5 Ways to Overcome Digital Transformation Culture Shock

As organizations strive to meet their goals, integrating digital technology into analytics, artificial intelligence and machine learning, and cloud migration has become essential. The end game is to transform businesses’ operations, share information, and deliver customer value.  

While digital transformation promises increased efficiency, productivity, and reduced costs, its success fundamentally depends on people. Neglecting the human aspect of transformation is a recipe for failure from the outset. 

A BCG study on digital transformation found that 90% of companies focusing on culture during their transformation journey experienced solid financial performance, compared to 17% that didn’t. Despite projections that global spending on digital transformation will reach $3.4 trillion by 2026, there’s a high failure rate -- around 70%, according to McKinsey. Much of this failure can be attributed to organizational culture shock, where employees react negatively to sudden changes. 

In 1955, Sverre Lysgaard developed a model describing how individuals adapt to a new culture, beginning with a honeymoon phase, followed by culture shock, then adjustment, and finally adaptation. This process mirrors what happens to employees during digital transformation. Companies must invest in addressing culture shock to ensure the success of their digital initiatives. 

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We recently embarked on a significant digital transformation with the introduction of our solution enablement platform. This platform unites various data and analytic assets built for risk management, marketing, and fraud prevention into one unified environment. This transformation enhances our ability to provide a more accurate picture of consumers across various use cases. From my experience rolling out this platform, I’ve identified five key strategies companies can use to navigate digital transformation successfully and avoid employee culture shock. 

1. Foundation setting 

It’s essential to communicate your vision and strategy. A well-defined roadmap that outlines the steps to achieve transformation goals is crucial. McKinsey reports that organizations with a clear change management strategy are six times more likely to succeed. Personalizing the vision for each employee ensures they believe in the transformation and actively participate in it. 

2. Employee training and education 

Training is vital for engaging employees and advancing their careers. Yet only 56% of organizations report expanding training on digital tools and new processes, according to PwC. At our company, we incentivize employees to complete training programs that enhance their skills, which leads to a more engaged workforce. Employees are encouraged to think about the skills they want to develop for their future, ensuring that our digital transformation also benefits their personal career growth. 

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A significant focus of our training has been on our solution enablement platform. We’ve curated specific training for employees, including certifications, across the organization. This approach encourages long-term career development while promoting a deeper understanding of new technologies. 

3. Be transparent and share progress 

Frequent updates on successes and challenges foster trust and authenticity. Organizations should openly communicate any changes to the roadmap or strategy. At my company, we hold regular meetings where we showcase both the progress and the hurdles we face during our technology evolution. Integration is a crucial theme; we highlight how different teams benefit from the work. 

4. Embrace learning and failures 

Encouraging a culture that views failure as a learning opportunity fosters innovation. Open lines of communication allow employees to share issues and contribute to continuous improvement. This helps employees feel secure enough to try new things and become active participants in the transformation. 

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At our company, we conduct regular retrospectives of our planned releases. When things don’t go as expected, we focus on what can be learned, not the failure itself. This feedback loop is shared transparently, providing valuable insights for the entire team and fostering a culture of continuous improvement. 

5. Find champions 

Too often, change management is reduced to sending out emails or presentations. While these methods are helpful, true transformation requires more personal involvement. Identifying champions within the organization can significantly boost morale and support. These champions don’t need to be formal leaders but are individuals who believe in transformation and help guide their peers through the process. 

Recently, our enterprise capabilities marketing and investor relations teams met with our engineers to better understand the benefits of our solution enablement platform. They became champions of the transformation and shared their enthusiasm with key stakeholders, which in turn had a positive impact on investors. 

Conclusion 

Digital transformation offers tremendous potential, but it comes with inherent challenges. To succeed, organizations must place people at the heart of the process through training, transparent communication, and fostering a culture that embraces learning from failures. Companies can mitigate culture shock and achieve their transformation goals by following these five strategies.