The following draws upon the work of several thought leaders/experts in their field including James Macaulay, Frank Mattes and Lee Bryant. The purpose is to share with you some insights into how to lead and organise for successful digital transformation.
Digital transformation is a challenge of scale and complexity and according to IMD, 95% of transformations fail. The same is true for large scale innovation efforts, with Frank Mattes author of Scaling Up citing the economic cost of the problem globally equivalent to that of the GDP of Germany.
Research conducted by IMD Business School found the biggest reason for the failure of transformation efforts is that frequently they are fragmented and pursued in a very silo’d approach. Leaders and managers are often well aware of the opportunities and threats of digitisation and work hard to incorporate new technologies, AI and automation within their functions but without a coordinated and synchronised approach, these initiatives are tactical in their impact and do little to create a competitive advantage.
“True digital transformation meaning changing your business model, your strategy, how you create value for your customers. How you go to market, how you make money, how you leverage the talent in your organization. These big fundamental changes – that’s what we think of as digital transformation.” – James Macaulay
Even functional leaders who understand the strategic importance of digital transformation come up against barriers intrinsic to the organisational design. As Lee Bryant notes in his article “I almost never come across a group of senior leaders that is not passionate about digital transformation, change and leaving behind a better organisation than the one they inherited. But I also never come across a group who feel they have the agency and the freedom to do it, except in situations of crisis.”
Organisations today often find themselves too large, too complex with layers of process and procedure, the way we’ve always done things engrained, calcified (Lee Bryant) and almost impossible to change at scale. Exactly how the business operates, its reason for being and importantly its core strategy, how it creates and sustains value better than the competition is no longer clear.
Digitisation and an environment of exponential change lays bare the inflexibility of monolithic organisations that are no longer fit for purpose. Yet they must redefine their strategy, adopt new ways of working right across the organisation at a pace that few could have envisioned in the past.
It’s clear from the above that digital transformation requires fundamental changes that will affect the whole organisation across functions, departments and hierarchies. It is the most complex of change initiatives that don’t have a beginning and an end in the typical linear sense of change initiatives, rather it is an all-encompassing overhaul from within, impacting the entire business.
James Macaulay co-author of Digital Vortex and Orchestrating Digital Transformation recommends that successful digital transformation starts at the absolute top. Below, he lays out the first steps:
- Establish a sturdy leadership consensus that starts with the CEO and the board on the direction of digital transformation
- Craft a consistent message to the organisation and communicate exactly what the strategic direction is that you’re pushing for
- Define your future competitive state and how you’re going to get there
Macaulay goes on to explain that Digital transformation is inherently cross-functional. Untangling the assets of a large complex organisation to enable big shifts in your business model and strategy means you’ll have to work across silos. The change is all encompassing and will require orchestration and a special type of leadership role to engage with and transform the organisation.
Macaulay recommends the appointment a Chief Transformation Officer with a mandate from the board to become the orchestrator of major cross-functional change. Strongly supported by the new messaging coming from the board this is a role for a modern leader capable of engaging with stakeholders across the business and winning their buy-in to the digital transformation initiative. The CTO should be someone who:
- Can drive cross-functional outcomes
- Can work with stakeholders all over the business
- Is able to orchestrate resources that may be distributed all over the company
- Has a baseline fluency in technology
The next step is to create a Transformation Office around the CTO. Comprising a small team of people with knowledge of the business to orchestrate contributions from across the company. The aim is to create synergy and align people and all the business assets (i.e. infrastructure, data, capital, brand, intellectual property) around the core purpose of transformation and the execution of the new business strategy. To achieve this, the transformation team will need a mix of skills like:
- experience in management consulting,
- extensive experience of agile development and
- project and programme delivery expertise.
It will also help if between them they are able to bring a perspective of different functions like
- human capital management and
- customer-facing disciplines of sales and marketing
To be successful, the Chief Transformation Officer and their team must gain buy-in and collaboration from leaders operating in cross-functional silos. The CTO role is to orchestrate effort and assets so that the results are synchronised and aligned for maximum impact. To achieve this takes a leader with some special traits. Four of which have been described in Orchestrating Digital Transformation as follows:
The Four Must-Have Competencies of The Chief Transformation Officer (H.A.V.E)
H – Humility
The recognition and acceptance of the idea that you don’t always know best. Embrace and tap into the ideas of others who expertise can help you to make better decisions, modify plans and execute better
A – Adaptability
To be agile enough to be comfortable in working in multiple disciplines, in multiple areas of the business and being flexible enough to change when conditions demand.
V – Visionary
This is something that can’t really be taught; the ability to look around corners, to look at competitors, different types of competitors, especially across industries, being comfortable looking forward, seeing opportunities and threats in places where others might not.
E – Engaged
This is probably the most important trait as you need to be engaged with the business to create buy-in with others across the organization, engage with them at an individual contributor level helping them to understand the direction and the ‘why’ of the transformation and what’s in it for them.
So, humility, adaptability, vision, engagement or H A V E are the key attributes described by the authors that will give your CTO and the leader of your digital transformation the best chance of success.
Summary
Digital transformation is a challenge of scale and complexity. To be successful it must be visibly supported by the CEO and leadership team. It will require a CTO who along with a small yet multiskilled transformation team can engage with stakeholders right across the business who can help reconfigure assets and align them to the new strategy and vision.
Reference Articles:
- https://www.thedigitaltransformationpeople.com/channels/people-and-change/a-practical-model-for-distributed-digital-leadership/ by Lee Bryant of Post*Shift
- https://www.thedigitaltransformationpeople.com/channels/people-and-change/cracking-the-code-of-digital-transformation/ a Connected Futures podcast featuring James Macaulay
- https://www.thedigitaltransformationpeople.com/channels/strategy-and-innovation/scaling-up-corporate-start-ups-by-frank-mattes-and-dr-ralph-christian-ohr-an-executive-summary/ by Frank Mattes
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