Why cultural transformation is the vital ingredient to any successful digital transformation

After 26 years of uninterrupted economic growth there may be a temptation for some Australian enterprises to rest on their laurels.

But historical fortune is not a blueprint for future success.

Australia may have an enviable economic track record, but it has also dropped to 21st out of 63 countries in terms of national competitiveness, as ranked by business school IMD, and 27th in terms of business efficiency.

We are at a critical inflexion point where enterprise must grasp the transformation nettle or face disruption either from a tenacious incumbent or a digital upstart. We must become more competitive.
The Productivity Commission recently noted that the “critical x-factor” in strong long-run economic growth derives from the application of new knowledge and technologies.

If we get digital innovation right McKinsey & Co believes we can boost the Australian economy by up to $250 billion by 2025.

There are challenges; CEDA has previously forecast that 5 million or 44 per cent of Australian jobs will be impacted by automation. A more recent Future of Skills report from Pearson, Nesta and the Oxford Martin School puts that figure closer to 20 per cent by 2030. While the impact of automation of jobs will no doubt be significant, the impact on the broader economy and Australia’s ability to remain competitive cannot be overlooked.

Strong enterprise leaders have already embarked on their transformation journeys deploying rich foundational technologies, reforming process, upskilling staff and nurturing agile and adaptive cultures that can stay the course.

What all of them already understand is that digital innovation isn’t about a one-off transition where you reach nirvana in one go; in the fourth industrial era transformation and innovation needs to be embedded in organisations as core capabilities.

What’s also true is that when it comes to digital transformation, the emphasis needs to be on the second word – transformation.

To innovate at the speed and scale that is required, the key determinant of success won’t just be technology but the ability of companies to adapt both their leadership and their organisations for the digital era. Cultural transformation is the vital ingredient to any successful digital transformation.
However, by establishing strong technology and cultural foundations today digital leaders are poised for ongoing innovation and growth for tomorrow.

That’s the approach packaging business Pact Group has taken; with Azure as its foundation the organisation can optimise operations and inject efficiencies today, and prepare to deploy predictive maintenance solutions across 2,500 lines of manufacturing machines, autonomous drones for stock taking in 80 locations, and offer chatbot support for employees and customers.

In the financial services sector StatePlus has transitioned data and core applications to the cloud, delivering an Australian first with straight through processing of financial advice – but also positioning the firm for continued innovation and growth.

In education RMIT’s School of Architecture and Urban Design is using HoloLens to transform the construction process, taking data directly from architectural drawings, and turning that into augmented reality representations of the building to guide construction workers, accelerate building and reduce waste. In the process it’s radically shifting the dial on the sorts of buildings architects dare to design.

Each of these organisations has strong, principled digital leadership in place and understand the shifting expectations of customers, business partners and citizens. Each has established skilled teams and cultures that are geared for change and enterprise transformation. They are deploying solutions for today without losing sight of the need for continuous innovation.