Why digital transformation must be driven by the board
Jon Payne, Manager - Sales Engineering, InterSystems, shares with Business Chief his insight into the various roles in the c-suite, from the CMO and Head of HR, to the CIO and CEO, and the parts they each have to play in digital transformation.
‘Digital transformation’ has become one of the biggest items on many business’ agendas over the last 12 months, consuming almost every industry who is eligible for the change. Digital transformation is all about changing the way a business operates and to become an organisation that is agile, data-centric and capable of evolving rapidly. However, many are still missing a trick when it comes to implementing change, with a lot of companies building their transformation projects from the bottom up. This explains why 70% of digital transformation projects don’t reach their stated goals. In order to succeed, they must be led from the top, with every member of the board having an important part to play. Digital transformation has to be a collaboration of minds and leadership from every board member is critical.
The roles of the c-suite
From the Head of HR to the CIO and CEO, everyone must be engaged with the digital transformation project in some way. For example, the CEO must take the lead, set a direction and decide where they want the business to go. The role of the CIO should be to look at how all the information flows might change and who owns that information. For the CTO, the priority should be to decide what technology is needed to enable digital transformation. The CMO should look at how the company currently deals with customer engagement and how they should do it moving forward. They must think about how they could they do customer engagement differently and more effectively in a digital world and the new channels they could potentially use. The c-suite as a whole must also consider security and information ownership challenges that digital transformation may bring, as well as the risks, all of which will differ radically as the business model evolves.
If the culture of the organisation is being changed during the digital transformation process from one that is hierarchical to one that’s agile with the freedom to fail fast and improve, the HR team must also be heavily engaged and supportive. The way the organisation measures people and what it holds people accountable for has to change and the business must ensure that people have the authority, understanding and capability to adapt, learn and evolve.
It’s not uncommon in business to encounter those who are sceptical about reorganisational programmes and the c-suite is no different. However, the fact is digital transformation is something enterprises should be doing. It’s therefore down to those in the c-suite who do see the merits of making this change to articulate the benefits of it and the risks that come with it if they ignore it to convince the rest of board. If the idea of digital transformation is still met with resistance, it’s time to decide whether the individual is part of the problem or the solution. It’s important to educate and persuade detractors, in the hope that they will buy in to the process. Ultimately, people need to transform with the business, particularly at board-level.
Where to start?
Once the roles of the c-suite have been established, it’s time to look at starting the digital transformation process. The most effective, least risky way of approaching this is by starting with one business unit. This contained way of starting the digital transformation journey will allow the business to apply learnings to other parts of the company as time goes on. Too much change at once isn’t feasible and is likely to mean the c-suite loses control of the process.
Digital transformation should not only be led from the top, but the c-suite must also actively engage and be involved in setting the direction and execution of the strategy. As an extremely disruptive process that looks to transform the way the business works, it’s vital that those in the most senior positions give it their attention not only to ensure the path to digital transformation is successful but also to reassure employees that it is a lasting change, rather than just a trial.
How involved should the c-suite be?
The c-suite should be involved in the entire process, from the planning stage right through to implementation. However, that’s not to say they shouldn’t delegate. Before delegating, the c-suite must first understand what success means.
Digital transformation is often an evolutionary process for organisations. Rarely do businesses get everything right the first time, so metrics must be in place to determine what success looks like and whether a change has worked or not. Once these metrics are in place, members of the c-suite can then delegate authority to employees so they can make decisions but with the understanding that it’s permissible to fail. In these scenarios, the c-suite member must still be accountable for any decisions those employees make and any resulting successes or failures.
Additionally, the c-suite should actively encourage employees to participate in the digital transformation. Often those working at the metaphorical coalface will have opinions and suggestions on how to improve the business, as such, it’s important to create a culture that is adaptive and empowers employees to share their feedback.
One of the fundamental mistakes made by businesses is assigning blame for failure to an individual, holding them accountable and removing them from their position. More often than not, this individual is then immediately replaced by somebody else and different results are expected. This is a damaging approach as 99% of failures come down to institutional obstacles and not failing fast, rather than being pinpointed to a single employee. For companies going through digital transformation, there’s no hiding place. Consequently, all departments and individuals must adapt and be willing to understand the scope and nature of change the business is going through.
What about smaller businesses?
Smaller businesses that don’t have a traditional c-suite shouldn’t be deterred from undergoing digital transformation, particularly as in some ways they have an advantage. Very small businesses should appoint one person to take charge but get all employees round the table, engage everyone and work together to decide how to approach it. They should start with one business area and find an initial starting point; if this is something they struggle with, they should look to external consultancy. Small teams have the benefit of short lines of communication, tend to be more agile, quicker to respond and suffer from less organisational inertia. However, the risk of getting digital transformation wrong is much greater, as it can impact the whole business in an instant. Therefore, small companies must try things out before they change the whole business but can then move rapidly from the trial stage to execution.
There’s no denying that digital transformation can be a difficult process, however, the involvement of the c-suite is vital to its success. For the entire organisation to buy into the process, the example needs to be set from the top. While the c-suite is unlikely to drive day-to-day implementation, their continued support and involvement is crucial.