Jeffrey Immelt, the chief executive of GE, kicked off 2016 in dramatic fashion: "I thought it was all about technology. This is something I got wrong. The people have to be different too."
He announced wide-ranging plans to switch GE’s business model and make changes to recruiting, to customer management, to technology.
For Immelt, a maths and economics graduate, technology was not magic. He recognised that it only works when people can use it effectively, to boost long-standing skills and expertise.
Right now, every business on the planet is engaging in digital transformation. They know smart, targeted deployment of digital technology at every level of an organization is the key to survival, innovation and growth.
But most businesses are finding change difficult and research confirms only 26% of major organizational transformations succeed.
It’s not hard to see why they fail. Digital transformation requires a massive effort involving many changes all at once, mostly focusing on people: the role-modelling of new behaviour, transparency of communication, the fostering of new capabilities and so on.
There are many, many obstacles to transformation: too-slow decision making because of competing priorities or the need to build consensus, the inability to prove ROI, too much focus on tech, lack of understanding of process… the list goes on.
Many companies would rather make minor tweaks and just plough on. They are making a grave mistake.
Digital transformation is the biggest challenge to business in this era. The option to keep calm and carry on has expired – especially when your digital competitors do everything differently.
In most cases, company culture will make or break your efforts at digital transformation.
How can you be sure you have the right company culture to make digital transformation stick?
Surveys suggest three ways your company culture can help you navigate the difficulties you are certain to face.
A strong, shared sense of purpose
By identifying what the overall purpose is, your team will be happier, more cohesive and political resistance will be less– even when things get bumpy.
Studies suggest the difference can be profound. Among KPMG employees whose leaders discussed higher purpose with them, 94% said KPMG was a great place to work and were proud to work for KPMG. But among those whose leaders didn’t discuss purpose, the corresponding results dropped to 66%.
Year-to-date actual turnover of these two groups was dramatically different: 9.1% vs 5.6% respectively.
With a shared purpose and a thorough understanding of objectives, those closest to the action will be empowered to make decisions at the precise moment that they need to be made.
How will they know when and what that is? The data will tell them. At GE things got too complicated to get the work they needed, done. So they embarked on what they called a "culture of simplification." That meant fewer layers, fewer decision points, and embracing Silicon Valley tools of "putting everything on the clock".
They turned the organization into one that was willing to listen to what the data was telling them (even when it went against their better judgement or previous understanding).
That way they could affect the necessary changes and make decisions that really made an impact.
A responsive attitude to outside influences and information
Organisations that are focussed inwards can easily miss the woods for the trees.
When Muhtar Kent took the helm of Coca-Cola, in July 2008, the company faced crisis. Kent discovered an inward-looking, "arrogant" corporate culture. A sure-fire sign? Most of the meetings they were holding were with themselves.
So Kent brought in their 400 top people from all over the world to talk. "We put a stop to all those internal meetings," he said. "We did not want to waste this crisis."
"You have to bring people in from the outside," said Immelt. "That is the only way you are going to get there fast enough."
Of course, listening to the data is crucial here too – even if it says something you’d rather not hear.
It’s almost impossible to overstate the importance of effective digital transformation. For most CEOs of any industrial or non industrial company, this is the most important thing you are going to work on in this era.
But whatever you do, don’t make the mistake of thinking it’s all about technology. It’s the people, and how they respond to the data, that matters most.