The hardest part of digital transformation for the chief digital officer at SAP SE isn't business process changes or new technology or even talent acquisition. "To me, the single hardest part has been changing the mindset," Jonathan Becher said.
Becher is not alone. In corporate cultures that do not embrace change as a core value, major transformation can face stiff odds, requiring strong change leadership from the top.
The same is so for building a digital business. A joint survey of 4,800 global business executives, managers and analysts by MIT Sloan Management Review and Deloitte Consulting LLP found that "what separates digital leaders from the rest is a clear digital strategy combined with a culture and leadership poised to drive transformation."
Rather than resist cultural resistance to change, digital leaders at SAP, IBM and CBS encouraged executives at the recent Chief Digital Officer Summit in New York City to understand its root cause and get underneath it. Fair warning: Changing the corporate mindset or culture often takes time and creative thinking.
Larry Kramer, the former president at CBS Digital Media, said he introduced change by using a time-tested method: He listened carefully to his colleagues' objections. Kramer was recruited to CBS in 2005 when the company split from Viacom and was in need of "a digital strategy fast."
A self-described business strategist and a change agent, Kramer, whose resume includes stints as reporter, editor and entrepreneur, said he walked into his first executive meeting at CBS with the idea that CBS put the NCAA basketball tournament online. The company owned all the digital rights; why limit viewership to TV? "Everyone in the room said, 'You're out of your mind. No,'" Kramer recalled. Executives worried about cannibalization and revenue loss, technical glitches, breaking the Internet and even contributing to the loss of productivity in America.
He listened, treating their resistance to his proposal with respect. "I said, 'Look, give me two weeks, let me go back and try to deal with every one of your problems,'" he said.
Kramer understood that changing the business model meant not only monkeying with the company's revenue stream but, potentially, with an employee's ability to do his or her job. "The people in that room, their job is to keep the water in the boat filled to the right level: 'Do not let people in. Do not screw up that we're bringing [so many] billions in revenue,'" he said, adding that "if you don't understand that about them, you're not in their world."
Kramer and his team spent two weeks addressing each concern, coming up with creative gimmicks such as the "boss button," a keyboard shortcut that allowed viewers at work to hide streaming video with what appeared to be actual work. "If you were watching a game and your boss came by, you'd hit the F1 button, and the sound went off and a spreadsheet came up," Kramer said. "It wasn't a real spreadsheet. It was just a GIF, and if you read it, it was hysterical."
Executives, including the head of marketing, immediately saw the value of the boss button (a feature that's refreshed and rolled out during March Madness to this day), and Kramer was able to get the buy-in he needed. "You have to actually be a kind of strength to those people and let them know what it is they do really matters ... help them translate what they do to this new world."
DIY approach produces lasting change
For SAP's Becher, cultural resistance eats up a good chunk of his time. "I'm certainly not a chief cultural officer, I don't mean to suggest that," Becher said, who became CDO in 2014 to lead the company's new digital unit. "But I do think that 50% of my time is spent on deep mindset issues." To overcome the change management hurdles, he and his team established "six characteristics of mindsets" required to facilitate change, Becher said.
"One of them is to find people with a hands-on mindset or a do-it-yourself mindset," he said. When IT or the business runs into a hurdle they don't know how to get around, they often turn to an expert -- usually in the form of an external consultant.
But, Becher contends, doing so is a way of getting to a solution that doesn't stretch the culture much. Instead, he advises digital leaders solve problems internally. "Even if it takes ten times longer, even if we make 100 times more mistakes, we find authentic change only happens when people learn from having a hand in doing it," he said. "And we force executives to do this as well."
Becher doesn't mince words when he describes the process, but he swears by the results. "It's ugly, it's messy; I've had more failures on my door in the last 18 months than probably my entire career put together. But it's the only way we've made real, systemic change in the last 18 months," he said. Once the team has found a fix, they'll bring in consultants to help with the next phase, scaling out the solution.
Superficial checklists vs. systemic growth engines
When building a digital business, company culture can sometimes lull a company into a false sense of security. "One of the things I tell the teams when they start speaking IBM speak: Remember, fish don't know they're in the ocean," said Kevin Eagan, vice president and general manager at IBM Digital.
Executives aren't immune to insular thinking, and because of it, they may not recognize what hurdles need to be dealt with if they're going to build a successful digital business versus the hurdles they can ignore. Asking tough questions such as what does "winning" look like and how will digital success be measured often take a backseat to focusing on "fashionable" digital accessories such as responsive Web design, Eagan said.
"You have to know the difference between superficial checklists and systemic engines of growth," he said. "When you measure something that's worth reporting to your shareholders, to your board members ... then you've translated superficiality into systemic organizational motivation."
Kevin Eaganvice president and general manager, IBM Digital
Eagan and his team, with top-down executive support (he called that key), asked the tough questions and then looked at the impediments -- culture, infrastructure, portfolio, channels -- that could get in the way of "winning." Rather than build awareness and consensus incrementally, Eagan pulled experts together from within the company to envision what it needed to look like to achieve success. "We said, 'Let's put ourselves 24 months in the future, suspend disbelief that we have to use any technology, any compensation plan, any organizational plan. What would a world class organization look and feel like?" he said. "Let's describe that without having to do anything incrementally."
While undertaking the journey is the first step, it's the final destination that matters. Eagan called it the "North Star" method. He and his team took it a step further by breaking off pieces of their vision, prototyping them and testing those prototypes with stakeholders. "That authenticity to translate [goals] into measurable systemic outcomes -- we found that to be key," he said.
Soft skills come in handy during a digital transformation
How to use business process management to digital business' advantage
Digital business upends the CEO-CIO dynamic