Success in the Digital Age: Think Organizational Culture

Results of a recent McKinsey survey of global executives show that cultural and behavioral challenges are the most significant barriers to achieving digital priorities.

The survey of 2,135 respondents revealed the following (% of respondents):

Three digital-culture deficiencies were highlighted:

Functional and departmental silos

Resulting in missed signals from customers causing narrow and slow responses to their needs; signals might have been seen, but picked up by the wrong parts of the company.  Siloed thinking and behaving was ranked number one among the obstacles to a healthy digital culture – including inadequate information and insufficient accountability or coordination in enterprise-wide initiatives.  Silos are cultural as much as they are structural.

Fear of risk taking

Resulting in underinvestment in strategic opportunities, and slow responses when customer and market needs change.

Difficulty forming and acting on a single view of the customer

Resulting in a non-unified understanding of customers and difficulty mobilizing employees to integrate a response.

These challenges aren’t new, but as the study says they become costlier in a digital age.

The study asks:

“Can fixes to culture be made directly, or does cultural change emerge as the company works on updating strategy or improving processes?”  The McKinsey view is, “In our experience, executives who wait for organizational cultures to change organically will move too slowly as digital penetration grows, blurs the boundaries between sectors, and boosts competitive intensity.”

BBVA, GE, and Nordstrom are highlighted as companies that have supported their digital strategies and investments with cultural initiatives that increase responses to customers, risk-taking, and improved connectedness across functions.  

A mindset of risk-taking and innovation must be embedded throughout the enterprise, and key executives and boards must learn to think more like venture capitalists.  

A final word from McKinsey:

“Executives must be proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations.”

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