Digital Transformation: Is Gonna Be Culture Shock?

Nidya Dudija

Faculty of Economics and Business Telkom University, Indonesia

Keywords: Digital Transformation, Digital Age, Digital Talent, Culture Shock Theories, Performance.

Abstract: This paper is conducted to describe the digital transformation using the theory of culture shock. It purposes

to generate a mapping of culture shock theories by applying a descriptive qualitative approach and literature

review of some previous studies. Successful digital transformation of organizations must be supported by

digital talent transformation, digital product transformation, and digital infrastructure. In fact, these changes

can lead to culture shock, that affects the performance of individuals and organizations. This paper will

analyze digital change using the stage of culture shock which consists of four stages including the

honeymoon phase, culture shock phase, adjustment phase, and mastery phase. The results of this study are

descriptions of each phase and strategy for handling culture shock. So the development concept of the

culture shock concepts can be use to explain the dynamic change to achieve organizational sustainability.

1 INTRODUCTION

Organizations over the past few decades have

experienced significant changes, including changes

in the global environment (Ghosal, 1987), changes

in labor (Lerman & Schmidt, 1999), technological

change (Self, 2008), highly competitive

environments or an increasingly stable economic

environment (Hoskisson, Eden, Lau & Wright,

2000), Organizations have been forced to adapt and

anticipate change by creating change preparedness

through organizational redesign, changing

organizational culture (Gilmore, Shea & USeem,

1997) or use several other ways. Organizations that

fail to respond to change appropriately have a big

risk by having competitors who are better able to

adapt to change, to the worst that the organization is

unable to survive and stop operating (Collins, 2001;

Vollman 1996). Most of the research included in

reviewing organizational change (Armenakis &

Bedeian, 1999; Porras & Silvers, 1991; Weick &

Quinn, 1999) focuses on how organizations prepare,

implement, and react to organizational change.

MIT Sloan Management Review and Deloitte’s

2015 global study of digital business found that

maturing digital businesses are focused on

integrating digital technologies, such as social,

mobile, analytics and cloud, in the service of

transforming how their businesses work. Less -

mature digital businesses are focused on solving

discrete business problems with individual digital

technologies. The ability to digitally reimagine the

business is determined in lage part by a clear digital

strategy supported by leaders who foster a culture

able to change and invent the new. While these

insights are consistent with prior technology

evolutions, what is unique to digital transformation

is that risk taking is becoming a cultural norm as

more digitally advanced companies seek new levels

of competitive advantage (Kane, Palmer, Phillips,

KIron & Buckley; 2015).

A Culture conducive to digital transformation is

a hallmark of maturing companies. These

organizations have a storng propensity to encourage

risk taking, foster innovation and develop

collaborative work environments. Digital

transformation is a technology-induced change on

many levels in the organization that includes both

the exploitation of digital technologies to improve

existing processes, and the exploration of digital

innovation, which can potentially transform the

business model. Digital innovation, which is defined

as the re-combination of digital technologies and

physical components to create novel digital products

(Yoo, Hendfridsson & Lyytinen 2010; Berghaus &

Back 2016), can be perceived as potentially

threatening to the organization (Abraham & Junglas

2011; Berghaus & Back 2016). Digital innovation

involves transformational changes in strategy,

processes, and products and thus requires the

Dudija, N.

Digital Transformation: Is Gonna Be Culture Shock?.

DOI: 10.5220/0009447602690275

In Proceedings of the 1st International Conference on Psychology (ICPsy 2019), pages 269-275

ISBN: 978-989-758-448-0

269

company to rethink its organizing logic (Yoo et al.

2010; Berghaus & Back 2016).

Whether culture drives technology adoption or

whether technology changes the culture is still an

open question. A former telecom industry CMO sits

on the other side of the debate. He observes that the

digital culture of his organization traces its roots to

early social media experiments. “Social helped get

the momentum going,” he says. “As more people

jumped on board, social played a major part in

changing the culture. I’d like to say it was thought

through in advance and part of a formal culture

change program. But it wasn’t. The change started

with a technology experiment.” The strategy

executive from the manufacturing sector quoted

earlier is somewhere in the middle. To her, culture

and technology are inextricably linked. As an

example, she cites replacing desktop computers with

laptops, which allows people to move around the

office. But if the culture and physical space of a

company don’t support employees working together,

people will likely stay put. “Organizations often

think about technology in a very narrow sense,” she

says. “They don’t ask questions about what

behaviors a new technology might foster and what

behaviors it might actually inhibit. The answers

must line up with the overall culture and direction

that leaders want to take the company” (Kane,

Palmer, Phillips, KIron & Buckley; 2015).

Bovey and Hede (2001) state that individuals

will always show their reactions when faced with

major organizational changes. According to Scott

and Jaffe (1988), this process consists of four stages:

initial denial, resistance, gradual exploration, and

commitment. Individual subconscious processes

arise when responding to threats of change (Halton,

1994; O'Connor, 1993). Unconscious individuals use

defense mechanisms and have a habit of protecting

themselves from change and from feelings of

anxiety from change (Oldham and Kleiner, 1990; de

Board, 1978). This defense can sometimes hinder

and prevent a person from adapting to change

(Halton, 1994). When changes occur, individuals

tend to seek comfort levels and try to maintain these

conditions. Each individual is different in terms of

ability and willingness to adapt to organizational

change. This is because individuals experience a

change in different ways. Some people tend to move

quickly through the process of change, while others

are trapped or experience some transition transitions

(Bovey and Hede, 2001).

This includes the occurrence of digital

transformation in organizations. Previous employees

worked with manual labor, then because there were

innovations in the field of technology, the

organization changed the soft side and hard-core.

This change must be followed by all employees so

that companies can compete with other competitors.

Someone who moves from one culture to another

and is unable to adjust properly will experience

culture shock (Yunanda, 2013). The term culture

shock or in Indonesian is called a cultural shock is a

psychological term to describe the circumstances

and feelings of a person facing different social and

cultural conditions (Sulaeman, 1995). Culture Shock

can be experienced by anyone who has lived in a

place for a long time, then for some reason,

individuals move to other places that have different

cultures. Because a person's transfer to a new

environment can lead to culture shock, the

individual will try to adjust to the culture in the new

environment. At first, there was a shock to the new

culture, then there will be an action to anticipate the

culture shock or culture shock experienced so that it

can adjust to the new environment (Chamidan,

2009).

2 LITERATURE REVIEW

2.1 Digital Business Transformation

Digital transformation is a rather fragmented field as

a result of the existence of multiple and diverse areas

of investigation, such as the digital transformation of

societies, industries, economies and individuals

(Abdelaal & Zaki, 2018). Recent work related to

digital business transformation has predominantly

focused on investigating its challenges, drivers and

the failures of previous attempts. Although the

pivotal role of a dedicated strategy has been

recognized in the literature stream, it is still in its

infancy, requiring more in-depth work to fully

comprehend how the transformation can be achieved

(Kulatilaka & Venkatraman 2001; Piccini et al.

2015; Hess et al. 2016). Exploring digital business

transformation from a strategic point of view should

therefore enhance the academic literature with

valuable insights and also aid leaders in grasping the

recent developments and underlying strategic

building-blocks of the transformation that they are

attempting.

Abdelaal and Zaki (2018) examine the

phenomenon about digital business transformation

form various perspectives. Figure 1. Represented as

distint perspectives.

ICPsy 2019 - International Conference on Psychology

270

Figure 1: Digital Transformation Perspective (Abdelaal &

Zaki, 2018).

From a digital era perspective, DT stresses the

fundamental change in our world due to the

pervasive nature and proliferation of digital

technologies (Anderson & Lanzolla 2010).

Arguably, we have reached the fourth industrial

revolution, which builds on the preceding three but

uses new digital technologies with “full force”,

whereby both the development and diffusion of

innovations are much faster than before (Schwab,

2017). A new global world economy, characterized

by dynamism, customization and intense

competition, is developing and the cornerstones for

succeeding in it involve embedding knowledge,

technology and innovation into products and

services (Atkinson, 2005). Additionally, the novel

concept of a circular or sharing economy is shifting

the linear take–make–dispose model of resources to

a model where flows of materials, energy, labor and

new information interact and promote a restorative,

regenerative and more productive economic system

(Schwab 2017). The industry perspective highlights

how the disruptive nature of digital technologies has

revolutionized the way that industries operate and

how the traditional boundaries between them have

dissolved. In recent years, manufacturing has gained

popularity with the introduced concepts of “Industry

4.0”, “smart factories” and “advanced

manufacturing”, which seek to enable industry to

navigate its way through digitalization through the

use of cyber-physical systems in the production

network and service-orientation in traditional

industries (Lasi et al. 2014; Blau & Gobble, 2014).

New technologies have also accentuated the

changing network dynamics from the center of

organizations to accommodate digitally engaged

customers at the edge, where consumers and

communities co-create value in a digital ecosystem

(Gray et al. 2013). Value network competition is

another research area for academics, who seek to

explore how IT affects overlapping, as well as non-

overlapping, networks (Katsamakas, 2014). The

need for transformation is also a clear business

reality, which occurs in all industries and impacts

companies of all sizes and shapes (Basole, 2016). It

is no surprise that “90% of business leaders in the

U.S. and U.K. are expecting IT and digital

technologies to make an increasing strategic

contribution to their overall business in the coming

decade” (Hess et al. 2016).

Digital transformation is also exhibited in the

“extended self”, where technological changes

dramatically affect the way in which individuals

present themselves and communicate. Five crucial

changes resulting from the digital age have been

conceptualized in the literature (Belk, 2013): de-

materialization of possessions in the form of photos

and videos; re-embodiment of our physical bodies

into pictures and videos; sharing more with the help

of digital devices; co-constructing the sense of self

through digital enablers such as social media and

blogs; and a distributed memory, where human

memories are outsourced to engines and hard drives.

This individual level of digital transformation allows

an exponential increase in digital data volume,

revealing a huge amount of information floods that

often bypass intentionally constructed barriers. Thus,

researchers have recommended ways of managing

the super-transparency of people in our world today

(Austin & Upton, 2016).

Figure 2: The Dimension of The Transformation

(Bowersox, Closs, & Drayer: 2005).

Figure 2. illustrates an integrative management

framework for the digital business transformation.

To fully embrace this framework, a company needs

Digital Transformation: Is Gonna Be Culture Shock?

271

to put aside (at least temporarily) most of its

traditional ideas about organizational structure. The

picture above shows that in digital business

transformation, the human element is one of the

most important resources for the success of a

comprehensive and mutually integrated change.

2.2 The Evolution of Culture Shock

Theories

Bronfenbrenner (1994), states that human

development takes place in the context of complex

networks that influence each other. This context

includes the deepest microsystems (family at home,

teachers, and peers) to the mesosystem (the

relationship between two Microsystems) to the

outermost macro systems (such as culture, society).

The inability of individuals to adjust to society and

culture can cause anxiety, discomfort, and tension.

This feeling of anxiety, discomfort, and tension is

called culture shock (Oberg, 2006)

The culture shock was first introduced by an

anthropologist named Kalervo Oberg in the late

1960s. Oberg himself defines it as the "disease"

suffered by individuals living in a new cultural

environment. Culture shock is anxiety, frustration

and helpless feeling felt by individuals due to the

loss of known cultural symbols and signs (Oberg,

2006). Culture shock refers to the amount of

adjustment that individuals experience at cognitive,

behavioral, emotional, social and physiological

levels when they are placed in different cultures.

Cross-cultural relations are divided into two broad

categories, namely those that occur between two

residents or people with diverse cultures, and that

occurs when someone from a community goes to

another country with a specific purpose, for

example: to work, play, study, exploit or give help

(Ward, Bochner & Furnham: 2001).

Guanipa (1998) defines culture shock as physical

and emotional discomfort when someone comes to

another area or a place different from the place of

origin. Habits used in the previous place are not

accepted or considered as something inappropriate

in the new place. Agree with the previous opinion

that different cultures or habits can cause

inconvenience for individuals and individuals cannot

take or benefit from the environment (Smith, 2008)

Culture shock shows that the inability to know

what and how various things are expected to be

carried out and accepted in society. In other words,

there is an absence of knowledge about what is

appropriate and what is not. This normally affects

people in the initial week in a new area (Pyvis &

Chapman, 2005). According to Peterson (1995)

culture shock is a mental disorder that is associated

with symptoms such as anxiety, depression,

difficulty sleeping, fatigue, easily offended, feeling

alone, easy to forget, remembering the past and

feeling unworthy of him. These symptoms can affect

the output of a person's behavior in daily life when

anxiety at a high level (depression) this is very much

related to social ability and can reduce work

performance. The research conducted by Aluja and

Blanch (2004) inability to adapt is a burden for a

person and the most powerful effect in influencing

achievement is the inability to adapt themselves to

the social environment.

3 RESEARCH METHOD

This study collected several literature studies on the

results of research and reviews of the theory of

culture shock that occurred in the digital era. The

results of the literature review are explained using

systematic qualitative descriptive methods beginning

with changes in the development of world

technology in the organizational context, then the

evolution of the theory of culture shock to the

phenomenon of culture shock conditions

experienced by employees who work in technology-

based organizations.

4 DICUSSION

Many organizations will have to change their

cultural mindsets to increase collaboration and

encourage risk taking. Business leaders should also

address whether different digital technologies or

approaches can help bring about that change. They

must also understand what aspects of the current

culture could spur greater digital transformation

progress. Digital Business transformation can cause

culture shock to employee, because employees are

faced with new and unfamiliar conditions about

technology.

The application of culture shock to digital

business transformation will be explained using a

theory developed by Oberg (1960) explaining that

the model of adaptation when someone is in an

environment that is different from the previous

environment, where individuals will go through each

stage to the final adaptation stage. Are as follows:

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1. The First Stage, is the Honeymoon stage where

everything new is seen as something positive,

interesting and fun. New habits are considered

to provide unlimited opportunities, and some

welcome them with joyful euphoria. There is

openness and great curiosity to accept new

things. At this stage, everything that is badly

suppressed and everyone focuses on things

both about work, colleagues, regulations and,

others. At the beginning of the new technology

was introduced, some people will be

enthusiastic about the sophistication and

convenience offered by technology. For

example, the persistence method that was

previously manual then now uses fingerprint or

tapping id cards. Of course, this facilitates the

work of the HR section in recapitalizing

employee attendance lists. Likewise, with

flexibility-oriented organizations, employees

do not have to be present in the office at work.

Simply report the work results via email or

video conference with your boss or work team.

These conveniences make some employees

accept new technology easily with a pleasant

adaptation process.

2. The second stage is in the phase of culture

shock, employees begin to realize something is

different. This experience begins with the

awareness of disorientation and feeling of not

knowing what is happening to the organization.

This includes very negative symptoms such as

stress, anxiety, depression. This phase is

characterized by general anxiety which can

lead to discomfort with the new situation and

ultimately does not like everything new. The

main reason at this stage is uncertainty

regarding self, environment, and future. The

signs that are available are not enough to

explain and provide certainty about the changes

that are taking place. The ideal approach at this

stage is to use symptoms that are perceived as

indicators that indicate to change the approach

to engage in some form of self-development,

handling emotions and understanding yourself /

others. Meanwhile, the worst thing at this stage

is ignoring symptoms or adapting to a rigid

attitude and believing that our methods/habits

are the best and forcing them to others.

3. The third stage is recovery, starting with

accepting and realizing that individuals have

problems and must work in them. In the

recovery phase and the final adjustment stage,

the practice involves thoughts and feelings

from the previous phase, the honeymoon phase,

and the culture shock phase. This compromise

is exceeding expectations and reality.

4. The fourth stage is in the form of adjustments,

individuals can return to work effectively,

know their respective skills, can use new ways

of doing things and most importantly can be

flexible.

Figure 3: Adaptaton Phase (Oberg, 1960).

Figure 3 shows the adaptation phase and

involves mood swings. This phase can be used at

different stages of life such as getting a new job,

marriage or even buying a house (Marx, 1999).

Where the first stage of honeymoon always involves

excitement, euphoria, and optimism. Furthermore,

the culture shock stage with its effects in the form of

confusion, anxiety, and frustration. Furthermore, the

recovery stage of symptoms caused in the previous

phase (recovery of depression and anxiety from

culture shock). The last step is an adjustment.

According to Marx (1999) in his study mention

culture shock depends on cultural alienation (how

much difference with one's own culture), social

context (owned social support) and personality that

is able to cross borders. This phase in culture shock

does not always appear sequentially. It is more

realistic to use a culture shock model that is not fully

linear but integrates a dynamic and repetitive cycle

from the positive and negative phases to be able to

break through culture shock (breaking through

culture shock), as seen in Figure 4.

Figure 4: Breaking Through Culture Shock (Marx, 1999).

Digital Transformation: Is Gonna Be Culture Shock?

273

Starting from disagreement with the opinion of

Oberg (1960) who stated that culture shock is

something negative and tends to be dangerous for

individuals. Ward, Bochner, and Furnham (2005)

state that culture shock is an individual response to

foreign cultures in the environment that actively

demands change. Next, they introduced the culture

shock model which explicitly divided the process

into three components: Affective, Behavioristic,

Cognitive making a different culture shock model.

The culture shock model is linked to each element to

create a theoretical framework that provides the

basis for empirical research in exploring issues

related to culture shock. Cultural distance principles

are used to explain the extent to which an

individual's experience in overcoming culture shock.

The relationship between each component of culture

shock can be seen in Figure 5 below:

Figure 5: Model ABC “Culture Shock” (Ward, Bochner &

Furnham, 2005).

Based on the description above, it can be

concluded that the aspect of culture shock used in

this study combines the theory suggested by Oberg

(1960) and Ward, Bochner & Furnham (2005) that

Culture shock is not only something that produces a

negative impact but culture shock can also positive

impact on performance. This study wanted to know

the culture shock process that occurs in individuals

from tension, feelings of loss, rejection of people in

the new environment, confusion over roles,

expectations of those roles, espoused values,

feelings, and self - identity, disliking differences,

feeling helpless. These aspects can cause individuals

to feel depressed and uncomfortable, in this

uncomfortable situation, individuals will feel unable

to carry out their duties or individuals will be

increasingly compelled to try and adapt in the new

environment as employees in organizations that have

undergone a change.

5 CONCLUSION

Culture shock as a result of the inability to adjust to

the new environment and culture will affect the

psychological condition of employees so that it can

become a barrier to produce work performance.

Many experts try to make different models in the

process of adaptation to foreign cultures. But there is

no standard model. Theoretically, the action to

reduce culture shock is very dependent on clinical

construction and personality traits, this can also

explain the culture shock difference between each

individual. Factors to reduce the negative impact of

culture shock including personal resources such as

self - efficacy, emotional resilience and interpersonal

assets such as social support. Can be demonstrated

through various interventions, for example, personal

characteristics can be considered in the readiness of

employees to accept technology in an effort to

increase the likelihood of successful adaptation. In

addition, Interpersonal assets can be increased by

mentoring, participation in organizations, and

systematic social support. Counseling especially

interventions will help in developing effective

coping skills, useful for improvement. Intervention

techniques on behavioral components are needed

techniques that function effectively in a cultural

environment to obtain the basis of relevant social

skills through training in cultural behavior,

mentoring and learning about the process of

technological change in the digital era. People who

have difficulty adapting are very likely to develop a

sense of anxiety, uncertainty and ultimately have

low self-esteem. Conversely, anxious, depressed

people tend to make efforts to develop appropriate

cultural skills. It was concluded that interpersonal

beliefs and perceptions when making cultural

contacts will trigger change or resistance to changes

in the individual. Although culture shock is quite

easily defined as an affective and behavioral and

adaptive and maladaptive element, the specification

of the cognitive culture shock indicator is a more

complex problem. Anxiety, confusion, inferiority

and feelings of helplessness are undesirable

experiences. Technology change in the business

world is a change that cannot be delayed if an

organization wants to win the market. But the

success of organizational change relies heavily on

individual changes in it because members of the

organization are the real object of change.

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