Building Digital Culture

A Practical Guide to Successful Digital Transformation

Daniel Rowles, Thomas Brown

• Publisher: Kogan Page
• Year: 2017
• ISBN:
  9780749479664
• Edition: 1
• Topic: Betriebswirtschaft
• Subtopic: Marketing
• Index: Marketing

WINNER: CMI Management Book of the Year Awards 2018 - Management Futures Category Building Digital Culture aims to answer a simple question: How can organizations succeed when the environment they operate in is changing so quickly? The last thing businesses need today is a digital strategy. Instead, their strategy needs to be fit for our fast-changing digital world, where businesses have more data than they know what to do with, a media landscape that's exploded in size and complexity, the risk of a new disruption around every corner, and only one certainty: that this change won't let up. Building Digital Culture doesn't address whether or not you should advertize on Facebook or invest in virtual reality. It doesn't seek to unearth a silver bullet to make digital investments a sure-thing. It steps back from the hype, and argues that whatever digital might mean for your business, if you don't create a digital culture you'll most likely fail, or at least fall short of what you want to achieve.Combining more than 30 years of experience at the forefront of marketing and digital developments, and based on more than 200 hours of research, candid interviews and contributions from brands including Twitter, Deloitte, HSBC and many more, Building Digital Culture will help you navigate from being a business that tolerates or acts digital, to one that truly is digital.

PART ONE

Why you need a digital culture

01

The increasing pace of change

Since you have just picked up a book on digital culture, it is probably already pretty clear to you we live in a time of increasingly rapid change. The reality is, that change has created huge business opportunity, but in at least equal measure it has created some huge business challenges. The average life expectancy of a company has dropped from around 67 years in the 1920s (Coase, 1937) to around 10 years now (Iyengar, 2016). This should be a very sobering thought for anyone in business. The company that you toil and work so hard to make succeed is statistically unlikely to exist in a decade.

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The average lifetime of a company has dropped from around 67 years in the 1920s to around 10 years.

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Before we panic too much, the flip side of this is that we now have incredible organizations doing incredible things that we couldn’t even imagine a decade ago. The other thought that may help us sleep at night is that the world’s most valuable company, Apple Inc., is actually now 40 years old. However, the second most valuable company, Alphabet (the parent company for Google) is not even 12 months old at the time of writing, and Google itself is only 18 years old. Can you imagine trying to run an organization without being able to Google stuff? I am apparently old enough to remember this, but it seems an entirely foreign concept already.

Disruption

Industry after industry has been disrupted by technology in recent years. The music and movie industries actively tried to stick to their traditional business models while their customers around them completely changed how they consumed the media that was being sold. The disruption in both industries has been fast and it has been complete; the majority of teenagers no longer watch television in the traditional sense (Coughlan, 2016). If those teenagers are your target market and you haven’t adapted, you’re dead. Maybe you don’t care about the teenage market. Soon enough those teenagers are your adult market and if you haven’t adapted, you’re dead. Besides, every market is changing, and even if not completely, by a significant enough percentage to hit your bottom line if you don’t adapt.

If we read the official academic definition of marketing, it becomes pretty clear that active resistance to market changes is completely insane. The Chartered Institute of Marketing tells us: ‘Marketing is the management process responsible for identifying, anticipating and satisfying customer requirements profitably.’ (CIM, 2016). But many industries, when technological disruption comes along, attempt to actively resist customer requirements. Customers have decided they want something different and the company’s reaction is to ignore the change and carry on regardless. However, in many cases the organizations may not be actively resisting, but the catch-up time between market change and company change is just too great.

Death by a thousand cuts

If it were just the occasional radical market change that was the problem, we would stand a chance of catching up. After all, even slow-moving companies can adjust and change given time, if there is a will to do so (and the will to change is incredibly important, and unfortunately, very often missing as we will discuss later in this book). However, the problem is that as soon as one change has happened another comes along, and we haven’t even adjusted to the first one yet. And then another comes along, and the first change is still not complete, all of our budget is allocated and we are not selling as well as we did, so we also make cutbacks in new projects. Over a very short period of time, this cycle is lethal. Not only are revenues probably being hit, but it very often leads to poor morale as the stresses of failing projects and falling revenues compound one another. This in turn leads to staff churn, making the problem even worse.

The radical solution in these downward spirals is very often a sudden change of leadership: a new, steady hand to get everyone back inline. However, when this change in leadership, after a short honeymoon period of positive thinking, also leads to very similar results, we are now even further in trouble. What we really need is radical change throughout every aspect of the organization.

Digital transformation

Understanding the core concepts behind digital transformation is essential to stop this cycle that leads to company mortality. Digital transformation is the process of making our organization fit for purpose in a radically changed environment. However, not only is the environment radically changed, but it will continue to change, and we need the ability to keep pace with this change.

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Digital transformation – yet another buzz term?

Digital transformation has all the signs of being a buzz term. It is mentioned at pretty much every business conference you will go to right now, consultants are offering expensive services to do it for you and most people don’t really understand what it is. This combination leads to a fair bit of natural cynicism on the topic. However, just like many things that are difficult within business, it is also too easy to dismiss the topic. In reality digital transformation is a phrase that means many things to different people, but at its heart it is about making our organizations effective in fast-changing environments.

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Beyond capability

Very often we will judge our current state of ability to operate in our current environment by looking at our ‘Digital Capability’. Digital capability is a list of topics that we need to consider when going through a transformation project. This might include things like IT and technical infrastructure, resources and measurement. Very often on this list we see the word ‘culture’ as a standalone heading. The reality is that we can’t just isolate this element of the transformation process, it affects every element of what we do.

Culture is the sum of the values, behaviours and ‘norms’ of those in your organization – which supports you today and may end up inhibiting your progress tomorrow. As we build an argument for a structured approach to building an effective digital culture, you will see that culture impacts everything else we do, and that is why the best way to deal with constant change is a change in culture.

02

The technology catalyst

One of the main drivers in the pace of change that is creating so many opportunities and challenges is the exponential growth of computing power. As computing power increases and devices get physically smaller, what our computers (and therefore mobile devices) can do becomes more and more interesting. Advances like better voice recognition, augmented and virtual reality (AR and VR) and high-resolution video displays have all relied on these increases in computing power to make them available on mainstream mobile devices.

Enter Moore’s Law

Moore’s Law is an often quoted, but quite often not fully understood, observation in regard to the exponential growth of computing power made back in 1965. Gordon E Moore, co-founder of Intel, observed that the number of transistors on integrated circuits doubled roughly every two years.

These changes have a direct impact on the speed at which computers can process information, how much storage they can have in a given space, and are even connected to things like the potential resolution of your digital camera.

This means that computing power grows at an exponential rate (more on that later).

Moore’s Law has proved to be exceptionally accurate; although he originally predicted that it would hold true for around 10 years, it has now done so for nearly 50 years.

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The future of Moore’s Law

There has been much discussion about the fact that Moore’s Law cannot continue to hold true forever. Practically speaking, you can only have so many transistors in a physical space before you reach the limit of what is possible due to the limitations of physics.

However, if you look at Moore’s Law more broadly, and think in terms of computing power, rather than transistors, there is a clear argument in favour of it holding true. What generally happens, when one technology reaches the limits of what can be done with it, is that some form of innovation is found to continue the progress of technology. Whether that’s an entirely new material, manufacturing process or brand new technology, there are lots of examples of innovation allowing Moore’s Law to continue when it looked to be reaching its limits.

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Exponential growth in perspective

One of the most important elements of this growth in computing power that is impacting our mobile devices is its exponential rate. The human brain is very good at understanding things that grow in a linear way, that is, something that grows at the same rate on an ongoing basis, like counting from 1 to 100. What we are not so good at is getting our heads around exponential growth. The best way to do this is to consider an example.

I first heard the following analogy from my friend, and expert digital strategist, Jonathan Macdonald (look up some of his talks for some real inspiration on the future of technology). I have seen a number of different versions of the analogy online, but the key thing is to take note at the end of the story.

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Filling a stadium with water, one drop at a time

Imagine a large stadium filling with water from a tap, one drip per minute, and imagine that stadium to be watertight so that no water could escape. If the tap continued dripping water in the same regular (linear) way, it would take many thousands of years to fill the stadium.

However, if that tap were dripping at an exponential rate, so that the number of drips coming out of the tap doubled every minute, it would be a very different story. The first minute there would be one drop, the second minute there would be two drops, the third minute four drops, the fourth minute eight drops and so on. This is exponential growth in action.

Now imagine you are sitting on the seat at the very top of the stadium, with a view across ...