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Elements of the company culture which impact the digital evolution

October 3, 2017

In the previous post we discussed barriers to digital deployment. Now, we move on to defining elements of the company culture.

Part 2

The company culture has many components and can range from attitudes toward diversity to perceptions around compensation and benefits. The issues related to the digital evolution for a distributor, though, are often topics new to the company, with no easy answers. They can include communication, relationships with customers, attitude toward data, and the value of innovation and problem solving.

The fast-changing landscape around e-commerce, extended supply chains, and value-added services will also play a large part in this ever-moving topic. “Executives must be proactive in shaping and measuring culture, approaching it with the same rigor and discipline with which they tackle operational transformations. This includes changing structural and tactical elements in an organization that run counter to the culture change they are trying to achieve,” a McKinsey report advises.

Let’s look closer at some of the elements of a digital-ready company culture in distribution and why these characteristics are so important.

Customer engagement. Distributors rely on their relationships with customers. Yes, this is still a challenge. As customer buying cycles and decision points evolve, your employees may not be keeping pace with the priorities around integrated touchpoints, customer buying journeys, and the importance of a consistent customer experience. Understanding priorities as they relate to customer service is essential. How far should each employee go to make sure the customer is happy?

Eliminating silos. This has been a priority for many distributors for years, yet the issue lingers. Breaking down departmental barriers is difficult, but one of the first tasks which much be tackled. Improving visibility will help. Cross-operational training and teams which bring in personnel from multiple departments will also encourage team-thinking, rather than department or division exclusivity.

Accepting risk. Adopting a digital mindset means a willingness to accept risk and try innovative, unproven concepts. Not all ideas will succeed without a hitch. Top management must communicate to team members that some failures are expected and there will be no reprisals. Fear of failure can lead to fear of trying new ideas. But, the pendulum cannot swing to the extreme opposite saying reckless, high-risk decisions are acceptable. Where is the balance point for our company?

Finding that sweet spot is not easy. As the McKinsey report states, “On the one hand, willingness to experiment, adapt, and to invest in new, potentially risky areas has become critically important. On the other, taking risks has become more frightening because transparency is greater, competitive advantage is less durable, and the cost of failure is high, given the prevalence of winner-take-all dynamics.”

What’s most important is to know the company position and communicate it to employees so they can make decisions which fall within safe parameters.

Encouraging problem-solving. Finding new ways to solve old problems is one of the hallmarks of a digital plan. This means employees must understand the basic principles of problem-solving and have access to necessary tools. Visibility and accessibility are the key words. Report writing and KPI tracking will be important capabilities to help personnel craft solutions. Access to customer data and a view of the complete value-chain are other requirements that are helpful when researching causes of problems and proposing solutions.

Team approach. In this digital era a team approach is more important ever. Working as individuals, some of the enterprise-wide innovations that are part of a digital overhaul will be difficult to enact. By forming cross functional teams to address these large initiatives, the distributor will have the benefit of multi-dimensional viewpoints which cover a variety of scenarios and “what if…” questions. A team approach also disperses the burden across multiple personnel so one department doesn’t carry the full weight of an extra workload. When teams are assigned to work through digital issues, it also helps generate buy-in, making personnel feel like part of the solution.

Empowering users. A digital-ready company culture places heavy emphasis on making each employee empowered to engage, make decisions and further drive the company initiatives—without being encumbered with excessive rigidity and red tape. Business happens at the speed of change and requires personnel who can quickly make well-informed decisions and know how to follow through. Your customers have high expectations. Your employees must be empowered to provide goods and services your customers want.

Next steps for building the company culture

Can bandages be applied to the existing company culture in order to make shifts, correct false assumptions, and fix gaps? Or, is the cultural change simply by-product of the digital deployment that will happen naturally? The McKinsey report says, “In our experience, executives who wait for organizational cultures to change organically will move too slowly as digital penetration grows, blurs the boundaries between sectors, and boosts competitive intensity.”

Distributors will be better positioned if they take active steps in changing the culture, influencing viewpoints, and helping personnel make the transition to the new way of distributing products and services.

Read the next installment in the series for tips on creating the digital culture, step by step.

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