"It's the Culture Stupid!" An organization's culture foretells its ability to deal with digital disruption

Focus on Culture!

In his initial run for President, Bill Clinton is famous for reducing his campaign message to campaign staff to one simple sentence: "It's the economy stupid!"  During his presidential campaign, there were many competing issues to engage with such as foreign affairs (the first Iraq war had just ended and the Soviet Union had just been dissolved), healthcare, trade policy, attacks on his character - to name only a few.  However, he told his campaign staff that the only issue which really mattered was the economy. With the support of this fixated focus, he was able to defeat the incumbent president George H.W. Bush in the 1992 election.

A major economic transformation caused by digitalization is currently in progress.  As disruptive technologies such as AI (artificial intelligence), big data, blockchain, collaborative software, cloud computing, IoT (internet of things), Robotics, VR/AR (virtual and augmented reality) and others take hold, both existential threats as well as historic opportunities are emerging. Since these trends affect every business and industry, it is tempting to focus solely on all of the previously mentioned technology in the current environment of constant and rapid change.

However, recent research proposes that business leaders should be taking another course of action to address digital transformation.   MIT (Massachussets Institute of Technology) and Deloitte have just finished publishing the result of a four year research project on digitalization.  Over the course of this 4 year study, over 16.000 people were surveyed across 18 different sectors of the economy - from IT companies to construction companies as well as the public sector.

The conclusion and advice of the MIT/Deloitte researchers to businesses is: Focus on your Organizational Culture! It is the ONLY way to successfully confront the digital transformation challenge.

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Digital Maturity and Organizational Culture

From the very beginning of the study,  researchers were faced with the issue about how to differentiate between the various levels of digitalization which companies had actually obtained. Many companies declare that they are digital but don't actually back-up this assertion with concrete behaviors throughout their organizations. The research results provide a pragmatic framework to classify the level of digitalization in organizations. This framework is designated as Digital Maturity.

Digital Maturity is defined as:

"The ABILITY of an organization to compete effectively by taking advantage of opportunities enabled by technological infrastructure, both inside and outside the organization."

In other words, digital maturity requires new approaches in the following three areas:

  • learning to do business in different ways,
  • restructuring organizations to enable them to respond more effectively to a digital environment and,
  • learning to adapt individual and institutional skill development.


Three categories of Digital Maturity arose from the data:

EARLY  -  companies "dabbling with digital", but where little change has actually taken place.

DEVELOPING - Companies focusing primarily on supporting digital technologies instead of becoming more digital as an organization. 

MATURING - companies deliberately creating more advanced changes to current business, operating and customer models. 

Companies which are more digitally mature are continually realigning their organization.  In addition, these companies are creating corresponding strategic plans to account for on-going changes in the technological landscape which affect their business.

According to the MIT/Deloitte research about 50% of companies which took part in the survey found themselves in the DEVELOPING category while approximately 25% were either in the EARLY and MATURING categories.

Key to Success in Digital Transformation

Many people are asking: What is the key to digital success?

The answer for a thriving and sustainable digital transformation is all about an organization’s culture and its people. Today’s successful organizations are those which enable its people to continually learn, adapt, create, innovate and lead. Moreover, it’s an organization’s approach to achieving digital maturity which plays a key influence.

EARLY and DEVELOPING companies push digital transformation through managerial  directive or by making technology available as part of a business investment.     

MATURING companies pull digital transformation by cultivating conditions which allow transformation to occur

How can a fixed focus on culture bolster organizations which are addressing digitalization?

  1. Digital maturity is achieved through a  culture-driven, bottom-up approach characterized by risk taking, collaboration, agility and continuous learning. 
  2. Digital Maturity is directly related to a SINGLE set of organizational cultural characteristics.  These cultural characteristics are consistent across industries and company size.  Digitally mature companies are:
    • less hierarchical and more distributed in leadership structure
    • more collaborative and cross-functional
    • encourage experimentation and learning
    • more bold and exploratory, with a higher tolerance for risk
    • more agile and quick to act.

The implications of this cutting-edge research provide a clear direction for all organizations which strive to foster digital transformation throughout their companies.

Cultivate the characteristics of a digital culture.

(Or as President Clinton may have advocated to business leaders: "It's the Culture Stupid!")

Is your organization prepared for digital transformation?

Download for free an overview of the 23 Cultural DNA traits that correspond with a digitally mature organization and rate your own organization's readiness.

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