Deliberately developmental organizations focus on culture

Organizations need to create work environments which provide employees with psychological safety 

It is becoming increasingly clear that mastering digital disruption is primarily an organizational culture issue not a technology issue.  The results of a 4 year study by the Massachussetts Institute of Technology and Deloitte clearly spells this out.

Digital maturity is the new paradigm which will increasingly be the focus of organizations' efforts to master digital disruption.  A "fearless culture" is the first step to digital maturity.

DIGITAL MATURITY is defined as "an organization's ability to compete effectively by taking advantage of opportunities enabled by technological infrastructure, both inside and outside the organization."

Digital maturity is all about organizational culture. 

PUSH vs PULL: The key chracteristic of digital maturity

One of the key differences between more digitally mature companies and less mature organizations is this:

Less mature organizations tend to PUSH digital transformation through managerial directives or by making technology available.  Maturing companies tend to PULL digital transformation by cultivating the conditions which are ripe for transformation to occur.

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In other words, more mature organizations enlist their workforce to help determine which technologies will bring most value to the organization and its clients.  Digitally mature organizations have a considerable bottom-up approach which requires highly motivated and engaged employees.

The need for a robust bottom-up approach

Why is a bottom-up approach necessary? 

Because the technological environment is changing so rapidly, out of necessity digital strategy must be iterative in nature.  Digital strategy cannot be a long-term plan to which the organization rigidly adheres and executes over a multi-year time frame.  Instead digital strategy is a constant experimentation which is designed to better understand how a specific technology can create the best value. 

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Take Twitter for example.  Major media outlets use Twitter as a means of broadening their reach of their content.  Airlines use Twitter as an effective customer service tool. KLM uses Twitter as a way to answer their customers' questions and promise a response to any customer request within 17 minutes.  Other companies use Twitter as a business intelligence tool.  By following certain twitter feeds, organizations can get an early warning of what their competitors are undertaking.  The Red Cross uses keyword monitoring to quickly identify natural disasters as well as their intensity.

In other words, 

Each organization needs to explore which is the best use of a given technology for their company.  To optimize this discovery process, it is critical to have employees who are willing to experiment, take risks and discover where the value added lies to master the digital disruption which is confronting their specific organization.

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The essential first step towards digital maturity

Unfortunately employees in many companies do not feel secure enough to take risks or to challenge the status quo.  Many managers still believe in the power of fear to motivate.  They assume that people who are afraid will work hard to avoid unpleasant consequences.

ALERT to those managers who continue to prescribe to this theory: Brain science has abundantly demonstrated that fear inhibits learning and cooperation. Research in neuroscience shows that fear consumes physiological resources, diverting them from parts of the brain that manage working memory and process new information.  This impairs analytic thinking, creative insight and problem solving.

The success factor of psychological safety

What is needed is a working environment of "psychological safety". This is defined as "the belief that the work environment is safe for interpersonal risk taking."

All of us are subject to subtle interpersonal risks at work. When you are at work - whether explicitly or implicitly - you are being evaluated. An individual higher up in the hierarchy is formally responsible for assessing your performance. Peers and subordinates are sizing you up informally all the time.

In contrast, it is OK to ask for help or admit failure in a psychologically safe environment.  Individuals feel comfortable to share their concerns and mistakes without fear of embarrassment or retribution. According to Professor Edgar Schein, an environment of "psychological safety allows people to focus on achieving shared goals rather than on self-protection" 

When an environment of psychological safety is not prevalent, things can go very wrong.

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Take the case of the American financial institution Wells Fargo.  Cross-selling has always been a strategy for financial services firms.  The fastest way to grow the business is to sell existing customers additional products. Savings accounts, loans, credit cards, etc. are pitched to existing customers who may only have a checking account. 

In the early 2000s, Wells Fargo adopted a strategy labeled "Going for Gr-Eight".  The idea behind the strategy was to get Wells Fargo customers to buy on average 8 products from the bank. Incentive schemes were put in place to help fulfill this strategy.  However, this target was not achievable.  

In an environment lacking psychological safety, employees did not let their superiors know that the targets were unrealistic.  Instead they resorted to a series of questionable practices such as opening accounts for customers without their consent, convincing customers to open unnecessary multiple checking accounts, creating fake email addresses to enroll customers in online banking  - to name just a few.

"Most people at work, even in high-performing organizations, divert considerable energy every day to a second job that no one has hired them to do: 

preserving their reputations, putting their best selves forward, and hiding their inadequacies from others and themselves. 

We believe this is the single biggest cause of wasted resources in nearly every company today."                        

                      Robert Kegan and Lisa Lahey - Harvard University

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Deliberately Developmental Organizations

Digitally mature companies intentionally focus on culture. 

In our experience, there are a number of steps which need to be taken in order to promote this specific focus:

Creation of an environment that feels safe, sustained first by top leaders who are willing to role model vulnerability and take personal responsibility for their imperfections and missteps.

A focus on continuous learning through inquiry, curiosity and transparency, instead of an environment characterized by judgment, certainty and self-protection.

Time-limited, manageable experiments with new behaviors in order to test individuals' unconscious assumptions that changing the status quo is dangerous and likely to have negative consequences.

Continuous feedback — up, down and across the organization – which is grounded in a shared commitment to help each other grow and progress.

Ultimately, organizations need to learn how to learn together. 

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