All companies continue facing unprecedented challenges. Disruptive technologies, shifting consumer preferences, and increasing competition are just a few of the factors that are causing companies to rethink their strategies and operations.
One of the most common solutions is to embark on a business transformation journey, where they restructure their operations, adopt new technologies, and change their business models. According to a recent report by McKinsey & Company, 80% of executives believe their current business models are at risk due to digital disruption, emphasising the urgent need for transformation.
While these changes may lead to short-term gains, the long-term success of any business transformation depends on one critical factor: culture transformation. Without changing the underlying culture of the organisation, any efforts to transform the business will be met with resistance, and ultimately fail. A study by McKinsey showed that “the most successful business transformations embed transformation in the way of doing business.”
Business culture refers to the values, beliefs, and behaviours that define how a company operates. It includes everything from how employees interact with each other, to how decisions are made, to how the company treats its customers. Culture is often deeply ingrained in an organisation, and it can be difficult to change. However, if a company wants to truly transform itself, it must start by transforming its culture. Here are a few reasons why:
1, Culture shapes behaviour
The way people behave within a company is largely determined by the culture of that organisation. If the culture is one that values innovation and risk-taking, employees will feel empowered to experiment and take chances. On the other hand, if the culture is one that values stability and predictability, employees will be hesitant to try new things.
If a company is trying to transform itself into a more dynamic and agile organisation, it must first create a culture that supports that kind of behaviour. This means fostering a culture of innovation, where employees feel encouraged to experiment and take risks. It also means creating a culture that values collaboration, where employees work together to solve problems and create new solutions.
2. Culture determines priorities
McKinsey’s research reveals that companies with a customer-centric culture are 60% more profitable than their competitors. The culture of a company also determines what it prioritises. If the culture is one that values short-term profits above all else, then the company will focus on cutting costs and maximising revenue. If the culture is one that values customer satisfaction and long-term relationships, then the company will prioritise providing excellent service and building strong partnerships.
If a company wants to transform itself into one that is more customer-focused, it needs to first create a culture that values customer satisfaction. This means creating a culture that prioritises listening to customer feedback, understanding their needs and preferences, and working to address their pain points.
3. Culture affects engagement
Finally, the culture of a company has a significant impact on employee engagement. If the culture is one that fosters collaboration, creativity, and a sense of purpose, employees will be more engaged and more committed to the company’s goals. If the culture is one that is rigid, hierarchical, and focused solely on profits, employees will feel disconnected and disengaged.
If a company wants to transform itself into one that is more innovative and engaged, it needs to first create a culture that fosters those qualities. This means creating a culture that values creativity and experimentation, encourages collaboration and teamwork, and provides employees with a sense of purpose and meaning in their work.
In conclusion, every business transformation requires a culture transformation. While it may be tempting to focus solely on changing processes and adopting new technologies, real transformation will only come when the underlying culture of the organisation is also transformed. By creating a culture that supports the desired behaviours, priorities, and engagement levels, companies can truly transform themselves and stay competitive in today’s rapidly changing business landscape.
To make this culture transformation a reality, companies must be willing to invest the time and resources necessary to create meaningful change. They must involve employees at all levels of the organisation in the transformation process, and work to create a shared vision for the future. They must also be willing to challenge longstanding beliefs and assumptions about how the company operates and be open to new ideas and perspectives.
In the end, a successful business transformation requires much more than just a step-change in strategy or operations. It requires a fundamental shift in the culture of the organisation, one that is focused on innovation, collaboration, and customer satisfaction. By making this culture transformation a priority, companies can set themselves up for long-term success in today’s rapidly changing business world.
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