Culture eats digital for breakfast

Why smart CIOs focus on cultural transformation

culture trumps digital transformation

Imagine you’re a caseworker in a state government agency that delivers vital services to people in need. Times are tough, and your clients are counting on you. But you can’t support them properly because legacy tech gets in the way. Instead of helping people find jobs and get healthcare, you’re filling in spreadsheets and writing endless, repetitive emails.

culture trumps digital transformationThe obvious solution is to replace legacy tech with a modern software platform that automates all the routine process work so your caseworkers can focus on actually helping clients. Simple, right? Not so fast. Despite all the industry and media hype around “digital transformation,” research shows most major IT implementations fail to create business value.

IDC predicts companies worldwide will spend nearly $7.4 trillion on digital transformation programs between 2020 and 2023. Yet only 14% of 1,733 business executives polled by McKinsey in September 2018 said their digital efforts have sustained performance improvements, with only 3% reporting complete success at sustaining change. A whopping 73% of enterprises failed to generate any business value whatsoever from digital transformation, according to a 2018 Everest Group study.

The right tech demands the right culture

How do you ensure your digital strategy beats those odds? In the COVID-19 era, you can’t afford to waste any resources. The more complex your business, the more work needs to flow smoothly across functions like sales, customer support, finance, HR, IT, legal, and so on. Your IT spend must deliver productivity growth and business continuity. And it must deliver the great experiences your customers and employees demand—anywhere, anytime, on any device.

Digital transformation programs often fail because employees don’t accept new technologies, not because of the technologies themselves. In fact, 43% of 4,500 CIOs surveyed for the 2017 Harvey Nash/KPMG CIO survey cited resistance to change as the top impediment to a successful digital strategy.

It follows that successful transformation involves building the right organizational culture, not just implementing the right tech. Last year, the Workflow Quarterly research team set out to test this hypothesis through an ethnographic investigation of two very different organizations: a major healthcare delivery system in Australasia, and a state government agency in the U.S. responsible for delivering social services to some two million residents. (We anonymized both organizations to protect their privacy and encourage candid responses from our informants.)

Organizational deep dive

With help from our friends at Habitus Insight, we investigated how employee and customer experiences change when humans and machines collaborate. We interviewed and shadowed about 20 research participants across the two organizations, collecting more than 80 hours of film footage and 60 hours of audio recordings.

Both organizations had successfully transformed their service delivery systems in the previous year. The state agency focused on improving its customer experience, while the healthcare system concentrated on the employee experience. Both achieved dramatic results by enlisting their employees in support of digital transformation.

The U.S. agency’s main problem was a terrible customer experience caused by a shortage of caseworkers, unfit-for-purpose systems, and manual data processing. As a result, customers were often kept on hold for more than two hours when they called with questions about their benefits.

In 2017, a new commissioner was appointed with a mandate to streamline and improve customer service. The agency embarked on a program of workflow digitization and automation to deliver more efficient services, given staffing limitations. The outcome was a 70% reduction in customer resolution times. And when the COVID-19 crisis hit in early 2020, the agency was ready to handle a surge of unemployment applications. It was able to process new claims in as little as 48 hours.

“We went from being the Fred Flintstone of customer service to being the James Bond,” said the agency’s customer service lead.

Healthcare transformation

The Australasian hospital system faced a wide range of business challenges, including budget limitations, staff shortages and an acute need for additional beds. Over the past decade it has also faced its share of catastrophes, including a major earthquake and a bloody terrorist attack. Both events put enormous pressure on emergency responders and the healthcare system as a whole.

In recent years, the healthcare system has been steadily modernizing its employee experience via new technology and a patient-centered approach. New tools include an HR workflow management system for employees and managers, a patient scheduling system for clinic appointments, and a task-scheduling system that dispatches hospital orderlies via smartphone app. As a result of these and other initiatives, the healthcare system has managed to save about 80,000 hours of employee time per annum, and is now a global leader in digitizing workflows.

So how did they do it? We distilled our fieldwork insights into a cultural transformation playbook that any organization can apply to mobilize employees in support of new workplace technology. It includes the following six principles:

  1. Develop a culture of change
  2. Collaborate across all levels of your organization
  3. Clarify expectations
  4. Show benefits
  5. Train relentlessly
  6. Focus on mission

For a full explanation of each principle, check out my video presentation on ServiceNow’s Knowledge 2020 site (free registration required). And remember: Your employee culture will determine whether your digital transformation succeeds or fails. To paraphrase an old (but valid) business bromide: Culture eats digital for breakfast.