How a Digital Work Culture can Define Business Survival
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There are many definitions available as to what constitutes a digital work culture and almost all of these can be distilled into one common theme: the use of technology in the work culture to increase business survivability. With the recent abundance of technological products and technical know-how, it is hard to imagine how technology can further improve business survivability. But given that only half of small businesses survive past the five-year mark (U.S. Small Business Administration, 2018), how can the application of a digital work culture be the key difference between survival and failure? We explore these differences in this article, the first of three on digital work culture.
Previous studies have revealed that organisations with a digital work culture have a more than optimistic trending success rate. These organizations were five times more likely to report breakthroughs or strong financial performance (Hemerling, Kilmann, Danoesastro, Stutts & Ahern, 2018). On the other hand, organisations with cultural obstacles have a tendency toward negative economic performance (Goran, LaBerge & Srinivasan, 2017). For example, an organisation with a strong hierarchal culture may be hesitant to adopt new practices that the decision maker is not well informed about – even if these practices are suggested by others or proven more effective. According to McKinsey’s survey of global executives in 2017, the three main digital culture deficiencies found in organisations were functional and departmental silos, a fear of taking risks and a difficulty in forming or acting on a single view of the customer.
A digital work culture can help organisations to dodge the aforementioned pitfalls in three main ways. The first way is by encouraging innovation. A digital culture enables organisations to foster a workplace that motivates employees to try new things whilst enhancing the learning of your workforce ("What is Digital Culture? – Everything You Need to Know", n.d.). With an environment that is open to experimentation, employees are free to come up with new ideas without the threat and cost of failure looming over their shoulders.
The old adage goes “the business world moves fast” and the second way that a digital work culture can improve survivability is by increasing the speed of business within organisations. When data and services go digital, everything becomes easy to access and readily available. Better yet, organisations suddenly find themselves with the ability to develop real time responsiveness. Within an organisation, speed of business can be increased by encouraging employees at every level to make independent decisions. Combined, these changes minimise delays caused by departmental silos and hierarchy. The result is a faster process and an even faster way to get work done ("What is Digital Culture? – Everything You Need to Know", n.d.).
Customers appreciate speedy service. When Allied Irish Banks (AIB) decided customers should be able to open an account in under ten minutes - 90 percent faster than the norm prevailing at the time - they saw a 25 percent lift in accounts opened, along with a 20 percent drop in costs (Goran, LaBerge & Srinivasan, 2017). Only the fast survive (Kamath, 2019) and as we saw in 2020, COVID-19 devastated businesses that were unable to adapt to digital disruptions. By rapidly adapting to new situations, fast, agile and responsive businesses can pounce on opportunities and build market share in blue ocean markets.
Last and most obviously, a digital work culture improves talent attraction and retention. Neither millennials nor zoomers (Generation Z) are interested in a 9-5 work culture. Instead, members of these age groups prefer a collaborative and autonomous work environment where employee engagement is high - where they are permitted to bring their voice of opinions and create an impact ("What is Digital Culture? – Everything You Need to Know", n.d.). Millennials especially are drawn to digital companies with creative environments with autonomy (Hemerling, Kilmann, Danoesastro, Stutts & Ahern, 2018).
The digital work culture presents the exciting future of work looming over the horizon. But not every company is prepared to make that leap. One popular inhibition is the organisation’s current work culture. An inhibitive and unsafe work environment would be the last place where one would experiment with a digital work culture.
Beyond the workplace, societal influences can also exert pressures that act against the adoption of a digital work culture. Asian cultures, in particular, individuals tend to hold opinions back because they are not accustomed to a safe environment to make many mistakes (Partogi, 2014). With an education system that does not heavily feature the case method learnings in western cultures, some individuals may not feel comfortable or safe making mistakes - at the workplace - even if they are allowed to.
Mistakes are part of the risks associated with major organisational changes and the other holdback toward the adoption of a digital work culture rises from the resulting risk aversion. This can come in two forms, loss aversion and narrow framing. In the former, individuals fear losses more than they would value an equivalent gain. In the latter, an individual may view the mistake as a single potential outcome rather than a larger portfolio of outcomes (Koller, Lovallo & Williams, 2012).
As a general rule, people obey the Law of Effect. Individuals would choose to repeat successful decisions and avoid punishing ones (Walker, Risen, Gilovich & Thaler, 2018). According to Koller, Lovallo & Williams (2012), these countervailing behavioural forces are amplified by the ways companies may structure their reward systems and cause individuals to be more risk averse or unwilling to tolerate uncertainty even when a project’s potential earnings are far larger than its potential losses. Kodak and Blockbuster are two examples of sudden-setback aversion where the organisation maintained a strategy where a slow death seemed nearly inevitable (at least in hindsight) rather than pursue a strategy that would increase their overall odds of success, but at the risk of more immediate failure (Walker, Risen, Gilovich & Thaler, 2018).
One decade on, research shows that getting closer to your customers can help reduce the risk of experimentation and the adoption of a digital work culture. Closer customers are more willing to help to co-create products through open innovation, and eventually, support fast-paced change (Goran, LaBerge & Srinivasan, 2017). Adding on the use of data and tools with which to analyse data, organisations finally have in their hands the ability to adopt their own digital work culture.
References
Goran, J., LaBerge, L., & Srinivasan, R. (2017). Culture for a digital age. McKinsey Quarterly.
Hemerling, J., Kilmann, J., Danoesastro, M., Stutts, L., & Ahern, C. (2018). It's not a digital transformation without a digital culture. Boston Consulting Group.
Kamath, S. (2019). Digital Culture Series | What Is Digital Culture And Why It Should Matter To You. Retrieved 18 January 2021, from https://www.knolskape.com/blog-what-is-digital-culture/
Koller, T., Lovallo, D., & Williams, Z. (2012). Overcoming a bias against risk. Corporate Finance Practice.
Partogi, J. (2014). Scrum does not work here in Asia. Retrieved 25 February 2021, from https://medium.com/@jpartogi/scrum-does-not-work-here-in-asia-72d7bccccb4d
U.S. Small Business Administration (2018). Frequently asked questions. Retrieved 8 February 2021, from https://advocacy.sba.gov/wp-content/uploads/2017/08/Frequently-Asked-Questions-Small-Business-2018.pdf
Walker, J., Risen, J., Gilovich, T., & Thaler, R. (2018). Sudden-Death Aversion: Avoiding Superior Options Because They Feel Riskier. Journal Of Personality And Social Psychology, 115(3), 363–378. Retrieved from http://dx.doi.org/10.1037/pspa0000106
What is Digital Culture? – Everything You Need to Know. Retrieved 18 January 2021, from https://gdsgroup.com/insights/technology/what-is-digital-culture/
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