May 22, 2014

Transforming companies need transformational leaders

Taneli Tikka

Head of Innovation Incubation, Data Driven Businesses, Tieto

In today’s restless world, making business transformation work is more important than ever before. A company culture that supports transformation is vital for success.

 In the “Future of Business Transformation” study, conducted by Tieto and Kairos Future, Nordic leaders agreed that a transformative culture is a necessary foundation for an innovative, adaptive organization. One of the key findings of the study was that 54% of Nordic CEOs said that culture is one of the two top barriers on the way to transformation, while only 20% said it was technology.

What sort of company culture is needed for one to succeed?

The world is not predictable, and companies need to create a culture where the corporate climate accepts continuous changes. The culture needs to have employees who are also willing to be drivers for change. It’s been said that culture eats strategy for breakfast. Culture, in turn, is the part of a wider system that the individuals of any company have created for themselves. This system encompasses work methods, rewards, processes, office attitudes, and the company’s style of doing things. In order to exceed expectations for success, everything needs to be lined up; a great system that produces great cultures allows for great strategies to be executed.

So, what if all the focus on strategy by top management was refocused on caring about the company’s culture and system instead? Some of the main elements of today’s successful companies are openness and a flexible culture. For me, one of the most interesting challenges is to create a culture of continuous learning. Here’s a list of factors that are key to building a culture of winning:

1. Open culture

Social media is forcing companies to be more transparent. Trustworthiness and aligned values are expected from customers, partners, and employees. Being open actively builds trust. When building a more open culture, technology can be used as a tool. Openness can lead to a better team spirit which usually brings better results.

Digitalization can help in making business processes more transparent and even aid in innovation. Companies can use social networks to communicate and collaborate with employees as well as customers and business partners. Mobile communication helps us to achieve this, since people can collaborate wherever they are.

There’s a clear trend that managers are becoming more accepting towards mistakes made by employees. A culture of avoiding mistakes leads to an eventual catastrophe. Companies that accept smaller mistakes from employees actually turn out more productive in the long run since the team learns continuously. Another interesting trend is the encouragement towards coincidences. Instead of eliminating them, there’s a clear trend towards managers hoping for employees to run into small coincidences. The reason is that there’s always a chance of finding new opportunities.

2. Culture of learning

I believe that the Lean Enterprise and the Lean Startup methodologies have proven to be very successful in startups, and this is the way to do it. Learning often happens outside of people’s comfort zones, especially when they’re faced with the task of learning from one’s own failures and shortcomings. Learning is also tremendously difficult because it requires a good level of mutual respect and trust in order to have teams. Some teams who lack these basic traits never quite arrive to a culture of learning in action.

The Lean Startup process is, most of all, a learning process. After all, you could define startups as temporary organisations whose main goal is to learn. Once they learn what works for them, they become rapidly scaling companies focused on delivering a working solution. When employees are located all over the world in different timezones and work together using communication tech & apps, it is especially important to reinforce aspects of human interaction like mutual respect, trust, and inspiration. A team can only shine in collegial learning when solid groundwork has been done. This requires commitment from each individual to step outside of their comfort zones and a willingness to make their own learning journey open. Saying “I’ve learned something new!” is an admission of not knowing it beforehand.

3. Culture of transformational leadership

In addition to the elements mentioned above, a crucial element of making change happen is support from the management team. Managers are responsible for fairly rewarding their employees, allocating resources correctly, and helping employees to focus on the right things.

Transformational leadership is a framework of human interaction that imagines teams being on a transformational journey together. The team members who start the journey together will look slightly different from the members who graduate from this long journey. Transformational leadership seeks to minimise negative passivity and negative control (ex. micro-management) of team member. This is done in order to include everyone on this transformational journey and learning experience together. This requires a decree of empathy and identifying situations in which a team member might need more encouragement, inspiration, and concrete examples of what works. Any manager living in the 21st century should research transformational leadership as a concept, and check out gurus like Jim Collins in this field.

The capability to change is rapidly becoming a strategic imperative for all corporations. You cannot live without an ability to change and learn in very rapid cycles. Is your organisation ready to face its competition?

I recommend you to check out the Future of Business Transformation study or a presentation of it on SlideShare.

Taneli is Head of Industrial Internet at Tieto Plc. You can read more about him here and follow him on Twitter & LinkedIn.

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