The number one hurdle to make digital transformation successful? According to 62% of business leaders it is organizational culture (as reported by MIT Sloan and Capgemini). This widespread challenge drives home the message that your company culture needs to be a key element in your industry 4.0 change strategy.

Changing organizational culture is tough, some even say impossible. Paradoxically, organizational culture is always changing because it is being shaped by people’s behaviors and interactions. This development can be influenced in such a way that it actually helps companies with their digital transformation. Working in an ever more digital environment asks for different values and beliefs, new ideas on how people work together, and eventually leading to a behavioral change of individuals. As said, this is tough and requires perseverance and patience. However it is very much achievable especially if what works well gets celebrated and what can be improved stimulated.

Going back to the MIT and Capgemini survey, they identified the key attributes for company culture to make digital transformation projects a success. Of all findings, these are our four top picks: a digital-first mindset, innovation, data-driven decision-making and collaboration. While every organization’s culture and business context is different, it is valuable to discuss how you can start injecting these qualities in your culture to boost long-term Industry 4.0 success.

1. A digital-first mindset

Thinking and being digital-first is important across the organization to facilitate and boost digital transformation. This seems like stating the obvious, however, we still see many maintenance staff walking around with pen and paper or working in Excel, while there are better digital solutions available to solve the problem they’re working on. On top of that, our consultants also regularly find that some of the (mostly older) staff has a resistance to change and digitalization. So, how to go about creating a more digital-first mindset?

Have a digital strategy and vision

Share the company’s vision and strategy. Include how digitalization can improve the company and emphasize what’s in it for them, meaning everyone involved from shopfloor to management and all departments. Explain for example to shop floor staff that certain repetitive tasks can be automated which will enable them to focus on other (more meaningful) work. If you think that you have a clear digital vision and have communicated this with your employees, then check with them if that is the case and elaborate on it if there are unclarities. The Cap Gemini & MIT Sloan survey found that 61% of leaders think they have communicated their digital strategy and vision properly with the whole organization while only 38% of their employees think that.

Implement, train and support

Going ahead with for example, digitalization of systems and tools only works well, if you provide ample support, training and coaching on the job. Give people time to get used to the new situation, offer them new insights to keep them engaged and new ideas that help change the way they work and even their behavior, if needed.

Show results and communicate

With a digitalized way of working comes the possibility of measuring progress and results. To avoid this being seen as a threat, communicate the benefits for both the company and the employees clearly. What do they get out of it? Also keep it simple (it’s not possible to focus on ten new KPIs at once) and make sure the data being used is reliable.

Lead by example

Managers should be digital savvy and show it. They can and should also be open to coaching and support in this case. For digitalization projects internally, it is desirable to take a backseat to the change team (if you have such a team).

2. Innovation

Not all industrial companies have a culture that is set up for innovation. Knowing that innovation is part of the company DNA or is encouraged, is important for your people. This will significantly boost acceptance and further rollout of digital transformation initiatives. How to infuse more innovation in your culture?

It is okay to fail

Make sure your staff knows that trial and error begets innovation. If someone has a good idea, encourage them and have them run a pilot within a safe environment. Trying out new things and failing at it, is a fundamental element of innovation. During our Round Table event on data-driven maintenance, René van Eerten, global maintenance manager at Vopak says: “There is always a chance that only sixty percent of our [digital transformation] plans come to fruition. That could be interpreted as failure, but imagine that 6 out of 10 of your visionary projects for your company will work and be successful… I would be very happy to achieve that.”

Promote creativity

Facilitate that your staff is able to discover new things and ways of working, that they can experiment and nurture their curiosity. To make this more tangible: think of boosting the possibility of attending trainings and workshops, allocate specific time to exploration (at one company they dubbed it ‘Friday Tryday’), have colleagues ‘intern’ in other departments or at other sites, share knowledge and ideas with colleagues (at MaxGrip we have Knowledge & Info sessions to inspire each other) and make (designated) rooms and attributes available to facilitate this.

Give trust

Again: it is okay to fail – and make sure all employees know this. Trust them to take ownership of projects, to take the lead in their own development and to explore opportunities and unknowns. This will be an important hidden driver behind innovation.

3. Data-driven decision making

Tribal knowledge – the unwritten knowledge and expertise that is kept in the minds of a certain group of people – is a big challenge in our industry. The generational brain drain and the great resignation are two catalysts for this and you need a data-driven approach to create a single source of truth. In many asset-heavy organizations, tribal knowledge is part of the culture (‘I am needed, my knowledge is key’). This element of the company culture needs to change in order to avoid big consequences in the long run. Get your data in order, both the quality and the quantity. Is it accessible? Are systems (IT & OT) connected? Is the IT infrastructure working across the organization? Don’t forget about other necessary asset information and documents. Is everything available and digitized? Solve these challenges and make connected data available in a KPI dashboard that is used by all departments. Take steps to go from actionable insights to actioned insights.

Be aware of the importance that a new mindset (and associated behavior) is vital here, in contrast to the ‘I am needed, my knowledge is key’ belief. Create an environment in which sharing knowledge, both digitally and in other ways, is more valued than keeping it to oneself. Promote easy access to knowledge for everyone above having a single subject matter expert for example. This will positively influence your organizational culture and will give it the chance to develop into a best fit for the company’s digital transformation.

4. Collaboration

Having your people and departments collaborate can achieve four times more revenue with digital projects. So, to say that getting rid of silos is important, is putting it mildly. It is difficult to speak and work in a common language and towards a common goal. Create governance policies for IT and OT systems. These ‘rules for the road’ establish guidelines and offer clarity. Who will set these up and work on digital transformation projects, or better worded: who owns Industry 4.0? You often see separate digitalization initiatives in different departments which are not connected but could benefit greatly from this. To take the next step, instate a separate digital transformation program team that includes experts from different departments and across organizational levels. This is also something that LNS Research advocates in their Transformation Chasm with the stages after the aforementioned one being a digital transformation organization at scale and digitalization being ingrained throughout the organization and culture.

5. Conclusion

Every organization is undergoing some form of digital transformation at this moment or in the near future. Digitalization and Industry 4.0 will change the way we handle data, systems and tools, change our processes and roles and responsibilities. Thus, organizational culture, meaning our way of working will (have to) shift significantly as well. The latter merits attention, effort and time to have digitalization be fully adopted by your organization in the long term.

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