During the last couple of years, we have been working intensively with large firms that aspire to drive digital change, and also with growing companies whose business models are based on digital platforms. In both cases, we have experienced a significant difference in mindset and culture compared to large traditional firms. This article highlights the main elements of these cultural differences.
1. Speed and agility
In a company with a digital mindset, speed and agility are fundamental criteria for success. Real time relationships with clients, stakeholders, employees and suppliers are crucial in order to disrupt traditional business models. In innovative industries, speed is often of the essence in order to capture market opportunities before other players become ready to enter the innovator’s niche, and lawmakers introduce regulations.
Even as digital companies grow and develop, they understand the importance of speed and keep their start-up agility and ability to make quick decisions. Speed is one of the main value propositions that they offer to their clients; in a disruptive business, the innovator must often bet against the law, and so the only long-term strategy element is the innovator’s own technology platform – everything else consists of tactics which will need to be adjusted depending on market developments. For example, in online forextrading, the location of the headquarters and the licensing entities may change after every couple of years depending on changes in the regulations.
2. Use of technologies and continued improvement
Digital companies typically tend to hire younger managers, since a successful executive in a disruptive environment should be passionate about technologies and continuing improvement. In many cases, these features tend to be found in the younger generation. Digital executives should not be afraid to experiment, and should be interested in continued learning.
Challenging the status quo and proactively looking for new technological solutions and partnerships are important elements for success in the digital world. For example, many FinTech firms are disruptors in financial services but nevertheless cooperate extensively with banks, telcos and retailers, while their services are available on tablets, smartphones and other devices. Their business models are highly diverse based on a very creative, innovative technology-based approach.
3. Leadership, motivation and talent
A leader in a digital culture is often the founder of a company and sometimes also an owner. A digital leader should convey the pride and the mission of being a disruptor and innovator with ambitions for technology-driven global expansion. Digital organisations are flat and there is no ethnocentric head office, but a high level of empowerment and autonomy throughout all layers of the organisation.
The leadership culture and style is based on high levels of freedom, teamwork, virtual offices and sharing. There is no scrambling for status, but passion and drive for a common mission. At the same time, the passion must be backed up by an advanced level of knowledge and technical skills in finance and technology. The digital economy is not for mediocre people; only the smartest, fastest, and most self-disciplined will succeed.
4. Embracing diversity and employment branding
In digital culture, employer branding is very strong and includes tribal elements – sports idols are sometimes used to communicate with the customers and staff. Offices are open-plan and represent the most modern approach to space management. The dress code is generally very informal, and allows individuals to express themselves. The culture is embodied by common celebrations of success, joint trips to sporting events and very open, fast and transparent communication.
Our digital clients embrace diversity of all kinds, and there are often cultural similarities among platform-based companies (e.g. Ferratum Bank, Facebook, and AirBnB). They see the world as a common space in which they can grow their businesses and attract the best talent.
5. Transparency, no bureaucracy, performance management
As part of the sharing culture, information is available to anyone at all times. There are no power struggles; only transparent, sharing behaviour is accepted. The digital environment shuns and disapproves of hiding information, attempting to develop your own career on the back of other people’s success, and twisting the facts for the benefit of your own internal PR. The single technology platform allows every action to be measurable, and thus the approach to decision making is very rational and analytical, yet very fast and transparent.
The above elements of digital culture and behaviour allow innovative technology firms to disrupt markets on a global scale, making them very attractive employers for the most talented and ambitious managers. But the leader also need to win in the Digital Economy:
How Thought Leaders Win in the Digital Economy
Next is that leaders should create a sense of purpose and a common understanding in order to bring back people together, because employees in this matter might be hard to adapt to what they don’t understand. Pontus Siren said in the survey, “First thing is to build a common language around what the digital strategy means for different parts of the organisation.” Thus, leaders should explain why digital is important, what different terms mean, and what the framework is to the whole organization.
Different models for different outcomes
Different organisation will require different effort of change. Siren said, “Development deals, governance structures, and leadership roles are all quite different.” So, member of each role should be carefully selected with a mix of expertise in technology, strategy, and business development. Likewise, you should not redesign organisational structure based on preconceived notions as it does not allow for learning. Successful company is taking a test-and-learn approach to their firm structures as well as to their product design.
Customer insight and working from the outside in
More than half of survey respondents (52 percent) said their company is either somewhat or very effective at sensing and responding quickly to changes in their industry to move in a new direction. It is because of a key factor in digital economy. Meredith Whalen, senior vice president of research at IDC, mentioned that “digital companies are adapting an outside-in approach, leveraging feedback from their ecosystem of stakeholders to evolve their offerings and business models.” As a result, not only just marketing and customer groups can adapt better, but the entire organisations as well. To do the approach, firms should employ design thinking and customer journey maps and changing KPIs to include measurements that span organisation.
The impact on IT system, organisation, and partners
Legacy IT system is too rigid and slow for digital business. On the other hand, companies should modernise their IT infrastructure so they can gain flexibility, scalability, and – above all – speed. You can combine this with outside-in approach to increase cloud and API/service-based infrastructure. Jeanne W. Ross, principle research scientist at the MIT Centre for Information System Research, advised that CIOs to build not just a service platform but also a set of digital service to go along with.
Timing and payoff
HBR mentioned that IDC prediction shows there are three-quarters of organisations will have digitally transformed by 2027. However, Ross is not sure. She argued that companies are not ready to have a total digital transformation in just 10 years unless companies are doing this brilliantly. Nevertheless, digital transformation demands leadership, organisational restricting, investments, in people and IT infrastructure. Above all, it requires flexibility.
The main difference between previous and today technology is that it is quickly global and much faster moving. Winner will be early out of starting blocks but also pace themselves for long haul. One trick is to accelerate change and create a culture that can sustain that over time.
Writer :Evita Lune
Taking leadership in a digital economy
Leading the economy successfully through fast changing markets requires new business models, great customer relations, competitive intelligence, agility, speed, and talent according to this new report co-authored by Telstra Corporation Ltd and Deloitte tilted Taking Leadership in a Digital Economy.
Key findings within the report include:
- With the increasing expectation of having to deliver more with less - and the fact that digitisation accelerates those pressures - we need to invest in new capabilities not old business models
- Providing customers with rich, real time and easy to use functions can reduce cost and improve service by putting customers more in control of their affairs
- Strengthening these customer relationships and having the foresight to explore community forums, and engagement tools like gamification, as well as collaborative consumption that will begin to differentiate those able to anticipate and be ready for digital disruption and those that aren’t
- It’s not about what you own, but what you do. Deloitte forecasts the direct contribution of the internet to the Australian economy to be $70b in 2016 – growing roughly 7% each year over the next four years
- All too often incumbents forget to look beyond their traditional boundaries and miss the most important competition of all, that of substitutes. In the digital economy, past competitors may also become future partners, and current customers may become future competitors
- Traditional value chains that were held together by physical limitations dissolve and new, networked based competition begins to form
- The report also outlines the danger of the ‘skills drain’. In the digital economy, talent is even more important than in traditional sectors. Employees with experience in digital roles are often tempted by overseas technology hubs, making their retention an important goal
- The report concludes that if Australia’s corporate leaders heed the opportunities of a digital economy and take leadership, then Australia is in for a prosperous future.