Digital transformation is not just about technology, but a shift in mindset and corporate culture. Innovation culture plays a crucial role in fostering creativity, risk-taking, and collaboration among teams. This is the key factor that helps Vietnamese businesses achieve the goal of a digital economy accounting for 20% of GDP by 2025.
Key Points:
- 62% of businesses struggle with digital transformation due to cultural barriers.
- 41% of Vietnamese businesses have begun digital transformation, but only 40.6% understand it well.
- Businesses with a strong innovation culture achieve 23% higher profits compared to traditional enterprises.
- 89% of organizations prioritizing digitalization have created new business models.
Quick Comparison:
| Criteria | Innovation Culture | Rigid Culture |
|---|---|---|
| Speed of Transformation | Fast, agile | Slow, resistant |
| Success Rate | 90% | 17% |
| Employee Engagement | High, encourages creativity | Low, lacks motivation |
| Adaptability | Easy adoption of new technologies | Difficult, delayed |
Conclusion: To succeed in digital transformation, businesses need to build an innovation culture: leadership with vision, encouragement of experimentation, and promotion of collaboration across teams. This is the key to not only achieving digital economy targets but also sustaining long-term competitive advantage.
Building Corporate Culture in Digital Transformation
How Does Innovation Culture Affect Digital Transformation Success?
A study shows that 62% of survey participants identify culture as the biggest barrier to digital transformation, while 80% of companies sustain strong performance by focusing on innovation [4].
The Role of Leadership in Driving Innovation
Visionary and confident leadership plays a crucial role in helping Vietnamese businesses succeed in digital transformation [3]. These leaders must demonstrate commitment through concrete actions, make digital transformation a strategic priority, and inspire the entire organization.
“Digital transformation is not simply about getting a company to use a specific set of new technologies; it’s the company’s ability to respond to and successfully leverage new technologies and processes—now and in the future.” – Lisay Herbert [4]
However, only 40.6% of organizations in Vietnam have a clear understanding of digital transformation [5]. This requires leaders to enhance their knowledge and capabilities to guide the organization through complex challenges. Decisive leadership creates an environment ready to embrace change and risk.
Openness to Change and Risk Acceptance
Successful organizations in digital transformation often have a culture of knowledge sharing and willingness to adopt ICT [5]. However, financial constraints can hinder investment in digital platforms, especially when businesses are not ready to accept risk.
Statistics show that 89% of organizations have implemented digital-first business strategies, and 60% of companies undergoing digital transformation have created new business models [5]. Yet, concerns about automation can lead to employee resistance, requiring effective communication strategies and upskilling efforts [5]. PwC’s Vietnam Digital Readiness report forecasts that 90% of respondents believe technology will significantly impact their jobs in the next 6–10 years [5].
The Importance of Collaboration and Communication
Collaboration across departments and teams is core to integrating digital technologies successfully. Vietnam is currently focusing on developing sectors like AI, IoT, 5G/6G, blockchain, cybersecurity, and semiconductors to master strategic technologies [6]. This requires close coordination among experts from multiple fields.
Vietnamese businesses are shifting from an IT outsourcing role to technology ownership and innovative product development [6]. With over 54,500 digital technology enterprises projected by early 2025 [6], building a strong collaborative culture will enable them to unlock their full potential. Effective internal coordination has contributed to significant economic outcomes in the digital transformation journey.
Specific Outcomes from a Strong Innovation Culture
Organizations willing to experiment and view failures as part of the learning process often achieve 23% higher profits compared to traditional companies [5]. In 2024, Vietnam’s ICT sector generated $151.86 billion in revenue, growing 11.2%, while hardware and electronics exports reached $132.341 billion [7].
To reach the target of a digital economy contributing 20% of GDP by 2025 [6][1], Vietnamese businesses must proactively manage digital transformation processes and adjust business strategies to align with reality [5].
1. Businesses with a Strong Innovation Culture
Organizations that cultivate an innovation-friendly environment make significant strides in digital transformation. They not only leverage technology effectively but also create a workspace that encourages creativity and long-term development. Let’s explore the core factors shaping a strong innovation culture.
Leadership with Clear Vision
Leaders are central to driving innovation culture. They not only inspire but also provide clear direction for the organization. To them, digital transformation is more than applying technology; it’s about automating processes, enhancing customer experience, making data-driven decisions, and strengthening competitive capabilities [8].
These leaders often develop digital transformation roadmaps from strategy to execution. For example, Xenia Tech Solutions has helped many Vietnamese businesses outline their digital transformation plans through consulting services, improving performance and achieving sustainable growth [8].
“Our industry does not respect tradition. It only respects innovation. The first step to building the right company culture is to have a growth mindset.” – Satya Nadella, CEO, Microsoft [13]
Openness to Change
A willingness to change is indispensable. It is shown by positive support and expectations from employees [9]. In the context of digital transformation, this means employees are ready to shift mindsets and practices to adapt to the organization’s digital initiatives [9].
When people are open to change, team collaboration improves and conflicts decrease [9]. This not only makes operations more efficient but also enhances service quality and shortens response times [10].
Employee Engagement
Beyond leadership and openness, active employee participation is crucial. When employees feel part of the innovation process, they contribute fully to drive sustainable growth [16]. A workplace that encourages engagement boosts motivation, reduces turnover, and retains talent [15].
Statistics show highly engaged organizations outperform competitors by up to 202% [17]. Companies prioritizing digital transformation in their culture have recorded a 50% increase in employee engagement and productivity [17]. However, nearly 85% of global employees still feel disconnected at work, indicating a need for investment in training and skill development to meet digital demands [14].
Ability to Adapt to Digital Processes
Adapting to digital processes is key for businesses to respond swiftly to change and maintain competitive advantage. It’s not only about risk management but also an innovation strategy to navigate a constantly evolving environment [10].
A mindset ready to learn and change is vital for digital skills development, paving the way for applying technologies like automation, machine learning, sensors, and big data analytics [11]. McKinsey’s survey finds 89% of global companies currently face or will face skill shortages in the coming years [11].
To thrive, businesses must invest in people and continuously develop new skills. A strong innovation culture is the foundation for optimizing digital transformation and achieving lasting success [12].
2. Businesses with a Rigid Culture
Compared to dynamic organizations, those with a rigid culture face many barriers in implementing digital transformation. These challenges not only slow technology adoption but also erode competitive advantage.
Leadership Lacking Clear Vision
In conservative organizations, leaders often lack a clear digital transformation vision or fail to communicate it effectively to employees. Statistics show that 70% of digital transformation initiatives fail due to lack of leadership direction [20]. This creates an environment without guidance, where employees don’t understand the reasons or benefits of change.
Furthermore, an authoritarian leadership style increases the risk of failure. Leaders rarely provide a safe space for employees to experiment with new ideas or technologies without fear of criticism. Conversely, organizations led by digitally minded leaders are 1.6 times more likely to succeed in digital transformation strategies [20]. However, in rigid environments, developing such leadership is a significant challenge.
Resistance to Change
A hallmark of a rigid culture is strong resistance to any change. Surveys show that 62% of senior leaders identify cultural issues as the biggest barrier to digital transformation [4]. Many organizations mistakenly believe digital transformation is merely a technology purchase [19]. They fail to recognize that changing habits and business operations is even more important.
This resistance not only slows transformation but also makes it difficult for companies to create a flexible, adaptable work environment.
Low Employee Engagement
Employee engagement is critical in digital transformation projects. However, in rigid cultures, participation is often very low. McKinsey’s 2022 report indicates 70% of digital transformation initiatives fail due to lack of employee engagement and unsupportive culture [18].
Additionally, 60% of employees feel neglected due to lack of timely information from leadership [20]. This creates a vicious cycle: employees don’t understand the project, resist change, and ultimately the initiative fails. Teams with high engagement, by contrast, achieve 21% higher productivity than disengaged teams [20].
Poor Adaptation to Digital Processes
Another major challenge for rigid cultures is difficulty adapting to digital processes. Lack of commitment from leadership and organization means many companies are unprepared in terms of personnel or processes before applying technology. Expert Thu Thủy from MPI remarked:
“Technology is the final step. Prior to that, they need to take the important steps of standardizing the process and preparing human resources before applying a certain technology.” [19]
These limitations underscore that, to succeed in digital transformation, businesses need to shift mindsets and build a more flexible work culture.
Strengths and Weaknesses
Previously, we discussed the critical role of innovation culture in digital transformation. The table below summarizes the differences between businesses with an innovation culture and those following rigid routines.
| Criteria | Innovation Culture | Rigid Culture |
|---|---|---|
| Speed of Transformation | Deployment is twice as fast as organizations lacking an innovation culture [21] | Delays due to resistance and complex procedures |
| Success Rate | 90% success when culture is prioritized [25] | Only 17% succeed due to lack of cultural alignment [25] |
| R&D Investment | Twice the investment in research and development [21] | Limited investment due to risk aversion |
| Employee Participation | 65% of employees want the organization to accept risk for innovation [21] | Low participation due to lack of motivation and encouragement |
| Decision-Making Speed | Fast and flexible thanks to flat structures | Slow due to strict hierarchical structures |
| Implementation Cost | Cost-optimized through cross-department collaboration | High costs as 26% of organizations face financial difficulties [24] |
Advantages of an Innovation Culture
Innovation culture creates a safe environment where employees can freely experiment and learn. As Jeff Bezos once said:
“Experiments are by their very nature prone to failure. However, a few significant triumphs make up for dozens upon dozens of failed attempts.” [21]
This approach enables continuous improvement. Instead of dismissing ideas with “That won’t work,” they ask, “How can we make this work?” [22]. As a result, 84% of executives believe innovation is critical to business growth [21].
Challenges of a Rigid Culture
In contrast, rigid cultures face numerous barriers. Surveys show 32% of senior leaders cite complexity as the biggest challenge [24]. Moreover, 27% of organizations admit a lack of technical expertise and 28% struggle with overly rigid business processes [24].
“Digital transformations represent a significant shift to new ways of working, often organisations underestimate the effort and commitment involved and all too often under-resource the project downstream.” [23]
These challenges not only delay progress but also negatively impact overall project outcomes.
Balancing Structure and Flexibility
Not all structural elements are bad. Some organizations succeed by balancing structure and flexibility, ensuring smooth digital transformation. McKinsey research shows companies with clear change management strategies are six times more likely to succeed [25].
Catherine Wilks of Slalom also emphasizes:
“Involving employees in the change process early on, so they can provide input, feedback and feel involved with the change rather than it being done ‘to them’ is often overlooked.” [23]
Even in rigid systems, early employee involvement can significantly reduce resistance. 72% of business strategists rank innovation culture among the top three priorities [21], highlighting the importance of creating a supportive work environment. As Peter Drucker said: “Culture eats strategy for breakfast” [22]—culture can override strategy if neglected.
Conclusion
Innovation culture is the key to successful digital transformation. Data shows that organizations with a sustainable culture have project success rates over 40% higher, customer satisfaction increases by more than 50%, and talent retention improves by up to 45% [2].
With the goal of a digital economy contributing 20% of GDP by 2025 and 30% by 2030, and over 40,000 IT graduates each year, Vietnamese businesses have a significant opportunity to evolve from “execution” roles to becoming innovation and leadership centers in technology [1][2].
These figures underscore the importance of innovation culture. Linh Nguyen, Innovation Lead, shared a thought-provoking insight:
“The difference between good and great tech teams is not just technical skill—but a mindset that continuously asks: ‘How can this be better?'” – Linh Nguyen, Innovation Lead [2]
To realize this, businesses should focus on three core elements:
- Create a safe environment: Encourage employees to experiment and innovate without fear of failure.
- Build cross-functional teams: Combine diverse expertise to enhance creativity and problem-solving.
- Invest in practical learning: Develop a comprehensive ecosystem where employees can learn from real-world experiences.
These steps will help businesses not only gain competitive advantage but also ensure long-term sustainability.
If your business is seeking support in digital transformation, Xenia Tech Solutions is your trusted partner. With comprehensive strategic consulting and digital transformation solutions, Xenia Tech Solutions understands the unique needs of each industry in Vietnam and offers the most effective strategies.
The time to act is now. Only by combining an innovation mindset with modern technology can businesses break through and build lasting competitive advantages.
FAQs
What role does innovation culture play in helping businesses adapt to new technologies?
Innovation culture plays a pivotal role in helping businesses adapt to new technologies. It creates an environment that fosters creative thinking, encourages willingness to experiment, and embraces calculated risk-taking. As a result, employees are continuously motivated to innovate, and the organization becomes agile and ready to respond to rapid market changes.
Moreover, a strong innovation culture enables businesses to adopt modern technologies more easily, streamline workflows, and improve operational efficiency. In the context of digital transformation becoming essential for maintaining competitive advantage in Vietnam, building such a culture is indispensable.
How can business leaders build and promote an innovation culture within their organization?
To nurture and grow an innovation culture, leaders need to create a work environment where employees feel comfortable sharing ideas and experimenting with new approaches. This requires fostering cross-department collaboration and ensuring clear, transparent communication.
In Vietnam, leaders should adopt an inspirational management style, provide specific direction, and support employees in taking calculated risks. Maintaining a continuous spirit of innovation not only helps the organization adapt quickly to market volatility but also builds a cohesive work culture aligned with the local business and cultural context.
What should businesses do to overcome cultural barriers in digital transformation?
To succeed in digital transformation, Vietnamese businesses must focus on key factors to overcome cultural barriers:
- Leadership commitment: Leaders must demonstrate strong commitment and actively guide the organization’s mindset change. When leaders show determination, they inspire the entire team to embrace innovation.
- Digital skills training: Providing practical training programs is one of the most effective ways to alleviate technology-related concerns. When employees are well-equipped with knowledge and skills, they are more confident in applying technology in daily tasks.
- Promote collaboration: Breaking down departmental silos is essential to building a cohesive work environment. Close coordination not only boosts efficiency but also fosters the development of innovative ideas.
- Build an innovation culture: An organization willing to accept risk, learn from failures, and continuously improve will have a significant advantage in the digital era. This mindset enables businesses to stay agile and adapt quickly to change.
These factors not only help businesses overcome challenges but also lay the foundation for long-term digital transformation success. Creating an open and innovation-ready work environment is the key to sustained growth.
