“Organizational Culture“: the set of shared attitudes, values, goals, and practices that characterizes an institution or organization – Merriam-Webster

What does organizational culture have to do with achieving business goals during digital transformations? Culture is important to the realization of digital transformation goals because it impacts what people say and do during changes. For instance, a culture where people aren’t encouraged to openly share feedback will likely impede the necessary flow of good information from the functional teams to those who need it to make decisions necessary to progress the change. Digital transformations progress when organizational cultures support the learning needed to make effective decisions. Learning is key because transformations are in-essence lots of little experiments to find a new business model. As people across the organization participate in the changes, they gather feedback about what works and what needs ‘further tweaking’. This feedback may relate to customers, business processes, systems, people capability and can be the key to overcoming obstacles.

However, to effectively influence culture in a way to support the transformation goals, it’s important to recognise that it has two dimensions that compete with each other. Firstly, the overt side of culture. This is the culture that is formally documented, such as in company values or business processes.

Quite separate from formal culture, what people actually do can be very different. Yes, that’s right, people are complex and don’t always do what they say! Actual culture is less overt, sometimes even a hidden side of organizational-life. Your immediate reaction may be to dismiss what isn’t formally sanctioned. However, leaders must learn to work with both aspects of culture. Here’s why….

Playing in the gap between formal and actual culture

This ‘hidden’ side of organizations was coined the ‘shadow organization’ by the renowned theorist Ralph Stacey. There is no more obvious example of the shadow organization than when employees use IT devices that are outside what is allowed or provided by their organization. For some organizations, these unsanctioned devices pose a threat to information security. IT Managers sometimes call such devices ‘shadow IT’. Although hidden aspects of organizational culture exist in all aspects, shadow IT is a simple and practical example that acts to demonstrate why leaders mustn’t underestimate the risks when the formal culture is given greater attention than the actual culture.

It’s easy for leaders to ignore what they don’t want to hear! Leaders who are savvy with culture and know how to influence it, choose to ‘play’ in the gap between formal and actual cultures. They work to formally define cultures that support the digital transformation goals, however, also use their people skills to tap into the informal side of their organisation.

In order to sustain the future-state, digital transformations require changes in culture to reinforce new values and ways of working. Leaders who are under-prepared to tackle cultural challenges risk their digital transformations being undermined by people who see these new ways of working as unimportant, or, even a threat!

Tapping into and become aware of this gap between formal and informal culture enables us to truly understand the current-state culture. This is the baseline from which to influence and shape your company’s transformation future-state and in the process, de-risk.