First Published on Noteworthy on Oct 28, 2019

Organizational culture has been a largely ignored part of digital transformation. While it is lightly touched upon by the big consultancy reports, there is a certain taboo in talking about culture. Culture is personal to many business owners — the bitter truth is deflates their version of reality. From my experience, an organization’s culture makes or breaks the organizations’ success. Technology has had a long-standing impact on culture — from the industrial revolution to the internet boom, technology, in every shape or implementation has had a tremendous impact on culture.

We’re often stuck implementing an internal solution with intricate processes and SOPs that we forget the impact it has on the culture. In this article, we’ll focus on identifying how a technology savvy organization builds a strong culture through technology. It must be said, however, that simply implementing technology solutions and hoping it works doesn’t bode well for the future. Every solution has to have an inherent problem it solves. Without it, we are simply building castles in the air.

Since this is a fairly long article, I’ll provide a quick tl;dr (too long; didn’t read — for the uninitiated)

tl;dr

Digital Organizations have a strong dependency on technology as a driver for:

1. Transparency through direct-to-employee communication
2. Performance management through measured KPIs
3. Decision Making through Data
4. Innovation through career safety

Culture dictates the use of technology — decoupling the implementation from the usage. Usage is governed by how close the implementation is in solving the problems and its effectiveness.

Cultural Dimensions

Let us look at Hofstede’s cultural dimensions(further reading), picking only what is I deem as relevant to organization cultures and the impact technology has on them:

1. Power distance index (PDI): The power distance index is defined as “the extent to which the less powerful members of organizations accept and expect that power is distributed unequally.” In this dimension, inequality and power are perceived by the followers or the lower strata. A higher degree of the Index indicates that hierarchy is established and executed in society, without doubt, or reason. A lower degree of the Index signifies that people question authority and attempt to distribute power. Digital savvy organizations have a lower degree of PDI across their departments.
2. Individualism vs. collectivism (IDV): This index explores the “degree to which people in an organization are integrated into groups.” Individualistic organizations have loose ties that often only relate an individual to his/her immediate team. They emphasize the “I” versus the “we.” Its counterpart, collectivism, describes an organization in which tightly-integrated relationships tie extended teams and others into in-groups. Digital organizations display collectivism — while archaic organizations, where there are no incentives towards growing an organization relative to growing the ‘self’, display individualism to a very large degree
3. Uncertainty avoidance (UAI): The uncertainty avoidance index is defined as “an organizations’ tolerance for ambiguity,” in which people embrace or avert an event of something unexpected, unknown, or away from the status quo. Organizations that score a high degree in this index opt for stiff codes of behavior, guidelines, laws, and generally rely on absolute truth, or the belief that one lone Truth dictates everything and people know what it is. A lower degree in this index shows more acceptance of differing thoughts or ideas. Digital organizations tend to score low on this since they are more accepting of different thoughts and tend to challenge the status quo. A primary contributor to this is the delegation of authority (DOA).
4. Long-term orientation vs. short-term orientation (LTO): This dimension associates the connection of the past with the current and future actions/challenges. A lower degree of this index (short-term) indicates that traditions are honored and kept, while steadfastness is valued. Societies with a high degree in this index (long-term) view adaptation and circumstantial, pragmatic problem-solving as a necessity. Agile organizations, who accept change towards a long-term goal are Long term oriented. They have a steadfast North Star towards which they march — with a willingness to modify traditions to match their objectives and pace.
5. Indulgence vs. restraint (IND): This dimension refers to the degree of freedom that organizations norms give to their employees in fulfilling their human desires. Indulgence is defined as “an organization that allows relatively free gratification of basic and natural human desires related to enjoying life and having fun.” Its counterpart is defined as “an organization that controls gratification of needs and regulates it using strict organizational norms.” Think Google and its 20% rule — allowing employees to explore personal projects during 20% of their office hours to encourage a culture of innovation. Many of Google’s industry-leading projects have been born out of this initiative.

Here’s a handy table:

Technologically savvy organizations are those who display a high level of customer-centric behavior through technological independence. Archaic organizations are those who are rigid in their processes and tend to resist technology and transparency.

Simply put, on detecting a customer issue, a technology-savvy organization will empower the lowest level of authority to find and implement a solution within a reasonable time frame, while an archaic organization will hold meetings and discussions with various levels of senior management, delaying the solution implementation.

Impact of technology on these dimensions

Here is how the dimensions are impacted by strong technology implementation:

Power Distance Index

With technology and agility implemented within an organization, the delegation of authority and transparency in decision-making enables every employee to understand and acknowledge the decisions made. Technology enables communications — from using slow-moving communication tools like emails to faster more direct communication tools like Facebook for Work, organizations can orient their lowest level of staff to align themselves on the bigger strategy. Gone are the days when information used to be segregated by pay-grade. I’d rather get to know the change in direction through the management, than by hearsay.

Individualism vs. collectivism

As technology empowers transparency, individuals begin to understand their teams’ value. Moreover, they understand the value of their counterparts in other teams. A key impact of a digital/technology savvy organization is the use of strong, measurable KPIs — performance indicators that prevent hiding behind the process that individualism encourages. Organizations’ problems become your problem and reward and recognition become fair and transparent.

Tools like KPISoft enable such performance management. Data becomes the king and CXOs can start predicting individual/team performance.

Uncertainty avoidance

Consider the situation where a change in direction is required for a team, due to some unseen market forces. With clear communication and objective setting, along with agile practices, pivoting is relatively easy. Digital organizations have a delegation of authority — the lowest level of management has the power to effect immediate change in pursuit of the bigger goal. Considering project delivery, since there is no lock-in on delivery, teams can easily move towards the new objective without rigorous planning. This leads to faster reactions to market forces.

Long Term Orientation

It’s a simple fact — individuals contribute more towards an organization that they feel a part of… a culture that encourages long-term commitments — through transparency, rewards & recognition and, career path development (all powered through easy to use data & technology) reap the benefits of strong employee benefits. The common misconception here is that the data converts individuals to statistics. Quite contrary to that, data brings out individual anomalies and allows for HR teams to focus on individuals. It helps in ensuring that the team that utilizes the data knows how to interpret it.

Indulgence v/s Restraint

With the above in place, it is only natural that an individual will contribute to the growth of an organization. Innovation breeds from safety — safety in knowing that the work they do is noticed and is contributing to the growth. Safety in knowing that transparency is rampant and the individuals’ efforts are recognized in the face of politics and nepotism.

Skunkworks teams are a testament to the technological impacts — almost every organization that focuses on innovation by allowing their employees to identify & solve critical customer-related problems has seen tremendous top-line & bottom-line growth. Only through embracing the principles of technology — that it is there to simplify complex processes and is to be used for solving a spectrum of customer problems that we can truly achieve a customer-centric digital culture.

A strong IT department that is aligned with the business objectives is key to business success. In this day & age of changing customer expectations and competitor agility, the IT department forms the backbone of success. It is the first layer of problem identification and solution.

Thank you for reading. A lot of the above has been borne through tedious study of the organizational behaviour and a steadfast love of technology. I’d love to hear your thoughts on this.

If you want a more scientific approach towards the impact of technology on culture, please check out the following:

1. Impact of Organizational Culture and Technology on Firm Performance in the Service Sector by Nathaniel C. Ozigbo from University of Abuja
2. Culture’s Consequences: International Differences in Work-Related Values