Transforming an organization to meet the demands of a digitized market is a complex challenge. The men and women leading the change need to be brave, aware of market trends and able to select the right people to help them. Even in an age of hyper-specialization, the leader’s versatility is the ultimate key to success.
It should be obvious that every modern organization must change to become fully digital. Some companies may see digitization as adaptive – a prerequisite for competing in today’s markets. Others may view it as an opportunity to improve the bottom line or grow their businesses. Regardless of which of these views underlies an organization’s digital strategy, a few basic steps must be taken to deliver on bold, transformational plans. And even if these steps do not always guarantee success, taking them will help an organization understand transformation as a rational process rather than as a bruising, helter-skelter battle in which everyone, including the leader, ends up feeling battered.
I will offer a few tips that I think can cushion the violent impact of digital transformation. All require certain key elements, beginning with the roles of the main architect of change (the CEO) and the competencies of the CIO/CDO or digital leader. Then we must factor in interpersonal relations within the organization as they, too, must change.
The success of a transformation begins with its leaders. The CEO sets the course, is responsible for the achievement of the transformation’s business goals and sets the tone for the process. Without the CEO’s deep involvement, the endeavor is likely to become a collection of half measures and conflicting projects that will inevitably get bogged down in a quagmire of indecision. For change to work, leaders must stamp their names on it and own each of its elements. They must internalize both its goals and processes.
An organization’s leaders must present the strategic vision, including the role that digital technology should play in all organizational processes from helpdesks to customer service to sales. In leading change, they must do their best to connect the organizational values and goals that they, their co-workers, the board and the shareholders already know and appreciate with modern technological solutions. Technology and the business’s values should be inseparable; this will help all the stakeholders involved or affected by the changes happening around them understand that digitization is not just a passing whim or an attempt to chase a fad. Rather, it is a means to strengthen the brand, the company’s market position and its bottom line; it is a response to changes taking place in the world. In a sense, the CEO must market the change internally and externally, using the tools and strategies of marketing. This process is described in McKinsey’s The seven decisions that matter in a digital transformation: A CEO’s guide to reinvention, which provides examples of leaders who package change in their organizations as would a head of marketing. The article’s authors see parallels between business transformations and brand development. This is how leaders can best gain the necessary support for their vision and communicate their ideas to others.
Technologists at the fulcrum
A critical part of the job of an effective CEO is to appoint team leaders. These leaders need to grasp the CEO’s vision, share her enthusiasm, and be able to match its elements with the tools they use. They will also be responsible for disseminating the CEO’s narrative across the organization, helping to establish a new company-wide digital culture. The group the CEO will work with most closely in the change process should include the Digital leaders. They have the unique ability to make the CEO’s vision a reality and embed its values in the machinery of the business. The CIO/CDO, architects of a large slice of the digital revolution, will be responsible for building the company’s new IT systems, creating compelling customer interfaces, and developing mechanisms that will largely shape the character of everyone’s daily work. Meanwhile, other department heads and business leaders will be watching to see if the new tools they have been given make them more productive, and happier, or merely produces pointless drama.
Today’s CIO/CDO need to be highly versatile. Along with their technical competencies, they will need a wide range of soft skills. This is necessary as IT heads must liaise with CEOs, financial directors and the heads of all business and design units. To do this well, they must be aware not only of the latest tools but also of the importance of customer behavior, the dynamics of internal relations between employees, the mechanisms of employee involvement, and the potential of modern marketing. For example, they must be involved in assisting traditional publishers launch digital content that will be attractive to customers. For that to succeed, a CEO’s vision is not enough; one needs specific technological tools to make it reality.
Technology leads also must be able to work with a host of external partners. Much of the work of technology managers should be devoted to understanding the start-up market – that is, those companies whose informal structures allow them to react flexibly to technological change. Today, small firms have a disproportionate impact the business landscape. I believe that keeping an eye on start-ups, and the potential benefits of working with them, is a key responsibility of CIO or CDO. If a company’s transformation philosophy allows acquisitions, keeping track of small, innovative companies that fare increasingly well in the world of changing technologies – and even largely define how the world will work tomorrow — is becoming ever more vital.
The ability to win over and educate colleagues plays a huge role in the process of transformation. Leaders tasked with the mission of digitizing their companies must find a way to explain their intentions to others clearly. People – managers and other employees – are critical to any change. Some will embrace the new direction and become allies; others will seek to keep their jobs and lives as they were. Some of these people will resist change actively. How, then, does one promote a digital philosophy and ensure it is seen as beneficial to all?
There are several ways to go about this. Those in charge of the transformation can deploy trained communications, PR and HR people to arrange meetings with management and others to explain the potential of new technologies (for example, in hackathons). As part of the change process, team leaders should be updated regularly on the progress already achieved, and how it has benefited the company. For IT heads, such meetings will provide an excellent reality check for seeing if execution remains on track. These meetings and updates are a good way to promote new behaviors among key employees. It must be acknowledged that it will take time for everyone to get accustomed to new tools, processes, values and philosophy. Change doesn’t just happen; it must be managed thoughtfully.
Five keys for change
I have described the leadership competencies I believe crucial to digital transformation success. Here are five key concepts on which a successful transformation should be based.
- An organization’s digital transformation is a larger endeavor than preparing a digital strategy for one or several departments. It comprises an adoption of digital solutions for allprocesses across an organization. This means restructuring many departments, creating (or adopting) new tools (for both employees and customers), as well as a change in work philosophy. Digital is about changing the company in broad strokes rather than tweaking of details or removing technological bugs. It will change the way sales are made, orders are placed, reports are prepared, processes are monitored, and customer and employee relations are maintained. It also requires a change of many competencies.
- Every transformation should be accompanied by a profound analysis of how digital technologies will change the market in the near term, and how they will alter manufacturer and customer behaviors. New technologies affect everything, which is why markets have become so volatile. Accordingly, the tools employed in the transformation process must be flexible and scalable.
- To be successful, digitization should favor solutions that create closer customer relationships. In today’s market, it is critical to acquire new customers and convince them that a company’s solutions are up to date, and that it is well-run. The tools that automate customer relations, customer data collection and product sales will massively impact customer sensibilities, for better or worse.
- To facilitate, control and assess transformations, companies need monitoring tools calibrated for accurately measuring the impact of the changes that have been made. Both to gain and maintain organization-wide buy-in, it is always a good idea to implement solutions that will demonstrate the efficiency of and support for the overall rationale of the transformation at an early stage in the process.
- In pursuing transformations, one should bear in mind that people drive the process. If people do not receive encouragement to improve if not completely overhaul their competencies, they will not succeed. Along with the CEO, lower-level managers are going to be vital in this. Therefore, a leadership training system should be developed that is relevant to the transformation. Leadership programs must align with new company objectives and account for the complexity of the effort.
Don’t forget your people
All the above concepts are important, but I believe the most critical may be the idea that the key to transformative success is the attitude and well-being of the people charged with making it happen. Tools are only as effective as the people that use them. And if people don’t use them, they’re not effective at all. For transformations to succeed, professional roles and competencies often need to be redesigned. This applies to everyone from the main architects of the change to executives to middle managers to rank-and-file employees. And although soft skills are much celebrated today, numerous studies have shown that training, incentives and leadership programs too often are poorly constructed, and fail to meet the real needs of companies.
I believe that every manager in an organization can and should devote part of every day to interacting with and motivating subordinates, helping them to cope with the stress that comes with change. In How small shifts in leadership can transform your team dynamic, McKinsey explores the experiences of leaders struggling with team management, specifically those that have become less productive, and shows how a few simple tweaks in management style and practice can bring about significant improvements. Simple fixes in communication, better management of work breaks (for example, discouraging employees from accessing online tools), beginning to listening, starting difficult projects by praising the team for prior successes are just a few of the ways to improve the mindsets and behaviors of the people they work with. This makes me think that a key challenge for every leader in any transformation is to attend to the psychology of the people they manage. It is a truth that should be self-evident: Little can be achieved in an organization without properly tending to interpersonal relationships.
This can be done
In this article, I’ve tried to define what I believe to be the key elements of the business transformation process. While there are obviously many more of them, I chose to focus on the mindsets and behaviors of leaders, and the few simple rules that may affect the process.
Changing a company can be like walking up to a roulette table, chips in hand, wondering whether to put them on red, black, or a number. That uncertainty, at least at the beginning, is not a bad way for contemporary leaders to feel; it simply acknowledges the reality of the spinning wheel of radical transformation. However, if the leader’s professional compass unerringly points to people, values, and the business’ ultimate transformational goals, he or she will have a good chance of leaving the table with a larger pile of chips.
. . .
Peter Dahlström, Driek Desmet, and Marc Singer, The seven decisions that matter in a digital transformation: A CEO’s guide to reinvention, McKinsey Global Institute, link, 2018.
Carolie Webb, How small shifts in leadership can transform your team dynamic, McKinsey Global Institute, link, 2018.
. . .