Four steps to digital transformation: Leadership

20 October 2018

From talking to CEOs and Board Executives, we have identified there are four essential ingredients needed to drive digital transformation – Structure, Culture, People and in this, the last of four articles, we address the importance of Leadership.

The difference between winning and losing within digital transformation is the ‘leadership’. Digital must become a top agenda item, and driven from the top. The digital leader needs Board exposure and the ability to incubate a digital team and identify what needs changing. It is the digital team’s role to make these changes, to educate people and demonstrate the value of digital to the wider business. This ethos should pervade throughout the organisation so that everyone owns and contributes to delivering the strategy. According to a Managing Director at Google “Ultimately the success of digital transformation depends on how high it is on the agenda”.

Strong digital leaders understand the importance of the wider company mission; if they are too technical they tend to be unable/unwilling to step back and look at the bigger picture. Digital is about multiplying the customer touch-points and it is the digital leader’s responsibility to maximise those touch points. At the embryonic stage, digital leaders must join the dots between online and offline: brands, products, technology, and exploit opportunities for greater synergy – the digital leader is the glue. Leaders also need to instil the right behaviours in the organisation around output, decision making, financials, metrics, pace and how communication takes place.

Communicating success gets people behind digital and generates momentum. People with strong digital experience should be very familiar working with data and they need to translate this into clear messages and actions across the business. Explaining the need and benefits of digital, creating an open collegiate environment where experimentation prevails and instilling a fail fast mentality is essential. This needs to be combined with clarity around decision making and the foresight, vision and ability to motivate the team.

Creating a supportive framework, which is visible to the business, will help drive participation, engagement and bring about confidence in digital. Using hard measures to engage individuals, for example, shifting KPIs, remuneration, bonus structures and offering training and development, and hiring top calibre digital talent all help to engender a deeper level of commitment and loyalty to the business. Those who demonstrate the right behaviours should be highlighted and encouraged. People need to be given permission to experiment and staff should be moved around.

A former digital executive and CEO highlights the importance of prioritising what is required, and then allocating resources, which need to be sanctioned at the top. It is likely that new skills will need to be brought into the organisation to instil a faster pace of change and to explain the opportunity cost of not doing it. The digital leader’s relationship with the CEO is crucial. They obviously need very strong interpersonal skills, but their credibility in the digital market is also crucial. People offline might think they are great but digital natives might not think they are great! People with true digital experience know it is about portfolio management and risk management – they are comfortable launching if something is imperfect, good at working in teams and generating a sense of cohesion, they operate with pace, urgency, curiosity, and intense enjoyment of learning, drive change and embrace technology, digital natives by choice – not viewing digital as a profession. None of us are experts and should not pretend to be.

To drive digital performance requires quick implementation of digital plans. At the embryonic stage, the business should monitor how digital operates relative to the traditional business and any signs of similarities should be rectified – you should notice an evident change in behaviour and the business should be aware of this and measure it. Any sign of hierarchical decision making will turn people off – team-focused decision making must be promoted. Equally, questions should be framed at the top and outcomes discussed, but it should not take the form of process and detail as this reduces impact and traction.

In a digital business, your ability to understand your audience and become truly customer-centric in your approach is even more important. This requires you to monitor and understand the core metrics: growth in audience, engagement, revenue and EBIT, and competition in the marketplace.

It is important that these four recommendations for creating a great digital business should not be implemented in isolation – structure, culture, people and leadership – each is interdependent on the other. Also, before embarking on such a journey, companies should consider the scale of the transformation in the context of their business and their competitive landscape. The rate of digital disruption is different depending on the scale and type of business and industry; what is important is blending the opportunities offered by digital with the traditional strengths of a large company. Finally, there should be some caution around the level of investment made in digital in context with the revenue line – whilst digital is very important it does not represent the lion’s share of revenues in most businesses – yet!

There are low investment steps which can be taken first, starting with raising digital’s profile if it is not a priority. The burning platform argument is unhelpful and loses credibility very quickly. Companies need to build steam and momentum over time and bring the whole organisation along on the journey. The reality is that everyone needs to be a digital professional in the future!

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