Digital Transformation = Cultural Transformation? The Influence of the Leader

In this article, I will address a topic that is not often discussed (but is the most important!) when we talk about digital transformation, a "data-driven" culture, and the use of artificial intelligence: How do we prepare the organization, from a people perspective, to navigate these new technologies and trends?

First, I’d like to briefly talk about the concept of influence within organizations. After all, what we do as leaders is influence people, right? Before diving deeper into this discussion, let me introduce a simple concept to guide us:

There are three main ways to influence people in organizations: Control by action, Control by result, and Control by people.

• Control by action refers to giving direct orders to perform an action or set of actions. For example, a factory operator may have a “script” of steps to follow. This represents the organization’s influence over them.

• Control by result is influence through performance measurement. A performance bonus is a straightforward example. The organization defines a measurable goal, and the employee is rewarded based on the results achieved.

• Control by people happens when you hire someone for a certain role and, based on their intrinsic characteristics and skills, they are already capable of achieving the objective. This is essentially “the right person for the job.”

In practice, we never rely on just one type of control; it’s always a mix of the three. For example, consider a Sales Manager: they need interpersonal skills (control by people), must attend certain meetings in person (control by action), and are compensated based on sales performance (control by result).

Now let’s apply this framework to our main topic:

Personally, I have never seen a technology (no matter how good!) thrive in a company without the willingness and ability to use it. On the other hand, I’ve seen average tools used incredibly well in organizations with strong human capacity, where everyone wanted to succeed. What’s the secret? There is no magic formula, but here are a few steps worth reflecting on:

• Step 1: Communicate the desired direction. Share with people the path the organization intends to follow. For example: “We are going to be a data-driven organization that bases decisions on data!”

• Step 2: Training, training, and more training. This is where control by action comes in. For people to embrace a data-driven culture, they must understand how data is structured. Introductory courses on database query languages and data structures are a good start. Training on the company’s analytical tools is also essential.

• Step 3: Apply control by result. Reward people who achieve the desired outcomes. Celebrate those who demonstrate concrete results from applying data in their daily work, and share their success stories. Expressing ideas through data should be encouraged.

• Step 4: Apply control by people. Who should we hire? Familiarity with data could be one of the criteria (even if not the main one) when hiring.

• Step 5: Control by result again. Promote people who successfully align with the new direction. Over time, this is how culture takes shape.

This doesn’t mean we should overvalue data skills and ignore everything else, but rather that it’s important to include this criterion. Without people moving in the same direction, nothing works. Moreover, someone who understands the potential of data (even if they’re a subject-matter expert rather than a data scientist) can often provide extremely valuable insights — sometimes even more than a hired data scientist.

If we focus only on the end result (adopting new technologies) and neglect to prepare the culture or use our influence to pave the way, the journey may end up being long and difficult.

In the future, perhaps all of us will be, in some way, data scientists.