Everyone loves to talk about “digital transformation”, but attempting one is not for the faint of heart. Most efforts to transform, in fact, fail. The reason, and the pathway to success, probably comes as no surprise to most: leadership. But there are five specific leadership actions that I’ll share that you must take now to make this work. The real question is why so many leaders still fail to take this into account and so easily dismiss the fundamental ways in which they are the key to a successful digital transformation.
In a Forbes article, Why 84% of Companies Fail at Digital Transformation1, Bruce Rogers interviewed Michael Gale about his extensive research into and analysis of the drivers of digital transformation success. Gale stated he believes a large reason for 84% of companies failing at digital transformation is because they are not prepared to change behavior. He adds, “They think they can have strategy and technology and it just doesn’t get them there fast enough or in a good enough way.” Graham Waller, co-author of Digital to the Core, Remastering Leadership for Your Industry, Your Enterprise, and Yourself, says “Digital business doesn’t just disrupt markets. It disrupts tried-and-true management behaviors.”2
Gale’s analysis and Waller’s comments underscore my article Why Digital Transformation Must Begin with You3 emphasizing the absolute necessity for each leader to undergo a personal transformation in order for the organization to achieve digital success. Your leadership style must now focus on speed, flexibility, and customer obsession. As the article points out, this requires concentration on employee engagement, empowering decision-making at all levels, prioritizing growth initiatives, re-imagining your organizational structure, and encouraging innovation from everyone throughout the company. But in order for your organization to truly change into a digital enterprise, there are additional transformations you as a leader must undertake.
Strong Leadership at All Levels Required
It is amazing to realize the number of corporate initiatives and strategies that have failed because leaders falter in helping people change. Transformation is not at all something that can simply be declared from on high causing the organization to meekly fall in line. In fact, an Accenture study found that the lowest performing change programs actually have strong leadership at the top while the most successful change programs are marked by strong, consistent capabilities in leading change across all levels of leadership.4 Leaders must set the vision and establish the environment for change. They must inspire a thirst for change throughout the organization and remove any roadblocks to its achievement. And they must be consistent evangelists for change emphasizing the desired results rather than prescribing the exact steps required for achievement.
Capitalize On Your Relationships
Isolationism will not work in the digital age. Huge risks are arising from sources that never existed before. These cyber risks are not just from hackers attempting to steal corporate data. In fact, I would contend that the biggest cyber threat to your company is actually digital disruption. A leader cannot be successful by retreating to the castle and pulling up the drawbridge. Your value to your company is exponentially increased by the knowledge and expertise you can bring to bear through your personal network. This can keep you apprised of digital advances in startups, university labs, and other industries that you might apply within your own company. And it allows you to act as a broker bringing top outside expertise to advise, coach and assist your organization as needed to continue to achieve new heights.
Digital enterprises are also more relationship-based than companies of the industrial era. This is one factor giving rise to new business models. “Ecosystems thinking provides a new frame and mindset that captures a profound shift in the economy and the business landscape. The importance of relationships, partnerships, networks, alliances, and collaborations is obviously not novel—but it is growing. As it becomes increasingly possible for firms to deploy and activate assets they neither own nor control, to engage and mobilize larger and larger numbers of participants, and to facilitate much more complex coordination of their expertise and activities, the art of the possible is expanding rapidly.”5
Obsess About Your Customer
Let’s face it. Your customers have changed. No longer are they quarantined so that their only knowledge comes from your salesperson or your advertising. Technology has enabled them to know more than ever before about your company, your products, your pricing, your reputation, and your competition. They can buy anything instantly and have it delivered directly to them. And their expectations have changed radically. In fact, some predict that “by 2020, customer experience will overtake price and product as the key brand differentiator.”6 At the same time, a proliferation of data allows you to know more about your customers than ever before…effectively allowing you to move from B2B or B2C to one-on-one marketing. A culture of customer obsession is the only way your company will be successful. This obsession must go beyond your customer service department into every individual in every crevice of your organization. “A customer-obsessed enterprise focuses its strategy, its energy, and its budget on processes that enhance knowledge of and engagement with customers and prioritizes these over maintaining traditional competitive barriers.”7
Push Evidence-Based Decisions
The rapidly growing expanse of pertinent data originating both inside and outside your organization increases the promise of game-changing results from data-driven decisions. Deploying analytics throughout the company can improve financial performance, increase productivity, reduce risks, and support faster decision making.8 By arming the rank and file, it can provide answers to questions you have not yet even thought to ask. While evidence-based management cannot totally replace intuition, there is no denying the potential benefit. Yet few organizations have successfully unlocked the door to achieving the promise. Instead of asking “What data do we have on that?”, decisions are too frequently based on the highest paid person’s opinion9 or the one that yells the loudest. “The hard truth is that a key enabler to delivering on the biggest promise of data science is transforming organizational culture”10 into an analytics-driven culture.
Think “DIGITAL FIRST”
Digital firms are at least 2.5x more likely to have all their core operational processes automated and their interfaces with suppliers digitized. In addition, they are 3x more likely to systematically gather and analyze process data to improve the way they work.11 They look to equip employees throughout the organization with digital skills that are refreshed on an ongoing basis. Traditional leaders must go beyond the mentality of small incremental improvements to emphasize the necessity of breakthrough thinking empowered by a “digital first” approach. This requires transformation in their passion and energy as well as the way in which they prioritize their time and money.
Digital transformation is not easy. Many companies will attempt it and fail. Some will decide it is not worth their effort and will simply try to maintain the status quo. Neither of these will ever again rival their current state within their industry, and most will slip into insignificance or obsolescence. The successful will be inspired by those who have disrupted their traditional management approach and undergone a personal transformation into true digital leaders. Which will you choose?
Sources:
1 Rogers, Bruce. “Why 84% Of Companies Fail At Digital Transformation.”Forbes. Forbes Magazine, 17 Jan. 2016. Web. 01 Apr. 2016. http://www.forbes.com/sites/brucerogers/2016/01/07/why-84-of-companies-fail-at-digital-transformation/.
2 Levy, Heather. “Remake Yourself With Six Digital Leadership Personas – Smarter With Gartner.” Smarter With Gartner. Gartner, 09 Feb. 2016. Web. 1 Apr. 2016. http://www.gartner.com/smarterwithgartner/digital_leadership_personas/.
3 Bennett, Terry. “Why Digital Transformation Must Begin with You.” The Institute for Digital Transformation. The Institute for Digital Transformation, 04 Apr. 2016. Web. 05 Apr. 2016. www.institutefordigitaltransformation.org/why-digital-transformation-must-begin-with-you/.
4 Parry, Warren, and Nicholas Whittall. “C-suite Is Not the Main Driver of Change – Accenture.” Accenture.com. Accenture, n.d. Web. 01 Apr. 2016. https://www.accenture.com/us-en/insight-memo-main-driver-change.
5 Kelly, Eamonn. “Business Ecosystems Come of Age: Part of the.”Dupress.com. Deloitte University ORess, 15 Apr. 2015. Web. 31 Mar. 2016. http://dupress.com/articles/business-ecosystems-come-of-age-business-trends/.
6 “Customers 2020: The Future of B-to-B Customer Experience.”Walkerinfo.com. Walker, n.d. Web. 30 Mar. 2016. http://www.walkerinfo.com/customers2020/.
7 Cooperstein, David10 M. “Business and Competitive Intelligence Strategy in the Age of Informatization.” From Business Intelligence to Knowledge Sciences An Introduction to Knowledge Information Strategy (2013): n. pag. Solutions.Forrester. Forrester, 10 Oct. 2013. Web. 30 Mar. 2016. http://solutions.forrester.com/Global/FileLib/Reports/Competitive_Strategy_In_The_Age_Of_The_Customer.pdf.
8 “The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture.” The Evolution of Decision Making: How Leading Organizations Are Adopting a Data-Driven Culture (n.d.): n. pag. Hbr.org. Harvard Business Review Analytic Services. Web. 30 Mar.06. https://hbr.org/resources/pdfs/tools/17568_HBR_SAS%20Report_webview.pdf.
9 DeRose, Chris, and Noel Tichy. Forbes. Forbes Magazine, 15 Apr. 2015. Web. 1 Apr. 2016. http://www.forbes.com/sites/derosetichy/2013/04/15/what-happens-when-a-hippo-runs-your-company/.
10 “Some Hard-Won Best Practices and (Surprising) Lessons Learned.” Tips for Building a Data Science Capability (n.d.): n. pag. Boozallen.com. BOOZ ALLEN HAMILTON, July 2015. Web. 31 Mar. 2016. http://www.boozallen.com/content/dam/boozallen/documents/2015/07/DS-Capability-Handbook.pdf.
11 “Organizing for Digital: Why Digital Dexterity Matters.” Digital Copyright : Law and Practice (n.d.): n. pag. Capgemini-consulting.com. Capgemini Consulting, Aug. 2012. Web. 29 Mar. 2016. https://www.capgemini-consulting.com/resource-file-access/resource/pdf/digital_orgns_cover_08-12.pdf .
About the Author:
Great article Terry – it highlights the challenges leaders face with the exponential increase in data that saturates every aspect of an entity’s ecosystem. I agree with you – data is far reaching, extending beyond the enterprise to all key stakeholders. The way in which companies harness the power of data analytics and the hidden gems stored in the terabytes is a true differentiator that separates the great from the just good.
In my travels, I’ve come to believe that new processes must be created to harness in real time the nanosecond decisions required to react to customer inquiries, changes in consumer demand, shifts in market conditions, competitive advances, negative reputational risk, cyber threats and more. How enterprises rapidly respond is a combination of auto-response capabilities and distributed decision-making expertise that is repeatable, flexible and change-enabled.
Thanks Terry for bringing to light the digital transformation the world is undergoing. Companies must respond, adapt and change, or be left behind. And as you know – the decision to get on the bus and transform must be made now, before it’s too late.