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Study findings on the topic of digitization and corporate culture

For years now, digitization has been fantasy fuel for managers and entrepreneurs everywhere. And not only at those widely cited startups, but also at the majority of companies already in place. Investments in all things digitization range from the automation of internal processes through to the development of completely new business models that only digitization has made possible – or necessary. As such, the degree of digitization achieved thus far varies just as widely.

But satisfaction is a rare bird indeed: most companies complain that they're reaching the limits of digitization far too early. Countless studies and surveys have shown that, along with a shortage of qualified employees, the blame for this falls squarely on the company's own culture.

To explore the links between corporate culture and successful digitization in more depth, in 2018 UMS joined forces with the Frankfurt School of Finance & Management to set up a corresponding study. The aim was to produce a differentiated picture of which cultural elements are necessary or obstructive to digitization.

The results should allow for the mapping and implementation of individual development journeys toward an explicitly digital culture, based on an analysis of the company's current situation.

This study, titled "Digitization and Culture", compares statements about the degree of digitization achieved at a company against statements about its corporate culture, current level of customer satisfaction, and effectiveness in the market. It draws on the cultural model outlined by Clare W. Graves, which uses measurable attributes to assign corporate cultures to specific culture levels. Graves identified five culture levels that are relevant to the study:

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Figure: Culture model based on Graves

  • Power: power and control, strength, everything for own benefit, win at any cost, get respect
  • Bureaucratic: loyalty, order, discipline, safety, reliability, justice, clarity, rules
  • Success: profit, success, performance, growth, target achievement, freedom, personal responsibility, challenge, customer orientation, hard work, competition, efficiency
  • Team: community, relationships, personal and human growth, flexibility, appreciation, sustainability, stability
  • Individualistic: innovation, flexibility, autonomy and personal responsibility, openness, growth, integration, networks, learning, continuous development

Although these culture levels are arranged in a specific order, a culture's 'rating' very much depends on how much a culture level contributes to the company's achieving its objectives. In other words: no corporate culture is better or worse than any other, per se, only more or less suitable.

The degree of digitization achieved was recorded based on the degree of utilization, as estimated by the respondents, of typical digitization technologies, methods, processes, and structures.

The study contained 29 questions, was conducted online, and was available to respondents for a period of eight weeks.

The study satisfies all academic and scientific criteria, and results were evaluated by UMS in partnership with the Frankfurt School of Finance & Management.

76 percent of the total 183 responses came from companies that employ more than 500 people. 19.8 percent of responses came from companies that employ fewer than 500 and more than 49 people. The remaining 4.2 percent came from companies with fewer than 50 employees.

Almost 70 percent of study participants work in the service sector. Around 10 percent are each in chemicals/pharmaceuticals and production. The remaining 10 percent are spread across other industries.

81 percent of respondents are directly or indirectly addressing digitization. 65 percent of all participants are in middle or top management. The remaining 35 percent are specialists and administrators.

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Figure: Participant statistics

Everyone was surprised by the study’s findings. Data analysis revealed no significant link between corporate culture and degree of digitization. This is also true of culture-shaping factors, such as communication and learning behaviors. Analysis by industry or function produced the same results.

We can therefore presume that the statement whereby culture is a primary obstacle to digitization can only be viewed in context with other, probably dominant, factors.

There was one other standout correlation, namely that between digital maturity and customer satisfaction as perceived by the participants. Here the data shows that a low degree of digitization is more likely to correlate with higher customer satisfaction than a moderate degree of digitization. Only as the degree of digitization begins to rise does customer satisfaction also increase again, and actually beyond its original level. In other words: consistent action in one direction or the other is more attractive to customers than following the middle road. Anyone who, as a customer, has been irritated by media breaks in communication or has experienced the shattering of their expectations by a once promising looking app, will surely empathize.

To that extent, it is worthwhile focusing particularly on organizational capabilities that are required to implement change fast, fully, and sustainably. This includes, for example, the ability to innovate and collaborate along the entire value chain. Another central skill is the ability to react in a fast, agile way to evolving customer requirements or technical options. Though culture has a role to play in all of this, motivated, capable, and empowered employees are just as important and, as such, it's all about the question of motivation, the right skills, processes and structures, and the right set of paradigms for change. In other words: it's about holistic transformation.