Part of the “Digital Finance Transformation” series that provides a framework for CFOs to move forward confidently on the journey toward digital transformation
In finance transformation journeys, one of the hardest parts is to create a positive climate that supports an innovative environment for change. This is one of the most mentioned key issues within the area of finance transformation. Digital innovation in business areas like logistics or sales is promoted much more heavily and therefore they serve as attractive role models for finance. Creating a tailored change-management plan that considers the organization’s culture is crucial for all CFOs.
Elements of a digital culture
Norms, values, and symbols are key indices that shape decisions, actions, and the behavior of organizational members. An organizational culture can be defined as a shared pattern of thinking, feeling, and acting. Thus, a digital culture evolves in digitally transforming companies. It’s a constant change process as part of a vision, especially for CFOs. The elements must be specified for financial departments based on the maturity of their digital culture.
The key elements of digital cultures are:
- Leadership in a digital culture fosters autonomous working conditions for accountants, which encourages self-reliance, initiative, and self-management, as well as creating an environment where explorative working is desired.
- An organization focused on entrepreneurship, digital technologies, and agility. It is also influenced by aspects of the leadership culture that support more flexibility to run digital projects.
- Performance combines elements like entrepreneurship, innovation, and learning. Furthermore, it includes a culture of failure that supports employees trying out new ideas and approaches.
- Cooperation within the organization is the main characteristic. It comprises knowledge-sharing and interdisciplinary and inter-divisional working. Collaboration and joint development with customers are also part of it.
- Innovation combines entrepreneurship and learning as well as agility.
- Change is related to the culture of innovation and contains the four elements of entrepreneurship, agility, innovation, and learning.
- Growth, new business, and brand relate to agility as the keys to the use of digital technologies and digital processes.
- Stakeholder and relationship are main characteristics of a digital culture leading to innovation and learning. In addition, customer orientation is key for a successful stakeholder and relationship culture.
- Communication in a digital culture is enhanced by digital technologies and digital processes. They allow a new type of collaboration and cooperation within the organization and with interfaces to customers.
Changing existing into digital cultures
In a fast-changing environment, companies can stay successful if they change their holistic ways of working – if they change their culture into a digital culture. This insight can only be obtained by creating urgency for everyone. Providing digital tools in the finance area – for example, tablets – is an important requirement of today’s job market, but it also helps to lead a company into a digital behavior. Going one step further and in the context of financial IT projects, an agile methodology is essential to reach the right degree of innovation.
Alongside this, the measurement of success has changed. A classical sequence approach with one big “go-live” at the end of a project must be rethought. In addition, the requirements for project members, including the leadership team, have changed. They must enjoy the trust of all concerned stakeholders and pursue the same goals. This can be achieved only if employees of different departments and stages are united.
The vision and strategy must be communicated well. When all involved parties can muster a common understanding for an agile way of working, the risk that a transformation project will be canceled decreases. The motto here is: high tolerance for failures. Those who fail early learn faster. Therefore, a unified vision with a suitable strategy must be developed. At best, it has a motivating effect on employees and acts as a support during the first steps of change.
For a smooth transformation, the leadership team needs to remove potential obstacles. This ensures a higher commitment within all stakeholders as well as trouble-free business continuity. To keep all necessary stakeholders involved, short-term successes should be communicated and celebrated. This illustrates the transformation progress and keeps all parties in a good mood, which increases their commitment. Change is a constant companion in times of digital businesses. Therefore, a mindset of a steadily changing business environment needs to be established within the company. Only then can the company adjust to changing market demands and business requirements.
Changing a corporate culture to one of digital transformation is certainly not an overnight process. Every cultural change takes time – from the initiation to the moment when the culture shapes the action – and can only take place step by step. In summary, it’s best to carry out cultural change in areas where technological change is particularly relevant to business activity or for reasons such as cost optimization. It is important to focus on the corresponding quick wins, which in turn contribute to reinforcing cultural elements.