent of executives identify culture and behaviour as the primary challenge in tech-enabled transformations, there is an underlying problem threatening business growth. 

As companies rush to implement new technology, they often find their organisational culture is not keeping up with the pace of change, leading to resistance and failure. All types of transformation impact company culture, and existing culture influences the success of these transformations. This symbiotic relationship is crucial but is often overlooked. The rise of AI and its role in Industry 6.0 has amplified these concerns, with many fearing job displacement due to a lack of understanding about AI’s implications, often stemming from inadequate education and a sense of insecurity within the organisation. 

The challenge of culture 

Culture is resilient. Just as it can be a strong driver of development, it is also very difficult to change. As creatures of habit, changing people's behaviours and daily routines, more often than not, can come with some pushback. This is why, when it comes to digital transformations people are most often the weakest link. This is particularly prevalent within the industrial sector which has been slow to cultivate company culture following the impact of the global pandemic, putting the industry on the backfoot when it comes to addressing any underlying cultural issues.  

Technical teams often work in isolation, especially with the rise of remote work. This kind of work structure hinders collaboration, which in turn leads to the formation of silos, resulting in inefficiencies, miscommunication, and resistance to change. Digital transformations, which involve integrating technological changes into all business areas, require cross-functional teams to bring diverse expertise and align on unified goals.   

Likewise, a fear of failure can be a significant roadblock to innovation. Digital transformations inherently involve some risk, and a culture that punishes mistakes discourages risk-taking and creative thinking, thereby stunting innovation. Cultures that lack openness to change, whether due to a lack of collaboration or fear of failure, hinder even the smallest transformations before they have a chance to be deployed. 

Steps for improvement 

Changing culture takes committed leadership that is persistent and provides years of continuous effort. Here are a few steps industrial leaders can take to foster an environment that is ready for change: 

Understanding their team: Leaders must take the time to understand their team’s strengths, weaknesses, and motivations. This understanding helps tailor approaches that resonate with the team and drive engagement. For instance, individuals in technical roles often have different goals and motivations compared to those in non-technical roles. While non-technical employees might aspire to managerial positions as their careers progress, technical professionals often prefer to remain in practical roles, continuously developing their skills. Recognising these differences enables leaders and managers to keep their teams engaged and retain top talent. 

Communication and collaboration: Communication is the cornerstone of any successful organisation, and it becomes even more critical during times of change. Regular, transparent communication helps align all members with the organisation’s goals. Encouraging collaboration breaks down silos to foster cross-functional teams, creating a more cohesive and innovative environment that is not only adaptable to change but also drives further innovation. 

Encouraging experimentation: Risk-taking and experimentation are vital for fostering a culture of innovation and continuous improvement within the industrial industry. Actively promoting the sharing of ideas and constructive feedback creates an environment where employees feel empowered to question existing development processes and suggest changes. Additionally, when employees are encouraged to take risks and try new approaches, they are more likely to discover innovative solutions and drive progress. By viewing failures as opportunities to learn rather than setbacks, organisations become more resilient and better positioned for growth.  

Fostering trust and loyalty: In times of significant changes like digital transformations, trust and loyalty within an organisation is crucial. Clearly outlining how roles and responsibilities will be affected helps employees understand their place in the new structure, while offering training and development opportunities shows the organisation’s investment in their growth. Emphasising the benefits and long-term vision of digital transformations helps employees see the bigger picture and understand the importance of the changes. These strategies ensure employees feel supported and valued, aiding in talent retention and creating a resilient, adaptable organisation. 

Igor Epshteyn, CEO, Coherent Solutions