We know that the rise of disruptive technology is challenging companies around the globe. Companies worldwide are racing to keep up; they’re competing for talent and investment and focusing on innovation. In the age of Amazon, it’s not hard to get left behind. In fact, we have routinely seen the demise of companies who allowed the digital omni channel era to leave them behind. Going digital end-to-end is not a choice. Not transforming your business and culture will lead to certain failure.
I spend time coaching c-suite executives on a range of issues: strategy, innovation, succession and board readiness, to name a few. Digital always comes up in conversation. Most recently, I heard from an executive who was struggling to get two organizations within their enterprise to work together, let alone not throw rocks at each other. Another chief digital officer was struggling with a CEO who failed to be the “customer” for the digital transformation and left it to the shorter-term focus of the business units to authorize and approve smaller scale, business-unit-focused initiatives.
Most organizations are built to effectively do yesterday’s work. Most big companies, born before the rise of digital, are fundamentally built to do the work they were created for, and to do it in ways that are pre-digital. The question is what to do about that and how to move forward in a disciplined way.
Newer companies are born with new capabilities, new experiences. Just consider mobile technologies, the rise of 5G and the delivery of tech-enabled, end-to-end experiences. Companies who can’t offer these services will get left behind.
Digital transformation is transformational change, making CEO involvement critical.
Older companies must become fully digital, which impacts all areas of organizations, including corporate areas such as IT, HR and marketing. This kind of transformation requires board level involvement due, in part, to significant investment as well as strategy decisions. Digital requires different employee skill sets and different hiring profiles. Companies will need substantially different training and development programs for current employees, and they are or will be recruiting to a different profile.
Transformational change must start at the top. And it’s clear that CEOs are thinking a lot about this. The Conference Board’s 2019 CEO Survey showed that of the three most-pressing internal issues for CEOs, two are related to digital. One is creating new business strategies in the face of disruptive technology, and the other is having the right approach to building new generations of leaders in an era when certain jobs will ultimately be replaced by tech. A major question companies need to answer: what do you do with the people you already have?
Digital transformation also can include bottom-up transformation. Company leaders need to find out what’s included in digital transformation, because it’s changing every aspect of our world. Lines of questions like, “how do you collect data, process every piece, and deliver a seamless experience in a customer-centric digital format?” are now baseline questions.
This top down/bottom up approach is one of the reasons we’re seeing an increase in the number of chief digital officers (CDOs); almost all big companies have, are looking for or are considering whether to have a CDO. Executive teams are working through the what (what are they responsible for and what is included in their remit?), and the how (how will we get this done and how fast?). They’re looking at how CDOs work across the enterprise to facilitate change, including with IT and operations.
Digital transformation requires significant culture change.
When everyone continues doing what they’re doing, nothing changes. To change a culture, employees need to understand -- at a granular level -- the vision of where the company is going, what it will take to get there, and what their individual role is. They need to competently perform that role, and they may need new skills.
Russell Reynolds Associates has looked at what they call strategic impediments to digital transformation related to leadership and talent. Their fourth annual Digital Pulse survey results show that the top three impediments include organizational inertia (55%), lack of integrated digital expertise/skills (52%), and ineffective cross functional collaboration (51%).
Some thoughts on what culture change will need to look like:
- Share a vision. Leaders, starting with the CEO, will have to own transformational culture change. They need to put forth a vision for where the company is going, how it will get there and over what time period. It should be clear what types of skills will be necessary along the way and where those skills will come from.
- You succeed at what you measure. That vision will need to be connected to a strategic and operational plan, with regular reporting intervals to understand how you’re doing against that plan. Report outs should include what employees need to do in the event corrective actions are necessary.
- Behavior change is necessary. Leaders must be clear on the behaviors they expect from each other and from employees. And for the best chance at success, leaders will need to demonstrate those behaviors every single day.
- Become friends with your communications organization. I’m a firm believer in the phrase: communicate, communicate, communicate. Make sure your employees hear regularly from you on what is needed, how to get there, and what role they play.
The journey is long and challenging but the alternative is a company left behind.