31 May 2016

Leading Digital Transformation

 

Co-author: Kathrin Opielka

The digital imperative facing organisations is both an opportunity and a challenge.

Because of the customer revolution, the way companies do business is changing completely and to stay competitive organisations are having to redefine both their business models and their strategies, and adapt themselves to digital change.

The generally accepted term for this is “digital transformation”.

But what does digital transformation mean?

Howard King, writing in The Guardian had this to say on the subject:

“Transformation refers to the wholesale change to the foundational components of a business: from its operating model to its infrastructure. What it sells, to whom and how it goes to market. A transformation programme touches every function of a business; from purchasing, finance human resource, through to operations and technology, sales and marketing.”

This change should not be seen as a threat.

As James Moffat,  Executive Director at Organic, says: “technology doesn’t drive change, it simply provides the opportunity to do things better.”

And this change includes every part of an organisation.

Who Should Lead The Digital Transformation?

When looking at who should be responsible for digital transformation, you might already suspect that this is not an easy question to answer.

The Case for the CIO
Digital transformation involves both technology services and innovation; does this mean the CIO of an organisation should lead the process with their technical expertise?

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The CIO

One of Deloitte’s research report on digital transformation suggests that the digital agenda should be led from the top, especially in maturing digital organisations. Fundamentally it is about leadership, and seniority is crucial to overcome potential organisational resistance to change, a situation that typically poses the biggest single obstacle to digital transformation.  Deloitte make the point that that “Digital fluency […] doesn’t demand mastery of the technologies. Instead, it requires the ability to articulate the value of digital technologies to the organization’s future”.

As such, the people who lead the transformation don’t necessarily need a deep understanding of technology. Rather much more important is their interest in service innovation and their willingness to redesign the way their company and people work.

This implies that digital transformation does not necessarily have to be owned by the CIO. So who then should be responsible for this task?

The Case for the CMO

In many organisations, the requirements for digital transformation have evolved due to changing customer expectations – a trend which is most likely to have first been recognised by (digital) marketers as they have to constantly analyse and monitor their customers’ needs.

In this case, a customer focus suggests that the CMO of the organisation should be leading the change process.

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Try putting yourself into your customer’s shoes.

The role of customer channels and how an organisation reaches out to them is, however, merely just one aspect of digital transformation, and is equally only one part of the value chain by which an organisation achieves its business objectives.

As such, an inadvertent focus on marketing is, arguably, too narrow a perspective.

The Case for the Digital Specialist

Does that mean that we would have to introduce a new role to be able to coordinate everything and put together the parts to form a holistic strategy?

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A new role?

Some organisations have adopted this route, as according to a recent PwC Report (2015) some 6% of all companies have appointed a Chief Digital Officer (CDO).

So why would an organisations introduce the role of a CDO?

The big advantage of having a CDO is that they represent a central focus point for digital transformation.

And although not an easy role by its very nature, the CDO will be expected to align individual digital initiatives across an organisational-wide perspective. Having such a coordination point helps ensure that strategies are communicated effectively across all departments and they are implemented in such a way to support the overall business objectives of the organisation.

Interestingly, the PwC report also suggests that the need for a CDO also depends on the digital maturity of an organisation. And that with greater digital maturity the need is higher. Before and after that, CDOs are not as crucial to the success of the change process.

digital transformation and the cio

The need of a CDO during the transformation process


What’s the answer? 

Well, the trite response is that it depends on your organisation, as each differs, even in the same sector.

Whatever the setting, digital transformation is anything but easy to lead and will require exceptional leadership and direction as old routines need to be challenged and resistance overcome.

So clearly the personality of the leader is critical.

For instance, Econsultancy found in a recent study that the traits associated with a successful leader of digital transformation are those connected with being “customer-centric, visionary, adaptive and agile, commercial, data-driven, open, curious and innovative”.

But on its own leadership is not enough.

Success in what is a multi-faceted process ultimately comes down to the ones executing it – the employees. If an organisation truly wants to transform digitally it needs the vision and leadership to make it happen; but equally it has to change the employees’ mind-set and the organisational culture.

Achieve both and you will be on the right road.

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  • André Badenhorst

    Excellent on-the-spot insights! The drive towards digital transformation should indeed shift from “individual effort” to an “organisational effort” through a change in its core (or DNA). The leadership structure in the above article might or might not apply to mid-sized businesses. This (http://bit.ly/292AV02) article complements the above concepts, but applies it directly to SME’s.

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