How leadership affects digital transformation
Friday, September 17, 2021 - Philip Rashleigh
The digital disruption is bigger than ever. Organisations across the globe are recognising the power that technology can bring to their operations and, with Gartner forecasting a further 6.5% increase in Government IT spending for 2022, these transformations continue to support global infrastructure.
However, the harsh reality remains that close to ¾ of all digital transformations fail. Sometimes leaders lack the technical understanding and skills required to spearhead such a shift. Other times, they fail to fully assess the risks and rewards of their transformation, which leaves them directionless.
For digital transformation to succeed, businesses need an effective leadership approach that can be influential and powerful in driving long-term change.
Here we detail how leadership has a profound effect on the success or failure of digital transformation.
Measuring the risks (but also the benefits)
Before any transformation can take place, companies should carry out strategic planning exercises to fully evaluate the what, why and how of these projects.
The first stage is to measure the risks.
Rather than focusing on simply investing in technology, your digital transformation should be guided by the overall goals and objectives of your organisation.
By strategising your transformation early on, IT leaders can unearth any potential obstacles and understand organisational challenges before deciding on the digital tools that will solve those issues. In practice, this is executed by addressing a specific business problem with a software solution.
A clear evaluation of costs, requirements and anticipated challenges will anchor your decisions moving forward.
As well as calculating the risks surrounding the transformation and the resources required for its completion, a successful leader should also evaluate the value that these projects will bring to the company.
Establishing a method for measuring the success of your digital transformation is the key feature of this setup. This will ensure that you are holding technology accountable; to your business strategy, goals and objectives.
Setting manageable Key Performance Indicators (KPIs) before the start of a project will enable you to keep track of any areas that are underperforming and address issues quickly. Recent research from Boston Consulting Group found a strong correlation between a strong business strategy and a successful digital transformation; 90% of organisations with winning transformations effectively monitored their transformation efforts.
Weak leadership, on the other hand, fails to set the foundations for a successful transformation. Without the appropriate business strategy, you leave your projects vulnerable to failure.
After all, if you don’t pinpoint your problems, how will you know if you’ve resolved them?
As technology occupies an evermore valuable place in business operations, leaders are expected to have a diverse skill set that accommodates both corporate and digital areas.
This means being competent with not only the technology that your organisation uses, but also external services that might be an asset in the future, such as public cloud or SaaS platforms.
Understanding technology can also assist you in overcoming any opposition to change that might occur. Having a solid knowledge of technology will prove useful when communicating its value to the organisation and help you achieve company buy-in — from stakeholders to employees.
It should be noted that technical incompetency isn’t always a case of what you don’t know but, rather, what you don’t take into account. Leaders who do not conduct thorough research or lack expertise at a senior level may not be able to adequately support an organisation's needs during the digital transformation journey.
Their reluctance to understand the preliminary steps that are required for implementing digital solutions can often result in vague requests.
For example, an IT leader may say that they ‘need cloud services’, but this isn't addressing a specific business problem. A better assessment would be, “we need to improve data storage and make data accessible for a hybrid workforce, what technology could support this?”
The best IT leaders are adept at applying their technical knowledge to business decisions, focusing on specific problems and being open to trying new solutions.
Fostering a Culture of Innovation
But being a successful digital leader isn't just about what you know. It's also a case of how you foster talent within teams and breed a culture of innovation across an organisation.
It’s about creating an environment where people feel not only supported, but willing to ask questions.
During your digital journey, this process of transforming company culture can feel just as challenging as overhauling outdated systems. Both require commitment throughout all levels of an organisation, but where the threat of legacy systems is visualised through backlogs and increased downtime, culture is a less tangible factor to deal with.
Research has shown that culture can often be an overlooked factor in successful digital transformations. A survey by Deloitte showed that C-suite executives and employees disproportionately perceived “clearly defined and communicated core values and beliefs” as a key factor in the success of digital transformation. A higher proportion of executives valued a clear business strategy (76%) over core values and beliefs.
Leaders have the responsibility to emphasise the importance of company culture. By doing so, they are more likely to get company buy-in at those crucial early stages.
One way that leaders can achieve this is by working with a process of continuous improvement - understanding that digital is an ongoing process and adapting your operations accordingly.
This culture can be cultivated by providing ongoing assistance and development to employees. In practise, this involves being sensitive to the needs of employees and supporting development through prototyping and testing.
And taking a holistic approach means recognising the impact that the transformation will have across your organisation, not just in specific departments.
Communicating and Collaborating
When transforming your operations or simply trying out new ways of working, communication is vital.
Successful communication inspires strong collaboration and even stronger partnerships as your digital transformation matures. Instead of just uniting for one project, leaders should create structures and protocols to allow them to maintain and preserve positive relationships.
If implemented correctly, this philosophy will trickle down from executives to IT leaders and employees and become ingrained in the company's culture. Enabling workers to be accountable for their customer relationships has real benefits when focusing on the overall satisfaction of the customer journey - a crucial area of any digital transformation
The ability to effectively communicate your organisation's goals and plans, along with how employees participate in projects, will aid in the creation of strong digital culture and initiatives.
Agile, Adaptable and Ready for the Unexpected
Digital transformation is a long journey, often with unexpected turns. The events of the past 18 months have only highlighted this fact and intensified the need for leaders who can adapt to unprecedented events.
Being adaptable is being able to cope when things don't go as planned. An effective leader is willing to go on a digital journey with an unpredictable outcome.
For the past two decades, agile has been an attractive framework for organisations who want to improve productivity and streamline operations. Adaptability is a central tenet to an agile methodology, which allows for rapid iterations in response to client feedback and also enables businesses to deploy software at a faster rate.
Through a keen understanding of customer and client feedback, agile leaders are able to improve products quickly. Given these benefits, it’s perhaps no surprise that agile adoption has increased from 37% to 86% in software development teams over the past year.
At the helm of a transformative journey, digital leaders have the power to either make or break your digital efforts. However, drawing on the principles of any business strategy (planning, risk assessment) and individual ability (technical knowledge, communication and adaptability) leadership can guide an organisations’ transformation.