Insights

07 June 2023

Culture: The missing piece in digital transformations that fail?

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Digital transformation (DX) was the buzzword 10 years ago. It was roughly the same time we conceived the idea of building Singapore’s most disruptive telco – that’s when Circles.Life took shape. At that time, Circles.Life was considered a misfit. While the telco industry tried to figure out the right digital transformation strategy, Circles.Life had already built a never-before-seen customer experience so innovative that many found it incredible.

DX success highly dependent on culture

Fast forward to 2023, and as the telco industry evolved, it borrowed concepts and strategies from adjacent industries like finance, media, hospitality, and transportation. While the others grew by leaps and bounds, telcos became the laggards. Average Revenue Per Unit (ARPU) continued to decline, Net Promoter Score (NPS) challenges abounded, and capital and operating expenditures climbed to all-time highs. As business leaders braced for worsening year-on-year bottom lines, everyone wondered how to escape this predicament.

Innovation then became the go-to solution for troubled carriers. Many leveraged existing partners or vendors to fulfil this fantasy of getting a bigger chunk of the pie. Some tried building development teams within their organisations. In a lot of cases, both failed. Why? The answer lies in the same question as to why digital transformation initiatives failed for many of these telcos: culture.

How culture shapes a company’s future

There is a popular saying: “Culture eats strategy for breakfast.” The problem with culture is that it can never be changed overnight. It takes years to build but only a few bad hires to destroy. Culture is a living, breathing organism that takes shape as the company grows. The spirit of innovation must be carefully nurtured for the culture to breathe life into the various disruptive ideas the company can monetise in the future.

As with all future-forward projects, the company will not be able to see the outcome or benefits in the short term. Hence, it is important to keep the innovation team lean, agile, cost-efficient, ambitious and ambiguous. Significant investment is necessary to sustain innovation in the company; as such, it would be preferable to undertake fewer large projects in favour of small ones.

However, one common mistake many companies make is banking on big bets without failing fast, which we usually see in projects involving development houses or system integrators. Business models are typically constrained around delivery and not failing fast; hence, projects tend to bloat and scope creep hounds timelines.

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Game-changing innovation takes guts

Successful innovation requires execution teams from commercial, product, and engineering to be able to fail, learn, and iterate as quickly as possible. There is little space for processes and formalities. This spells trouble for control freaks like telco governance.

A typical innovation flow consists of going through a couple of research and ideation stages followed by a validation stage which involves low code or no code implementation of a Minimum Viable Product (MVP) to prove interest among a target cohort. If the validation stage checks out, the idea will go through a series of iterations to try to reach Product Market Fit (PMF). This is when prototypes are built to test different hypotheses. Once PMF is hit, the idea then go for scaling where it gets released as a full-fledged product.

When Circles initially launched Circles X, it resembled more of an audacious innovation experiment. The team, driven by a clear problem to solve, embarked on a journey even though there wasn’t a well-defined product roadmap. Along the way, numerous products and solutions were born, only to be ruthlessly killed or meticulously evolved as we relentlessly pursued growth. This relentless pursuit of innovation not only shaped Circles into what it is today but also imbued it with a remarkable ability to adapt and thrive.

One of the challenges in adding an innovation function to a company serving live customers is how to do this with the least risk exposure. Carving out a safe environment for experimentation is required along with a creative team of motivated people to anchor the charter.

Strong attachments to projects are not allowed; out of ten projects, nine will be killed, and if the team is lucky, one will reach the MVP stage. Nevertheless, it is always fulfilling to see that one MVP change a whole industry.

This article was originally published by Kelvin Chua on LinkedIn. Like what you read? Follow us for more news and insights from Circles.

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