APAC executives have ranked cultural change as important as technology modernization: diversity and disruptive thinking are also critical.

Amid the ongoing pandemic, governments across the region are rolling out incentives to support businesses in identifying and implementing suitable digital solutions. From South Korea’s ‘Digital New Deal’ package to the newly launched CTO-as-a-Service scheme in Singapore, many of such programs have been centered on digital innovations like AI and data analytics.

Yet, what continues to get overlooked is: onboarding of any new digital tool or solution is just one step of an iterative, never-ending journey of digital transformation. With the accelerated pace of innovation, we know that today’s new digital tools will be obsolete in a few years’ time. Some reports indicate that, when it comes to digital transformation APAC executives have ranked cultural change as important as technology modernization.

Clearly, to successfully ride the waves of future disruption, just having the right digital hardware and tools will not be enough. Heartware — the mindset, skillsets, and culture in which organizations embrace change — will be to key to sustaining digital transformation in a rapidly changing world.

Building digital-ready heartware

Organizations need to know if they are simply focused on digitization, or really focused on digital transformation. Digital transformation is primarily a people business, with technology only a distant second. When people transformation trails behind digitalization, organizations will find themselves struggling to keep up, stumbling over common hurdles like fear, resistance to change and insufficient skills and capabilities.

Unlocking the power of digital transformation requires digital leadership to ensure the right ‘heartware’ is in place. In our recent study conducted in partnership with the American Chamber of Commerce exploring the state of digital leadership readiness in Singapore, we found two key cultural shifts that are necessary for any successful digital transformation, anywhere in the world: the first is focused on the speed of learning, while the second on the ability to embrace diversity.

Effective digital leaders need to be in ample supply across all functions and business units in the organization and they are the ones to nurture agile teams and instil an open mindset to change. These leaders make digital transformation possible and ultimately close the digital divide that would otherwise leave the organization behind.

In the face of crises, such organizations will be in a better position to stay flexible and resilient, adapting quickly as new challenges unfold and technology advances.

From achieving to celebrating learning

To stay ahead, businesses need to build an innovative ecosystem that starts with adopting agile ways of working, where teams are encouraged to fail fast and try again. This is a truth that the COVID-19 pandemic made readily apparent: a McKinsey study suggested that organizations that experimented with new technologies during the crisis were twice as likely to report outsize revenue growth.

However, although we are hearing leaders say that “it’s ok to fail”, we are not seeing enough examples of leaders walking the talk when it comes to experimentation and really creating an environment where it is ok for employees to make mistakes and even recognizing them for trying and failing.

In our study, we found that only 34% of leaders used agile approaches to a ‘great to very great’ extent, while 9% did not use any agile approaches at all. Even when an agile approach was in place, the fear of making mistakes still got in the way much of the time. As a result, the psychological safety necessary for employees to feel comfortable with sharing ideas and taking risks was often at a deficit.

Psychological safety requires the right ‘heartware’ to be in place, including practice and a culture that allows and even celebrates failure. In addition to celebrating achievements, reward systems must also recognize that learning at speed comes from constructive failures. 

While there is still a lot of work and ‘heartware’ needed to continue making this shift, it is positive to see that leaders are already starting to do more to encourage disruptive thinking, by pushing employees to challenge existing processes.

Shift from similarity to diversity

Multiple studies have shown that diverse teams can drive better business performance. Diversity in ethnicity, gender, nationality and even industry bring about new ways of working and divergent thinking, thereby unleashing creativity that is the lifeblood of innovation.

When it comes to diversity, we are facing significant gaps between intentions and outcomes. Diversity initiatives often fall short because there is not enough drive and real intention to tackle the systemic hurdles to hiring and retaining a more diverse talent pool.

Successful diversity initiatives require commitment and involvement across the entire organization— from the board of directors to the C-suite and frontline leaders. Once again, this is where the organization’s ‘heartware’ comes in and can make the difference in how leaders feel, think and act to really include divergent perspectives. One examples of achieving diversity is setting a clear goal of having more than 40% of new hires from diversified industries, from retail to FMCG, government, and non-profits.

Nurturing digital leaders within the organization and nurturing diversity go hand in hand. As technology advances and global competition for tech talent intensifies, we face a widening digital skills gap. To ensure inclusivity and maintain a diverse blend of talent, organizations must continue to invest in an ecosystem of learning that includes ongoing mentorship, coaching and upskilling.

Catalyzing digitalization from the top

As we move into the next wave of digitalization, we need outstanding digital leaders to drive cultural change, to create the right ‘heartware’ and to secure buy-in from stakeholders across the entire organization.

In a future that will only grow more complex and unpredictable, one thing is certain: effective leaders will be critical to charting a successful digital transformation journey that can bring a better and more sustainable future.