Building a digital culture: How to meet the challenge of multichannel digitization

April 23, 2013

Executive summary

Many traditional retailers and other customer-facing businesses have installed new digitally enabled organizations, processes, and systems. Their goal is to remain competitive by building multichannel experiences: attracting shoppers on the Web and through mobile devices as well as through their established retail stores. This approach, however, is not enough in itself to win in the digital age. Even well-designed systems can be undermined by a company’s established culture — for example, when employees balk at the new practices required by the new technologies. The result is a divided company: one part moving into the future, the other clinging to traditional sales channels — and a delay in the much-needed transition to a multichannel operating model.

A more successful approach is to fully develop digital capabilities throughout retail operations. This can happen only if there is a company culture that embraces digital media and multichannel capabilities. It takes time to develop a digital corporate culture; the sooner a company acts, the more quickly it will be in a position to compete in this fast-paced, digitized, multichannel world.

Senior management can take practical steps to embed a new way of thinking and new behaviors into business operations, even at the scale of a large retail chain. These steps fall into two categories. First are the formal levers of change — leadership policies, role definitions, and people processes — that address the processes and structures that support digitization. They organize the introduction of new digital channels into traditional operations. The second category is the informal levers — key behaviors, role models, and networks — that help employees start thinking, feeling, and behaving in new ways. Using these formal and informal levers in an integrated fashion can help people adapt to new ways of doing business and enable companies to deliver the multichannel experience that customers want.

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Embracing the digitization path

To fully embrace the digitization path requires companies to adopt new ways of working. In short, they must develop a digital culture. They can use the formal levers to help change processes and adapt organizational structures and roles and responsibilities. They can use the informal levers to encourage people to change the way they think, feel, and behave to embed the digital way of doing business in their day-to-day work. If senior management addresses only the formal aspects and develops structures without targeting critical behaviors, the transformation is unlikely to take root over the long term; similarly, a push to change behavior just by bringing in role models and nurturing pride builders will have limited success if the more formal corporate structures that support the staff are not in place to sustain it.

Peter, the ambitious and motivated manager who sought to introduce digitized sales channels into a more traditional retailer, was thwarted by his reliance on formal structures. Because senior management didn’t grasp the full picture and failed to walk the talk, Peter’s success depended on his ability to talk directly and informally to his threatened colleagues. When he couldn’t or didn’t do that, the organization resisted taking on its new digital identity. The urgency to adapt to the multichannel experience that customers are demanding is real. Few weeks go by without news of another corporate bankruptcy. By understanding the process of digitization and the important role that corporate culture plays in determining the success of its implementation, companies can transform themselves to compete in this multichannel mix. As Tony Hsieh, founder and CEO of Zappos, says: “If you get the culture right, most of the other stuff will just take care of itself.”

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Building a digital culture: How to meet the challenge of multichannel digitization