Five theses for successful digital transformation
How to master the digital transformation
The example of GKB shows well that a digital transformation is only successful if it is accompanied by a cultural transformation. GKB is the pioneer of digital transformation in the industry. And this is no coincidence. Rather, through a systematic development of leadership and culture, the bank has developed a commitment, trust and change capability that now enables it to implement digitalization at speed. This also shows that for successful digitization, no cultural measures can take effect as fringe or superficial ad hoc actions. Rather, digitization is only successful if it takes into account the deep structures of the company and goes beneath the surface. It is also important to strengthen the digital skills of employees. If all this happens, the digital transformation will quickly become a success. However, all companies that quickly “buy in” to a cultural transformation on the surface or with a few measures will not have this success. The decisive factor is a process of authentic transformation and the right cultural mindset in the company.
Assessments of the development status of Swiss companies in the digital transformation show an ambivalent picture. While most Swiss companies are still at the stage of digital dinosaurs (Hochschule für Wirtschaft in Zürich, 2017), a study by the Institute for Leadership and Human Resource Management (I.FPM) at the University of St.Gallen shows that executives believe their companies are already well positioned in terms of the technical aspects of digital transformation (Bruch & Block, 2017). The cultural transformation side, on the other hand, actually appears to be insufficiently developed and is becoming the primary bottleneck to successful digitization in companies. First of all, it is important to understand how digitization changes the culture in the company in the first place. In particular, digitization enables a whole new way of working together. Employees are increasingly working in flexible locations and in different teams. This requires a new understanding of leadership from managers. Furthermore, employees are expected to take more responsibility and be more flexible. This successful design of the New Work Transformation is one of the key success factors for the success of digitization.
Index
Only 6% of companies are successful
The New Work Transformation will be a decisive success factor for almost every organization in the future. However, the transformation of the working world can also lead to resistance, more conflicts or excessive demands on employees. For this reason, there are on average only 6% of so-called successful pioneers, i.e., companies that have successfully mastered the step into the new world of work (Bruch, Block & Färber, 2016). These companies are distinguished from others in particular by their Work Culture 4.0 and thus their ability to adapt their culture to the new conditions. If companies take the digital transformation seriously and combine it with a New Work and culture transformation, new, unimagined opportunities will arise. A great deal of energy and dynamism is released in the company, and innovation, performance and employee loyalty are significantly increased as a result.
GKB – Becoming a Pioneer of Digital Transformation through Cultural Work
One company that is actively shaping the challenges of digitization and the associated cultural change is Graubündner Kantonalbank (GKB). By consciously developing its corporate culture, the traditional bank has been able to become a pioneer of digitization in its industry.
In addition, GKB has been rated as the most attractive employer in the Swiss banking industry for years, among other things because of its cultural transformation (Handelszeitung, 2017). In our many years of collaboration in the context of culture and leadership development at GKB, five key themes have emerged in relation to successful digitization:
1. Digitization starts with the corporate strategy
A company-wide digitization strategy is the central starting point for digitization in the bank. Various banks are investing heavily in digitization. However, it can often be observed that they get lost in individual activities, do not bundle their initiatives, or the technical transformation of processes and products is not consistently linked to the development of leadership and culture.
In contrast, GKB pursues an integrated digitization strategy with a strong emphasis on culture and leadership issues. This strategy shows which goals are being pursued with digitization. There is also a digital strategic road map that describes which strategic measures are to be realized in what order and with what priority. It is crucial for employees in the company to understand what digitization means for them personally and how they will be taken along and supported. For this reason, GKB’s road map also shows how HR work and leadership in the company are changing in conjunction with new products and business models. As a result, digitization and the associated cultural transformation are firmly integrated into the strategic orientation at GKB and there is a clear goal of digitization for everyone involved.
2. Corporate culture as the basis for digital transformation
Many companies are already well prepared for digitalization from the technical side. In order to gain the full support of employees and to be able to realize the benefits of new products and processes in the first place, an accompanying cultural transformation is also essential for the success of digitization. Because if employees are left alone to deal with the challenges of digitization, this can quickly lead to a feeling of loss of control and uncertainty, resistance or being overwhelmed.
From the very beginning, GKB has linked its digitization strategy with the conscious development of its corporate culture, which it has been pursuing for a long time. The main aim was to adapt all relevant areas in the company to the new circumstances. The cultural transformation at GKB encompasses many areas here, from the design of new forms of collaboration and the further development of human resources work to the development of a modern management concept for the age of digitization. In this way, GKB has succeeded in shaping the cultural transformation not as an isolated project of one department, but in implementing it in the company in a participatory and collaborative manner. This overcame resistance and released productive energy for change in the company.
3. Removing the fear of digitization
In most companies, digitization brings with it a change in competence requirements, the elimination of some tasks and, in some cases, fundamental restructuring. Therefore, feelings of uncertainty and fear about the future are common in the course of digitalization. The danger is that digitization is not perceived as an opportunity, but by many as a threat. Many companies ignore these fears, do not take them seriously enough, or underestimate the need to openly inform about digitalization, to involve employees, and to talk to them about their personal perspectives, opportunities, and development possibilities.
GKB also had to face this challenge. At the bank, some task profiles are changing significantly, while others are even being eliminated and yet others are being created completely from scratch. For example, new jobs and roles have been created at GKB as part of the digital transformation (e.g. multi media producer, data warehouse analyst, workflow designer) – job profiles that were previously not to be found in a regional bank. In order to show employees the consequences of digitalization on GKB’s products and workflows, the so-called Digital Roadshow was carried out. At 20 large group events, newly developed solutions (such as mobile payment or the digital financial assistant) were presented to the 1,000 employees at various stations. This has already reduced some of the employees’ uncertainty. Another key contribution was made by skills development.
4. Digitization requires new skills from employees
In addition to changing job profiles, digitization also involves a new form of collaboration within the company. By using modern communication technologies, employees and entire teams or departments can work flexibly in terms of location. Traditional hierarchies are increasingly being dissolved and employees are increasingly working in a self-determined manner. For many companies it is difficult to take this step and often employees and especially managers lack the necessary competencies for the working world 4.0. If companies underestimate the necessary competence development or invest too late in this process, they do not realize the advantages of the new possibilities or they often even have bad experiences at the beginning.
GKB has been focusing for years on further developing its employees to make them fit for digitization. On the one hand, key qualifications are promoted within the framework of workshops and coaching: Problem-solving skills, the ability to work in a team, flexibility, creativity, entrepreneurial thinking and action, and innovative strength. It is also important to develop technical skills. For example, in the future GKB will focus on providing interactive advice to its customers using tablets. To this end, the customer advisors were trained in an initial workshop with the new products and in the use of IPads. This took away the advisors’ fear of change and made it clear what potential digitization offers for customer advisory services.
5. New form of leadership through digitization
New forms of work only lead to success if they are accompanied by a new form of leadership. When employees are required to show greater flexibility, creativity, self-competence and co-entrepreneurial thinking and action, the old management notion of “command & control” has lost its meaning. Some companies lack the courage to question hierarchical leadership as part of the New Work transformation, while others are strongly reducing hierarchy and management elements, but neglecting to build up real leadership competence. There is then an increased risk that the reduction of management will be accompanied by laissez-faire leadership, i.e., non-leadership, employees will feel neglected, or diffusion of responsibility will occur. Any form of transformation of work forms should therefore be accompanied by a transformation and development of leadership, which involves much more than a reduction in hierarchy and bureaucracy. The focus here should be on building trust, inspiring leadership and empowerment.
GKB has recognized that a modern leadership style, in which superiors show trust, act as mentors and actively support employees, is central to the success of digitalization. Furthermore, terms such as “empowerment” or “letting go” are key concepts of modern leadership. Viewed in this way, leadership means “leading along people and their potential” – right through to promoting shared leadership, i.e. developing and handing over leadership competencies to the employees themselves. To this end, GKB has already defined leadership development as a central strategic goal for the past ten years within the framework of further training and workshops. Since then, regular leadership workshops on inspirational leadership, organizational energy and cultural development have been a central component of further training at GKB. This has enabled existing ways of thinking to be broken down and a modern leadership vision to be implemented in the company in a targeted manner.
Conclusion on Digital Transformation in Practice
The example of GKB shows well that a digital transformation is only successful if it is accompanied by a cultural transformation. GKB is the pioneer of digital transformation in the industry. And this is no coincidence. Rather, through a systematic development of leadership and culture, the bank has developed a commitment, trust and change capability that now enables it to implement digitalization at speed. This also shows that for successful digitization, no cultural measures can take effect as fringe or superficial ad hoc actions. Rather, digitization is only successful if it takes into account the deep structures of the company and goes beneath the surface. It is also important to strengthen the digital skills of employees. If all this happens, the digital transformation will quickly become a success. However, all companies that quickly “buy in” to a cultural transformation on the surface or with a few measures will not have this success. The decisive factor is a process of authentic transformation and the right cultural mindset in the company.
Bibliography
Bruch, H. & Block, C. (2017). Top Management zwischen Digitalisierung und Arbeitswelt 4.0. Leadership-, HRM- und Kommunikationsstrategien bei Schweizer Unternehmen.
Bruch, H., Block, C. & Färber, J. (2016). Arbeitswelt im Umbruch. Von den erfolgreichen Pionieren lernen (Tob Job Trendstudie 2016, Hrsg.).
Handelszeitung. (2017). Ranking: GKB beliebtester Arbeitgeber für Banker (Handelszeitung, Hrsg.). : Handelszeitung.
Hochschule für Wirtschaft in Zürich. (2017). Digital Switzerland 2017 (Hochschule für Wirtschaft in Zürich, Hrsg.), Zürich.
McKinsey. (2017). Digital success requires a digital culture. An old-world organization will doom your reinvention for the new world (McKinsey Global Institute, Hrsg.).
Authors: Prof. Dr. Heike Bruch, Alexander Villiger (GKB), Manuel Fleschhut (University of St.Gallen)
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