The impact of digital technologies is already substantial, but it will grow exponentially over the years to come as new innovations are developed and new use cases emerge.
For manufacturers, productivity gains and cost savings from digitisation could be worth $200 billion to $500 billion in the near term. A significant proportion of these gains will come from enabling smarter, faster use of data, making it easier for organisations to access the information they need to make informed decisions on future strategy. However, benefits such as these will only be realised if organisations are able to put effective digital leadership in place.
At Morgan Latif, we have already produced guidance around how to future-proof a leadership team, in which we discuss the importance of addressing digitisation at leadership level. Now, we take a more in-depth look at the practicalities of providing effective digital leadership, based on conversations with more than a dozen experienced digital leaders from within our network. In this guide, we will cover:
- The importance of challenging ingrained beliefs and behaviours
- How the CEO must define the vision and goals for a digitisation project
- Why each team must understand the impact of digital transformation
- The leadership profile required to achieve digital goals
- How to execute an effective recruitment strategy geared toward delivering digitisation
1. The CEO should set a vision and measurable goals
Before embarking on a programme of digital transformation, stakeholders throughout the organisation must understand what they are trying to achieve. Almost three-quarters of companies already have a digitisation strategy in place, or are in the process of developing one, so organisations that are yet to define their approach must move fast or risk being left behind.
Each organisation will have its own reasons for undertaking digital transformation. However, research shows that the most common objective is “digitising the organisation’s operating model” (cited by 68% of respondents), while less than half of companies say their digitisation plans were motivated by “launching new products or services”, or “interacting with external partners through digital channels”.
The CEO should assume responsibility for defining the vision that underpins their organisation’s digital transformation project – although they will likely want to consult with other members of the leadership team and individual department heads.
Once the vision has been outlined, management should then quantify it by setting measurable goals that make it clear when any given stage of the project has been completed. In the early stages, these goals should be modest and achievable, according to Sebastien Diaz De Corcuera, Deputy to the Head of R&D for a leading supplier of vehicle technology that was a very early adopter of automation and digitisation:
“It is important at the start to take baby steps that make the life of the key stakeholders easier. Take small components and make them work together, don’t just start by trying to improve revenue.”
Importantly, the digital strategy – and its associated goals – must align with and support the organisation’s overarching strategy. If a digitisation project is treated as an entirely separate entity, rather than a natural extension of the company’s existing plans, then its potential impact and chances of succeeding will be dramatically reduced.
2. Challenge legacy beliefs & get buy-in for digital transformation
Whether or not we are aware of it, we each have ingrained beliefs that impact the decisions we make. This can be a good thing – when we face a challenge that is similar to one we have previously overcome, it gives us valuable insight on the most effective course of action – but it can also cloud our judgement and create blind spots. Just because something has always been done in a certain way, that doesn’t make it the right way.
Changing legacy beliefs is notoriously difficult. But for organisations to realise the benefits of digitisation, it is vital that all existing behaviours, processes and systems are scrutinised to ensure they remain fit for purpose – and will continue to do so post-digitisation.
Start by conducting a “challenge what you know” workshop – either at leadership level, team level, or both. During this workshop, core beliefs should be identified and turned on their head. Gartner gives the following example:
“Our customers want to own the product and will buy and upgrade via a transactional model” becomes: “Our customers want the product’s benefits and will embrace a subscription (as a service) model.”
Next, define how and when this “new” belief could work. What are the risks? How do they compare to the potential rewards? What impact would it have on existing revenue models? Is there anyone else within the market adopting this approach?
Ultimately, the purpose of this exercise should be to identify which ingrained beliefs and behaviours are absolutely essential to the business, which can be modified, and which can be dropped.
3. Clarify how digital transformation impacts each team
At leadership level, digital transformation will naturally be discussed in terms of its impact on the organisation as a whole. But what does it mean for individual teams? What is their specific role within the wider project?
“Experienced leaders must recognise the need to balance accountability with empowerment,” says Alexander Demmer, Global Research Director for Digital Transformation at Global Business Research. Alexander explains that this balance is achieved by closing the loop between:
- Orientation: Strategy, adapted to the goals, defined, and clearly communicated, understood and accepted by the whole team
- Security: Upgrading roles and responsibilities, especially those of team members whose current workloads can be partly automate
- Trust: Having confidence that team members in new, upgraded positions are taking the right decisions, based on the right information, at the right time
When it comes to accountability, outcomes should be assigned at team level, while specific actions should lie with individuals. This way, each person should understand their particular purpose within the wider project and know what success looks like. Furthermore, this approach helps to avoid conflict and promote collaboration by making it clear who is responsible for what. Many positions will be closely aligned – such as the CDO and CIO, and their respective departments – so it is vital that everyone knows what is expected of them.
The world of professional football, in which success and failure are separated by extremely fine margins, provides an effective example of this process in action. Players must adapt in real-time, while the coach must accept that they are unable to directly influence proceedings. “It only works well if sufficient preparation has been made beforehand, and not only in times of crisis,” Alexander says. From the perspective of a football coach, the three step “loop” outlined above could look like this:
- Orientation: “Our goal is to win the Champions League. However, for the next 90 minutes, I want you to focus on winning every one-on-one contest for the ball.”
- Security: “Today, you are going to be a substitute, but next week I want you to play on the left side of midfield and push the strikers forward.”
- Trust: The coach having confidence that all players are making the right decisions in every situation.
But leaders should not simply expect to designate responsibilities and wait to see the results. Unless individuals and teams are fully bought into the digital vision and the outcomes that it seeks to enable, they will have little reason to engage with the project or feel personal accountability for their actions. Be open and specific about how digitisation will impact each team, considering:
- How each department and leader will have to adjust
- What benefits the team can expect to see from the project
- How their day-to-day work will be directly affected
- What training will be necessary to help teams adopt new systems of working
- Whether digitisation will create new roles within a team and/or render some existing roles redundant
In short, effective communication is crucial to the success of any digital transformation project. As former Hauni Group CEO Christopher Somm explains:
“The right communication is essential. All of the executive team should be unified in this message. If you have one gap, you have a war and one function can rebel.”
4. Find leaders who combine technical & people skills
Digital transformation is hard to achieve. Research shows that less than 30% of projects succeed, while just 16% of organisations believe their digital transformations have improved performance and positioned them to sustain changes in the long term.
According to Jacob Koehler, Analytics and Big Data Lead at Deloitte Consulting, one of the primary reasons that digitisation projects fall short is poor leadership at C-level. Senior leaders may not have the right combination of strategy and digital expertise to deliver on the CEO’s vision. Even when they do possess the necessary technical skills, they may lack the people skills required to achieve buy-in from key stakeholders throughout the organisation.
The consequence of poor digital leadership is a lack of focus and a lot of confusion. Jacob notes that in some cases, it is not even clear whether a digital transformation project has actually delivered the desired objectives:
“The person in charge of the digital transformation calls it a success when it isn’t. Then they are replaced and the next CDO says it wasn’t a success.”
Finding the right leader to deliver a digital transformation project – someone with a proven track record – is no easy task. Talent is in high demand and short supply, which means sourcing the best people requires significant time and resources. Organisations that choose the right search partner will be best placed to achieve their digital goals.
At Morgan Latif, we empower Life Science & Industrial businesses to achieve their change management, diversity & transformation goals. Contact us to find out how we can support your digital transformation project.
5. Identify & close skills gaps across the business
Having recruited to strengthen the leadership team, organisations must identify and close skills gaps throughout the wider workforce.
Digital transformation projects are typically broad, with eight in ten organisations saying their approach involves either multiple business functions or the whole enterprise. It is therefore vital that all teams contain the right people with the requisite skills. A lack of technical or organisational capability within any one department or business unit could jeopardise the entire project.
When it comes to addressing skills shortages, organisations should not rely solely on bringing in external talent, according to Dr Sebastian Goebel, VP of Digital Controlling & Business Analytics at Fresenius Kabi. Instead, they should pursue a dual strategy, recruiting and hiring consultants where necessary, while also investing in upskilling team members.
External talent alone will not be sufficient to deliver a transformation project, Dr Goebel explains, because key stakeholders also require a deep understanding of the organisation’s culture and internal processes. What’s more, digitisation requires collaboration across all functions; this is inevitably far harder to achieve if all the people leading the project have to develop completely new working relationships.
Morgan Latif can help you build an effective digital leadership team
As these five steps demonstrate, without effective leadership, digital transformation projects have a much higher chance of failure.
Morgan Latif can help. We represent leaders who are experienced in and passionate about delivering organisational change. Our approach to executive search is centred around building leadership teams that help organisations plan effectively for the future:
- We go beyond the professional to the personal, finding life-changing roles for leaders and coaching them through the challenging onboarding period and beyond
- Accuracy and efficiency drive our process; 90% of the leaders we put forward make it to interview
- We help our clients to unlock the business benefits of building diverse leadership teams
- We offer a market-leading warranty, guaranteeing employee tenure and performance for up to 12 months
- We have built a superb talent network, fostered over more than two decades serving the life sciences and industrial industries
Get in touch to find out more about how we can support you in building a high-performing digital leadership team.
