Cultural barriers block the progress of digital transformation

A simplistic breakdown of the Infosys's Digital Radar report 2020 under Cultural barriers, Empowering employees, Customer-focused initiatives and Improved risk-averse culture

In 2017 I had this dream of building stories on how brands are digitally transforming themselves on a simple model that I had built (inspired by the common model). I gave everything to this project, got a small sponsorship and met considerable Chief Digital Officers (CDO). In one such meeting, a CDO said he has a cool role for the media but internally he is just a connector between all departments.

“Transformation can happen only if we leave the egos at home and grow our risk appetite.”

Obviously these stories were never published and so my dream went for a toss. However, I wasn’t surprised when ‘Culture’ was highlighted as the biggest roadblock globally for digital transformation projects.

Cultural barriers

According to Digital Radar report 2020: “Respondents said their technological barriers are declining, but human hurdles persist.” The report highlighted that compared with last year, all barriers decreased but the very human challenges of lack of change management and lack of talent show the smallest declines. The related obstacle of risk-averse culture now stands tied with lack of talent as the most-cited barrier to digital transformation, along with legacy modernization (35%).

Digital Radar report 2020 is an ongoing effort from Infosys to track the progress of digital transformation globally. In November 2019, the Infosys Knowledge Institute used an anonymous format to conduct an online survey of more than 1,000 CXO and other senior-level executives from companies with more than $1 billion in revenue. Respondents represented 12 industries and were based in Australia, Canada, China, France, Germany, India, New Zealand, the United Kingdom, and the United States.

While cultural barriers are blocking progress, companies have reported strong progress against technology. Enterprises continue leveraging technology to improve efficiency and productivity but the most successful business now also transforms to improve the customer experience and employee engagement.

Before we proceed further one needs to understand how Infosys measures companies on its Digital Maturity Index to compare year-on-year progress towards digital maturity. The index has been created by identifying 22 initiatives that signaled digital maturity and asked respondents where their companies stood implementing each initiative. A score (0-100) was assigned depending on the progress of the 22 initiatives.

The 22 initiatives have been grouped into four and they are:

Foundation initiatives must be implemented to modernise legacy systems.

Mainstay initiatives represent the core elements of digital transformation, including automation and artificial intelligence.

Customer initiatives primarily impact the customer experience. They include omnichannel marketing and content personalisation.

Forefront initiatives harness cutting-edge technologies such as augmented reality, drones and blockchain.

This year digitally mature companies report scale across the full range of initiatives as shown in the nearly full outer circle representing Visionaries - standing out with strong progress 22 digital initiatives.

Empowering employees

The Digital Radar 2020 report shows while customer-centricity is important, the most successful companies focus on employees as well. Nearly half of visionaries describe “empowering employees” as a major business objective for transformation, compared with less than one-third of Explorers and less than one-fifth of Watchers.

Of the 22 digital initiatives studied, cybersecurity remains the most widely developed capability with 51% of all respondents saying they are operating at scale. Cybersecurity was the top priority in last year’s survey.

Digital marketing has jumped to the second position followed by big data and analytics. This signals the importance of data and personalisation - attributes that digital disruptors have been using as a competitive advantage against the incumbent business for years.

Enterprise learning management platforms showed the greatest increase in popularity year over year. More than 37% of respondents reported operating at scale in this area, up from 29% last year. This finding reinforces a consistent theme: an emphasis on employees is a trait of successful organizations.

Customer-focused initiatives

Customer focussed initiatives remain one of the top priorities across all three, led by the Visionaries. Visionaries report more motivation to peruse new technology for customer acquisition more frequently than Explorers and Watchers do. Even the Watchers are using technology for efficiency and say that they are most motivated to improve productivity and customer experiences.

High tech and telecom industries continue to drive the highest Digital Maturity, this year the survey also shows that customer-focused initiatives are driving digital maturity across all industries.

Segments impacted by changes in customer behavior — manufacturing, consumer packaged goods, and logistics — exhibited the most improvement in digital maturity this year compared with last year. Differences diminished Increasingly, large enterprises say they leverage technology to retain customers and acquire new ones.

Countries like China have made significant strides in digital maturity — improving from 28% of respondents in the Watcher cluster in 2018 to just 5% this year. Yet China still has the smallest proportion of Visionaries (8%). Indian companies led by a strong percentage of Visionaries and Explorers reported strong motivations to use technology to improve customer relationships.

Improved risk-averse culture

Risk-averse culture has become strong this year and more pronounced in the case of large transformational initiatives. Companies dramatically improved their ability to experiment from last year, reporting a 49% decline in companies who called it a barrier this year.

The Digital Maturity clusters showed divergent views on the most challenging barriers to technology transformation in the year ahead. Visionaries predicted that the inability to experiment quickly and cybersecurity would be their greatest challenges in 2020. Explorers expressed the greatest concern about their own lack of corporate vision for digital. Watchers said insufficient budget would be their greatest challenge.

As a group, all survey respondents predicted that risk-averse cultures and a lack of talent would be the top challenges for their companies in the coming year.