Leading Digital Transformation – Not Business As Usual
Right kind of leadership is the scarcest resource that is essential for digital transformation success. Digital transformation is a profound and unprecedented business transformation effort that has become an imperative across industries. Successful companies have crystallized two attributes that are critical to success for digital transformation – innovation and speed. Digital transformation enables digital engagement not only with customers, but with every internal operational area of the business and with external partners. Because of the magnitude of change, the degree of disruption, and the power of inertia from digital transformation, leadership of the CEO is significant for digital success. Think, bold digital strategies with customer centricity, data advantage, value focus, enabled processes and right technologies, and have to be executed with innovation and speed. This requires a different kind of leadership than traditional business transformation leadership. Many are discovering that becoming a digital leader isn’t simply a matter of being technology savvy. It’s about creating an agile organization that can detect what type of change is essential and respond quickly with the most competitive solution.
Let us get one thing clear – strategy, and not technology, drives digital transformation, and the success is squarely rooted in digital maturity attained. Innovation will emerge not only from technology, but also from customer-experience, offerings, operating model, processes, and business-model. The digital opportunity matrix covers everything from re-imagined offerings, re-thought value chains, exploited operating model and innovative business models. Leading through this entire gamut of digital engagement opportunities require new approaches, capabilities, structures, accountabilities, governance, & cultures. The digital agenda will have to be set from the top, even if they are in an early stage on their transformation journey. Digital leadership will require fluency not only in the technologies, but the ability to craft optimum narratives defining value creation with digital engagement, developing the optimum strategy, and executing on the strategy while maintaining focus on value. Leaders will need a holistic ecosystem view of the digital threats and opportunities facing key parts of the business, and a way to link them to an overall vision for how digital is reshaping the competitive landscape.
Early stage digital transformation leadership
Typically, early stages if digital transformation is more about digital opportunism. One or two digital champions with in a business unit take the lead and band together with essential talent to focus on execution of projects that allow for quick-wins. They may be customer and/or productivity driven projects. Usually, the biggest hurdles they face are from the lack of an overall digital strategy, and they work in silos with little collaboration across their business unit or enterprise. Not much energy, time or skills are allocated to such one-off projects. Leaders of such digital projects are digital enthusiasts from business or technology experts from IT who look typically look for digital solution from a feasibility perspective, as opposed to customer desirability or business viability perspective. This often positions the project to not gain sufficient momentum, even if it works.
What can make the difference here is having that overarching digital strategy in place first. And then, cherry-pick 2 or 3 strategic quick-wins that will demonstrate digital success establish credibility with a compelling story and build momentum for the waves of projects that follow. They could start with a project on a new offering by building a good understanding of customer experience journey, develop optimum solutions with compelling value propositions, build a ‘minimum viable product (MVP)’ prototype, get it to market quickly, refine them based on customer feedback, with a mindset of experimentation. Grow this into a repeatable innovate, build, asses, learn, and redo cycle, that will encourage fail fast & fail cheap culture. Agile principles could apply well to such projects. Be prepared to scale-up what works, acquire necessary digital talent as you move forward.
Accompany your pilot projects by developing an overarching digital vision or strategy that sets direction or ambition for the effort with plans that lay out responsibility and deliverables. But because of the changes in pace, scope and disruptions, by the day, digital transformation needs room for course correction, as compared to other business transformations. The enterprise-wide digital transformation map should eventually be developed that depicts a realistic timeline to move from point-of departure with a digital vision towards a point-of arrival with waves of projects & initiatives along the timeline having milestones and pathways for all areas where digital engagement is pursued. Companies have to pursue practical, high-impact initiatives to adapt promptly with tomorrow’s digital innovations.
Constant changes in the business environment and emerging technologies, call for adaptive strategies and organizations, which in turn require adaptive approaches to leadership. Adaptive leaders create the conditions that enable dynamic networks of actors to achieve common goals in an environment of uncertainty. Leaders need to articulate a broad strategic outline and the purpose and context for change. But they also need to be open to feedback from people in the organization, from customers, and from partners. They need to be able to course correct. While adaptive leadership is more important for owners of the overarching digital strategy, the individual projects need to have inspirational leadership and focus, as well. An inspirational leader uses his/her well developed inner resources, to set the tone, connect the dots and lead the team with meaningful purpose. Focus comes from being centered by engaging all parts of the mind to be fully present. Leaders must coordinate across critical business areas (customer experience, product or service, operations) and organizational enablers (operating models, data and analytics, and IT).
Developing stage digital transformation leadership
At this stage we find increased maturity in the initiatives demonstrating digital centralism at the business unit level. We have clear long-term vision and ambition with customer-centric focus and open innovation. Increased focus on digital transformation, innovation and decision creates growing vision. Collaboration widens its presence with integration across business functions and investment in resources and skills rise. However, the barriers that come up at this stage are the many competing priorities at the business unit level that become distraction.
Cross-functional teams that have a mix of process owners, experts and IT talent, develop the necessary build, test and learn approach using agile principles. They start building digital tools, digital processes and digital talent at scale. They embrace customer at center of everything mindset and deliver integrated & standardized solutions. Sufficient internal communication takes hold with the existence of a central PMO that manages the entire portfolio of digital initiatives at the business unit level. The challenges at this stage include a dearth of a strong enough mandate to create change supported by strong enough digital leaders. The digital execution lacks tight integration between the enterprise level and the business unit level.
A digital strategy is only as good as the organization attempting to execute it. Some companies may appoint a digital leader at the business level, who temporarily drives and coordinates all digital activities. The digital transformation initiatives will need to sustain changes with an integrated approach using a portfolio approach to initiatives/projects management. It should support transparency across milestones and outcomes with rigorous methodology, tools and integrity. It should have a forward-looking view providing early awareness of risk and issues that might derail the effort. Stakeholders and sponsors across the enterprise must be deeply accountable for the success. They must be able manage change effectively with alignment to the digital vision that is palpable, visible and maintained. A clear governance structure must be put in place with explicit roles, processes and decision rights. A strategic digital initiative office (like a PMO, but value-focused) must provide essential support structure for the digital transformation. Not only should the stakeholder be deeply engaged, but employees at every level should be aware of the changes and equipped to manage the changes. Essential behaviors must be reinforced to enable culture shift in the organization, if necessary. Accountability must be hardwired with metrics, performance management and recognition systems.
As agile ways of working takes hold for these digital initiatives, traditional leaders find themselves disoriented. Sufficient mentoring & coaching should support such leaders. By design, agile teams are fast, cross-functional, experimental, and self- directed. It is one thing to have a few agile pilot teams but quite another for large parts of a global organization to be agile. Leaders in an agile organization set the context and purpose, ensure alignment, and enable autonomy. Finding the balance between alignment and autonomy is the ultimate test of leadership during a digital transformation.
Maturing stage digital transformation leadership
As companies arrive at maturing stage of digital transformation, we see digital activism with digital becoming a core value. They are focused on putting in place a pure digital business model, using subsidiaries to accelerate digital. The company disseminates digital in the company, shifts the culture, and acknowledges that innovation at speed is critical to digital success. Digital policy is set and managed from the center at the enterprise level to maintain quality and create scale. Digital execution is entrusted fully to the business unit, and accountability of a cohesive digital strategy is owned at the enterprise level.
The CEO is typically the de-facto digital leader at the maturing stage of digital journey. In some companies, a Chief Digital Officer (CDO) is appointed to own the enterprise-wide digital transformation on behalf of the CEO. They must be able to have a clear understanding of threats and opportunities posed by digital innovation & disruptions from all angles. They must orchestrate customer engagement, products & services, operating model, digital disruptors & innovative business models, while knowing how to leverage IT, technology, open innovation ecosystem, data analytics, capabilities, people, and organization. That is not your typical business leader; the digital transformation leader must be able hand-hold the rest of the C-suite executives and their organizations in a collaborative stance to arrive at the right solutions, at the right time with seamless execution.
In a large enterprise, it is important for such digital orchestrators to understand the role of the other C-suite members and collaborate with them effectively. Typically, the CMO owns the customer-experience; the CIO owns the digital engagement; CTO owns the digital technology, architecture, data & emerging technologies. You don’t want to have digital transformation leaders who are hammers, who think that everything they look at is a nail. Compelling digital vision for the enterprise must be crafted, with effective sponsors, and an achievable transformation plan for seam-less execution. Take the digital quick-wins from across the organization to create success stories. Scale the successes to continually advance the capabilities. Business, technology & functions must work together to unlock the strengths & opportunities from the entire company. Digital transformation is a long journey with possibly a moving target, but at a relentless pace.
Companies at maturing stage have a transformative vision, and so executing culture shift must be owned by the CEO. They must integrate across the enterprise and innovate better than their competition in their quest for ‘innovation at speed.’ Sufficient investments for resources are established, and bringing in digital skills become high priority concern of the CEO. If a digital strategy is only as strong as the organization that executes it, it is likewise only as effective as the people who execute it. During this stage, managing the competing priorities continue to remain the major hurdle, but we also start to see security concerns due to digital proliferation across the enterprise getting significant attention.
The roles of leaders in the organization fundamentally change in an agile organization. They need to learn new behaviors and let go of old habits. Agile, for example, is built on employee empowerment rather than rigid hierarchy and governance. Adaptive leadership does take on stronger hold at maturing stage of digital transformation. Adaptive leadership is not code for indecisive leadership. One commonsense way to become more adaptive is to perform more frequent reviews. Quarterly business reviews replace annual planning cycles. Course corrections happen on a weekly or even daily instead of monthly cycles. The speed of digital transformation dictates the increase in frequency of course corrections necessary.
The pace of the digital transformation can be unrelenting. The goals may be more ambiguous than those of a traditional transformation. There may be more need for outside support to pull off such initiatives with innovation at speed. Top digital leaders may need to act fast when fast decisions are required. They may need to act on more imperfect information. Digital transformation requires new ways of working, not just new technology. But in the age of agile, digital leaders can’t expect their teams to sprint if they just keep jogging. They need to comprehend and support the entire new approach that their digital transformation team has adopted, and then demonstrate palpable leadership with a cohesive narrative across all the digital opportunities that they pursue through their journey. Such digital transformation leaders must have the right balance of adaptive & inspirational leadership with the right focus for digital success.