Download to read offline
Uploaded byBrian Solis
The Digital Culture Challenge; Bridging the Employee-Leadership Disconnect
Capgemini, a global leader in consulting, technology and outsourcing services, and Brian Solis, a prominent digital analyst and world renowned author, have today announced the findings of The Digital Culture Challenge; Bridging the Employee-Leadership Disconnect report. The comprehensive research says that 62% of respondents see corporate culture as one of the biggest hurdles in the journey to becoming a digital organization. As a result, companies risk falling behind competition in today’s digital environment. Furthermore, the data shows that this challenge for organizations has worsened since 2011 by 7 percentage points, when Capgemini first began its research in this area. Key report findings show that there is a profound disconnect between leadership and employees on all the dimensions of digital culture: Innovation is still not a reality for many organizations. Only 7% of companies surveyed feel that their organization can test new ideas and deploy them quickly. This figure echoes employees’ sentiment about culture of innovation, with only 37% of respondents stating that their organizations have a culture of innovation, experimentation and risk-taking against 75% of senior executives. Organizations need to actively reward risk-taking and create an environment where employees can experiment. There is strong disagreement on collaboration practices. The findings reveal a divide between senior-level executives and employees on collaboration practices. 85% of top executives believe that their organizations promote collaboration internally, while only 41% of employees agreed with this premise. Leadership believes they have a digital vision, employees disagree. The research found considerable differences between what leadership and employees perceive as a clear digital vision. 62% of respondents in leadership positions affirmed they have a well-defined strategy to achieve their digital goals, while only 37% of employees agreed with this statement.
More Related Content
Similar to The Digital Culture Challenge; Bridging the Employee-Leadership Disconnect
The Digital Culture Challenge; Bridging the Employee-Leadership Disconnect
- 1. By Capgemini DigitalTransformation Institute Digital Transformation Institute The Digital Culture Challenge: Closing the Employee-Leadership Gap
- 2. 2 Why culture shouldbe on top of CXOs’ agenda As Deborah Ancona, MIT Sloan School professor, noted, “Leadership often underestimates the importance of culture” and yet, culture is one of the most important sources of competitiveness. world where only 13% of employees feel engaged.2 Without laying a strong foundation for culture progress on digital transformations. As Professor Ethan Bernstein of the Harvard Business School explained in a recent discussion with Capgemini. Culture—a roadblock or a catalyst for digital transformation digital transformation and it’s a problem that’s worsening. In 2011, a majority of respondents (55%) said that culture was the number one hurdle to digital transformation1 has actually risen to 62% (see Figure 1). “The big moment for an organization is when they have embraced the fact that digital transformation isn’t a technical issue, but a cultural change.” “Culture change is a prerequisite of digital transformation.” Presence of archaic IT systems and applications 48% Lack of digital skills 43% Lack of clear leadership vision 38% 75% France 64% Italy 68% Netherlands 72% Germany 71% Spain 55% UK 65% Sweden 62% Global average 54% US Respondents who reported culture among the top two hurdles (Breakdown by geography) Hurdles to digital transformation (Percentage indicates responses ranking the issue in top two) Cultural issues 62% Figure 1: Culture is the number one hurdle to digital transformation 62% Percentage of respondents who consider culture as the top 1 hurdle to digital transformation
- 3. 3 methodology at theend of the report provides more details on our approach. What is digital culture? Employee Centricity Customer Centricity Collaboration Open Culture Innovation Data-driven Decision-Making Digital-First Mindset Agility and Flexibility • Innovation: exploration of new ideas • Data-driven Decision-Making: • Collaboration: • Open Culture: startups or customers • Digital First Mindset: a mindset where digital solutions are the default way forward • Agility and Flexibility: • Customer Centricity: the use of digital solutions to expand the customer base, transform the customer experience and co-create new products We also applied the lens of employee experience across these seven dimensions, for example, the engagement of employees and their empowerment or the weight of bureaucracy and hierarchy. 3 we have Culture is the glue that either keeps us doing things well or keeps us doing things poorly” Professor Ethan Bernstein, Harvard Business School
- 4. 4 Understanding the digitalculture challenge “Employees will resist because theystill see the old behaviors as critical to theirsuccess and central to who they are whileseeing the new norms as risky.” Professor Deborah Ancona MIT Sloan School of Management 1. The leadership neglects, underestimates or misunderstands the importance of culture in their digital transformation planning. 2. The existing culture and way of doing things is so deeply ingrained that it becomes very 3. development of digital culture Most behavioral change initiatives accomplish little because employees are not
- 5. 5 Figure 2: Percentageof leadership and employees who agree that there is a high prevalence of digital culture in their organization 43% 50% 63% 53% 47% 45% 48% 40% 27% 3% 20% 0% 25% 0% 27% 0% 5% 0% Germany Italy Netherlands France Spain UK Sweden Global average US Employees Leadership Digital culture: the disconnect between leadership and employees couldn’t be wider Employees don’t see their organizations’ culture as “digital” (For details on potential reasons explaining these disparities, see “Understanding the leadership–employee divide”).
- 6. 6 10pp -1pp 43pp20pp 7pp 27pp 5pp 25pp Italy Netherlands Spain Sweden Germany France UK US pp between 11 to 20 pp between -10 to 10 pp more than 30 pp between 21 to 30 Figure 3: Geography breakdown of the leadership-employee’ disconnect on the prevalence of digital culture in their organization (in percentage points, pp)
- 7. 7 Understanding the leadership—employeedivide . It is “There is a reality of • • Adapt cultural pursuits to accompany a digital vision • Act as mentors and role models to achieve over-arching cultural ambitions • Adjust KPIs or the incentive structure to align with the transformation goals, or embed desired behavioral changes in Figure 4: Percentage of leadership and employees who agree with the following statements: Role descriptions and KPIs aligned to digital transformation goals Organization has a digital vision which is well communicated through the company Leadership acts as role models in displaying openness to change and adopting new behaviors Redesigned company core values to include digital culture attributes 95% 10% 3% 3% 8% 51% 65% 78% 90% 93% 90% 0% 10% 57% 0% 0% 50% 63% 68% 68% 95% 0% 61% 0% 20% 0% 45% 50% 57% 68% 100% 0% 58% 0% 10% 0% 50% 58% 63% 78% France Germany Italy Netherlands US France Germany Italy Netherlands US France Germany Italy Netherlands US France Germany Italy Netherlands US Leadership Employees Leadership Employees Leadership Employees Leadership Employees
- 8. 8 80% 71% We use digitaltechnologies to create stronger customer engagement 56% 40% 85% 41% 75% 37% 65% 34% 53% 33% of my organization 56% 31% Figure 5: Percentage of leadership and employees who agree that there is high prevalence of digital culture dimensions all the seven dimensions of digital culture with pronounced gaps found in innovation and collaboration 41% vs. 85% Percentage of employees vs. leadership who believe they easily collaborate across their organization
- 9. 9 Management does notfeel empowered to be a catalyst for the culture change agenda 65% 46% Redesigned company core values to include digital culture attributes 71% 41% Leadership acts as role models in displaying openness to change and adopting new behaviors 61% 40% Organization has a digital vision which is well communicated through the company 76% 55% Leadership Management Figure 7: Percentage of leadership and management who agree with the following statements: Figure 6: Percentage of leadership and management who agree that there is a high prevalence of digital culture in their organization 50% 33% 63% 38% 47% 34% 40% 22% 45% 20% 20% 0% 25% 0% 27% 0% 5% 0% Germany Italy Netherlands France Spain UK Sweden Global Average US Leadership Management Our research found that management teams are equally out of sync with leadership, as shown in Figure 6. The disconnect
- 10. 10 Leadership believe theyhave a digital vision, employees disagree Figure 8: Percentage of leadership and employees who agree with the following statements on digital vision: constitutes a meaningful, and achievable vision (see Figure 8). The reasons for this disconnect 62% 37% 69% 36% 61% 38%
- 11. 11 60% 33% My organization isinvesting in building digital capabilities of employees 56% 17% 66% 32% We do not have to deal with bureaucracy to submit ideas 64% 32% There are dedicated avenues for sharing innovative ideas with senior leadership 47% 22% There are established processes for commercializing ideas 74% 42% Employees can set aside time from core work to innovate 62% 31% Employees are engaged in the operational implementation of new ideas 28% 12% Although lab(s) is in place, innovation is carried out across the organization Leadership Employees Figure 9: Percentage of leadership and employees who agree with the following statements on innovation initiatives: Innovation exists in theory, but not necessarily in practice come naturally to our company and neither has it been an area of focus from our leadership”. Our believe that innovation culture is highly prevalent, while none of the employees agree. employee told us, to build innovation capabilities from within.” Our research indicates that the behaviors, processes, 66% vs 32% Percentage of leadership and employees who believe there is no bureaucracy for submitting ideas
- 12. 12 Collaboration is amyth, say employees; leadership disagrees “We are pretty isolated, and we don’t have any • • 85% of senior executives feel that the culture is collaborative (see Figure 5). collaboration, and are still being managed through traditional hierarchical norms and operational silos. As Figure 10 shows, there is a fundamental disagreement between employees and leadership on all aspects of collaboration. 76% 41% Discussions around novel business initiatives that leverage newer technologies are open for all employees 82% 44% My organization has redesigned the workplace to foster more collaboration among employees 76% 45% In my organization hierarchy does not really matter, it is the value of your ideas 95% 52% My organization has a culture of promoting collaboration and exchange of ideas across Leadership Employees Figure 10: Percentage of leadership and employees who agree with the following statements on key collaboration initiatives: We are pretty isolated, and we don’t have any incentive to work with other departments either. a corporate employee Employees, who are crucial to the culture change agenda, are disengaged from the process. This undermines the chances of pervasive and sustained success.
- 13. 13 Where are organizationslagging in the culture journey? Consistent progress across all seven culture dimensions is rare. Overall, organizations are making the most progress in terms of collaboration and a customer-driven mindset. However, they still have a long way to go in other areas. Percentage of organizations with high prevalence of the seven digital culture dimensions Customer Centricity Innovation Data-driven Decision-Making Collaboration Open Culture Digital-First Mindset Agility and Flexibility 59% 20% 25% 31% 31% 51% 35% Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organizations
- 14. 14 For many, datais still not being utilized fully to make decisions. We make decisions based on data and analytics We use analytics to identify new business opportunities and make future predictions Data-driven Culture Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organisations 32% failing to empower their workforce to move in new directions. 31% 33% The processes in our and adapted as required Our company encourages bold, rapid and independent decision-making Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organisations ongoing problem across organizations, with only 7% feeling that the organization can test new ideas and deploy them quickly. 7% 28% 18% Innovation Cultureof openness We can test new ideas, learn and deploy at pace We have access to a wide ecosystem and co-develop solutions with partners Although lab(s) is in place, innovation is carried out across the organization Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organisations And many do not see digital as a business-as-usual solution or approach. 31% We take advantage of digital solutions wherever possible Digital-First Mindset Source: Capgemini Digital Transformation Institute Survey, Digital Culture; March-April 2017, N = 1700, 340 organisations 37% People naturally think of digital technologies when we consider ways to improve 30%
- 15. 15 What sets digital culture leadersapart? Who are the digital culture leaders? whom we call the“Front-Runners”. The Front-Runners 1. Theyhave performedconsistently well across the seven dimensions of digital culture 2. Theirleadership has largely succeededin aligning The Front-Runners’ performance contrasts greatly with a laggard groupwecall “Slow-Movers.” Theyalso better placed than Slow-Movers in developing all the seven culture attributes and in aligning their employees.
- 16. 16 Front-Runners outperform Followersand Slow-Movers on all seven dimensions of digital culture (percentage of organizations who agreed on high prevalence of digital culture dimensions in their organizations) Percentage of leadership and employees who agree that there is a high prevalence of digital culture dimensions in their organizations Front-Runners exhibit a higher alignment between leadership and employees 53% 6% 1% 91% 65% 21% 77% 15% 1% 75% 17% 0% 60% 14% 0% Customer Centricity Innovation Data-driven Decision-Making Digital-First Mindset Agility and Flexibility 96% 53% 4% Collaboration 37% 37% 31% Open Culture Front-Runners Slow-Movers Followers Front-Runners Followers Slow-Movers 64% 67% 21% 1% 35% 13% Employees Leadership
- 17. 17 Strong representation ofFront-Runners in the UK, Sweden and the US Automotive has the highest proportion of Front-Runners UK 63% Sweden 60% US 56% Netherlands 0% Spain France 13% 0% Germany 0% Italy 0% 43% 38% 32% 31% 25% 34% Automotive Consumer Products Telecommunication Banking/Insurance Retail Global Average
- 18. 18 Characteristics of Front-Runners Front-Runnersalign KPIs and incentive systems “We have changed our recognition program to mirror the new values, and subsequently they will also be a part of our time often go on to assume leadership positions.5 75% 19% 17% 82% 37% 23% 83% 41% 29% 70% 21% 13% Figure 11: Percentage of Front-Runners, Followers, and Slow-Movers who agree with the following statements on hiring, KPIs and incentives: 83% Percentage of Front-Runners who focus on behavioral characteristics to recruit talent
- 19. 19 Front-Runners measure andmonitor culture evolution use that approach, compared to 23% of Slow-Movers. By putting measures in place, Front-Runners Front-Runners have their leadership drive the digital culture change Front-Runners get their leadership to drive the culture agenda and align their senior executives behind models in displaying openness to change and adopting new behaviors. In comparison, only 1% of Slow-Movers involve their leadership in this process (see Figure 12). 72% 20% 1% Leadership acts as role models in displaying openness to change and adopting new behaviors 75% 23% 10% My organization has redesigned company core values to include digital culture attributes Followers Slow-Movers Front-Runners Figure 12: Percentage of Front-Runners, Followers, and Slow-Movers who agree with the following statements: 72% Percentage of Front-Runners where the leadership acts as role models
- 20. 20 in the digitalgame (see Figure 13). Front-Runners have a clear vision for digital transformation • • 77% 25% 3% 76% 28% 3% 70% 31% 3% Figure 14: Percentage of organizations that agreed with the following statements on digital vision and strategy: 70% 16% 1% Every employee is encouraged to share thoughts with senior leadership and there are dedicated avenues for doing so 83% 25% 3% Our leadership/senior management understands the importance of having a digital culture Followers Slow-Movers Front-Runners Figure 13: Percentage of employees who agreed with the following statements on their organizations’ leadership:
- 21. 21 Coding a Digital DNA Set aclear vision and have visible leadership involvement Blend top down and bottom up approaches to code a Digital DNA Invest in the digital skills that matter Make digital culture change tangible Use collaboration tools to increase transparency and reach out to employees Take a systems thinking approach to culture change Design new digital KPIs focused on behaviors rather than successes or failures Deploy change agents and empower employees to drive digital culture Figure 15: Coding a Digital DNA How to evolve your digital culture? nutrition and materials company, agrees, saying really want to get things done.” To create a digital cultur empower, and inspire employees to build the culture change together.
- 22. 22 Deploy change agentsand empower employees to drive digital culture 6 . Design new digital KPIs focused on behaviors rather than successes or failures Evaluating employees on outcomes and traditional KPIs might set them up for failure and create performance systems that reward positive digital behaviors. As Professor Deborah Ancona from MIT’s Sloan School told us, individual or an experiment. An experiment should be judged not on its success or failure but on what it adoption of the new behaviors.” • • •
- 23. 23 AT&T: Creating digitalemployees of the future through were increasingly on the path to becoming obsolete. The company envisioned a dramatically undergoing some sort of training program that prepares them for a new job in the future.8 Our research shows that employees are not engaged in the culture change journey. This sense to employees focused on day-to-day objectives. Leadership and management need to translate the broader digital vision into compelling and tangible business outcomes to which employees can Employees “Leadership has to be sharp and clear in communicating why a change was made and be transparent about the objective and the bigger picture.” US says, Use collaboration tools to increase transparency and reach out to employees “One of “ improvement and innovation and change.” compared to just 11% of Slow-Movers. As a result, employees feel more engaged in the transformation Companies need to assess the gaps between existing capabilities, expertise and needs.
- 24. 24 Conclusion they have theright digital culture ingrained and in place. Currently, that is not happening. Employees are being sidelined and disenfranchised in the culture change journey, and the gap between leadership time, they need to re-design KPIs to measure behaviors rather than outcomes, deploy change agents to promotes learning, experimenting and growth. As such, employees rally together to achieve something greater than just individual execution.If they plan early, and execute with clarity and purpose, struggle to jumpstart an innovation culture by solely setting up an innovation center without the reinforcing loops of behavior. Set a clear vision and have visible leadership involvement says, “It is the responsibility of leadership to role model the culture we desire, failing which the employees will not see the value. It needs to start there and if done well, it gives the opportunity for the rest of the organization to adopt and engage with that approach.” “There are a lot of leaders who do a good job talking about digital but only few are actually walking the talk.” company’s hierarchical management culture, Axel Springer (AS) sent three of its most senior leaders to California to learn from the technological and entrepreneurial companies in San Francisco. They spent the US start-up culture to understand how they fostered innovation, openness, and collaboration. These executives became role models, motivating their direct reports to drive digital change in the business.
- 25. 25 Tom Goodwin There area lot of leaders who do a good job talking about digital but only few are actually walking the talk”
- 26. 26 Research Methodology Survey: • non-supervisory roles. • • Spain. FocusInterviews with academics, industry leadership and employees: We conducted a number of interviews with academics, industry senior executives, and employees. This was to build a rounded perspective on culture challenges and understand the latest theoretical frames of reference. 12% 35% 12% 12% 9% 9% 6% 6% Respondents by Geography Respondents by job category Respondents by industry Employee Management Leadership 20% 40% 40% Retail Telecommunication Banking/Insurance Automotive Consumer Products 20% 20% 20% 20% 20% INDUSTRY JOB CATEGORY Italy Netherlands Spain Sweden Germany France UK US
- 27. 27 References Gallup, “The WorldwideEmployee Engagement Crisis”, January 2016 Harvard Business Review, “How Southwest Airlines Hires Such Dedicated People”, December 2015 about employee engagement.” 2015
- 28. 28 Accelerate your digitalculture transformation journey by partnering with Capgemini Our value proposition behaviors are at the core of a successful digital transformation strategy. We help our clients transition to a digital culture and drive tangible outcomes from their digital transformation initiatives. How we do It—our approach Three key steps: • Understanding and empathising • Finding patterns and generating insights • Co-creating recommendations Four key principles: • • insights with numbers • and capabilities. • shift beliefs and behaviors We have also created numerous tools that we use throughout the digital culture journey. Our Digital Culture Assessment of all the digital culture dimensions. Our Digital Leadership Assessment examines whether a culture towards a digital future. Why us? and successful way towards a digital mindset.
- 29. 29 Discover more aboutour recent research on digital transformation The Innovation Game: Why and How Businesses are Investing in Innovation Centers Digital Transformation Review 8: The New Innovation Paradigm for the Digital Age: Faster, Cheaper, and Open Organizing for Digital: Why Digital Dexterity Matters When Digital Disruption Strikes: How can Incumbents Respond? Being Digital: Engaging the Organization to Accelerate Digital Transformation Ctrl-alt-del: Rebooting the Business Model for the Digital Age SAP: Interview with Claus von Riegen, , Vice President and Head of Business Model Innovation (BMI) at SAP: Innovating at SAP – the Delicate Balance between Incremental and Radical Innovation Fast Thinking: Reinventing Strategy for a Digitally- Disrupted World - Interview with Rita McGrath (Columbia Business School) Telefonica: Innovation through Intrapreneurship – Interview with Director of Innovation at Telefonica and Head of Telefonica’s Barcelona R & D lab GE: An interview with Transform to the power of digital Beth Comstock, Vice Chair of GE, How an Industrial Leviathan became a Digital Giant Cracking the Data Conundrum: How Successful Companies Make Big Data Operational Frugal Innovation: Interview with Navi Radjou
- 30. 30 The Digital TransformationInstitute publishes researchon the impactof digitaltechnologies onlarge traditional businesses. The team draws partners. The Institute has dedicated research centers in the United Kingdom and India. [email protected] contribution to this report. About the Authors Amrita Sengupta Senior Consultant, CapgeminiDigital Transformation Institute [email protected] Amrita is a senior consultant at Capgemini’s Digital digital disruptionsacrossindustries andits impact on businesses. Claudia Crummenerl Head of Executive Leadership and Change [email protected] Europe, Asia and in the USA. Claudia is leading the Executive Leadership and Change practice for Capgemini Consulting. Her main interest focuses on leadership in the digital age and shaping the future peopleagenda.Claudiahasbeenoneoftheco-authors of the renowned Change Management study of Capgemini Consulting since 2011. Catherine Aboud Director, People Transformation, Capgemini [email protected] Cathy leadsthePeopleTransformationpractice within Digital Services, CapgeminiAustralia and has a proven engagements across a diverse range of industries. Her collaborative style ensures the people aspects consulting engagements. Kunal Kar Manager,Capgemini Digital Transformation Institute [email protected] Kunal is a manager at Capgemini’s Digital clients on their digital transformation journey. Lead, Culture and Talent practice, Capgemini Talent and Culture practice at Capgemini Australia. Sheis passionateaboutempoweringleadersand team through collaboration and innovation. Jerome Buvat Global Head of Research andHead, Capgemini Digital Transformation Institute [email protected] Jerome is head of Capgemini’s Digital Transformation nature and impact of digital disruptions. Brian Solis @briansolis Brian Solis is a digital analyst and an award-winning When Business Meets Design, introduces the importance ofexperiencesasthenew brand, bringing the customer journey and lifecycle.
- 31. 31 For more information,please contact: Claudia Crummenerl [email protected] North America Tony Fross [email protected] Chris Peila [email protected] Australia Catherine Aboud [email protected] France Catherine Paquet [email protected] Central Europe (Germany/ Austria/ Switzerland and Netherlands) Claudia Crummenerl [email protected] Ursula Bohn [email protected] Herman Bosker [email protected] Sweden / Finland Anna Karin Vernet [email protected] UK Rachel Charlton [email protected] Anne Gauton [email protected] Global
- 32. sender immediately anddelete all copies of this message. A global leader in consulting and technology services, Capgemini is at the forefront of innovation to address the entire breadth of clients’ opportunities in the evolving world of cloud, digital and platforms. ambitions through an array of services from strategy to operations. Capgemini is driven by the conviction that the business value of technology comes from and through people. It is a multicultural reported 2016 global revenues of EUR 12.5 billion. www.capgemini.com