In our last blog, we explored how to create a clear vision and strategy for your digital transformation. However, once your vision is in place, who will champion it and bring to life for everyone in the organisation? Ownership of digital is a critical success factor, along with creating the right organisation, environment and employee experience to empower and drive change.
In our digital transformation blog series, we are taking a deeper dive into what we believe is the right set of ingredients for successful business transformation in a digital age. We are sharing our proven Digital Change Framework, which provides the blueprint to successfully digitally evolve your business for better outcomes, drive innovation and enhance competitiveness.
“As all companies increasingly become “technology companies,” the roles of the CIO and IT department are more important than ever — but true success in digital transformation is an enterprise-wide, cross-functional endeavor”.
“Many company cultures are risk-averse, and their leaders do not feel a sense of urgency to compete differently, despite global consumers’ embracing smart telephones and the Internet for more than a decade.”
The 2017 State of Digital Transformation, Altimeter Group
In this interview, I catch up with our Strategy and Leadership expert, Richard Morecroft, as he shares his opinion on:
- Why ‘ownership’ of ‘digital’ is a critical factor for successful business transformation in a digital age.
- Who should be owning ‘digital’ in your business?
- What are the benefits when you get the right team in place?
- Why can digital transformation fail if you do not create the right culture and environment for change?
Richards’ insight is based on real-life experiences of helping a range of organisations think out and then deliver on their digital transformation ambitions.
Sophie: Why is ownership of digital a critical success factor of digital transformation?
Rich: Historically digital has been the web and their website, which was, in the early days, often an additional element to an organisation.
Initially, it was somewhat of a bolt on. Retailers, for instance, had a digital store and gave it a store number and that store had stock. It was treated from a financial and operational perspective, almost the same as any one of their retail fleet.
The reality is the digital capability has the opportunity to touch every customer. It is much more an overlay. Digital now is about the ability to connect with your customers, so therefore all parties in the organisation have responsibilities towards a customer and the delivery of customer experience. The sharing and ownership of digital as a capability across the organisation is a natural part of being customer focused. That is why it becomes a critical success factor.
Sophie: In your experience, is the leadership of digital given the priority it deserves within the majority of organisations?
Rich: I think there are two ways to look at this.
Generally, I think organisations often fail to get the right balance. They tend to view digital as “Tech” or “Sales” rather than an overall method of engaging customers. Boards and CXO’s often delegate the leadership to these areas. When doing this I think they are missing the importance of their ownership.
The other view is how a leader makes things happen, i.e. detail and the understanding of what it takes to create a given customer experience using digital technologies.
Digital as a capability and as a channel is very unforgiving. A human interacting with a customer can work around problems, and missing bits of data whereas the web or a smartphone does not have that intelligence, so you have to design processes that are very customer experience friendly but are also incredibly robust, and that takes a lot more thought. The leadership needs to be significantly more analytical.
There are different types of leadership experience needed to make digital work. From a technical perspective, it is that analytical focus on the detail and the outcomes of customer experience.
However, from a senior management perspective, they need to recognise that investment has to happen. The majority of organisations don’t get the balance right – they may appreciate the importance of digital but don’t give it the resources or time it needs to make it right. The ones that are successful get that balance.
Real digital analytical leadership and the willingness to support that depth of experience is required. In theory that can be quite slow to do – humans can work around problems in seconds – digital needs to be programmed to work around a problem. So solving issues can take time, and that requires patience and persistence, and additional resources are needed from leadership to make that investment.
Sophie: How important is strong leadership in successful change when you are pushing a large-scale digital transformation?
Rich: There are those that create the environment to make it happen, and there are those that make it happen.
Those that create the environment are the c-suite. They set the targets and KPI’s, expectations and outcomes, but also provide the resources for those departments to deliver.
The KPI’s work both ways, so you might set a target regarding the outcome, but it has got to be realistic and achievable, and it has got to be resourced to deliver.
So strong leadership is also complex in nature. It needs to be accepting that you cannot run at 100 miles an hour as an organisation and change effectively. Specific areas may have to be slower.
Alternatively, you can make rapid progress, but some of it may be wrong, or some of it may need to be thrown away. You can do change at two speeds, but quite a bit of it in the tactical area may not work. Strong leadership is about making sure that the resources are used in a way that is measured and to a plan.
The environment that you create for your staff to operate in is everything – if you do not give them the resources, they will not be able to make the change happen.
So, it is about making tough decisions and giving explicit support to the initiatives that you are sponsoring by listening to the people who are doing it and supporting them with the resources to make it happen.
Sophie: There has been the rise of Chief Digital Officer and Chief Innovator roles, but who do you think should be owning and driving digital?
Rich: Often organisations do look to give the responsibility to an individual, and the Chief Digital Officer or the chief Innovator are roles that can exist in an organisation, but I think they are temporary.
I think the most useful deployment of these types of roles is at the very early stages of looking for opportunity and building a business case to invest and change things.
These positions are not necessarily the leader or saviour of the organisation. This is a job for the CEO and the executive board – these are the people who are making the decisions that will lead to successful change and transformation, or not.
A chief digital officer does not usually have that remit. They are great people to be disruptors and starters of change, but it is not a long-term solution. The long-term solution is the CEO and the board to take responsibility for delivering, owning and driving digital change.
Sophie: What are the benefits when you have the right leadership team in place?
Rich: The right leadership team will work together for a common aim.
By setting your direction, whether an executive team or just a CEO or COO, being aligned with a set of common outcomes you want to deliver and supporting each other in that task is critical in any organisation. It is even more critical during a period of change because there are disruption and uncertainty.
Humans inherently don’t like change, so having a strong leadership in place is essential to success. Of course, just having the right leadership teams does not in itself mean you will be successful – you still need to have the strategy and targets and objectives aligned – but it is a huge enabler.
By bringing together the right people, with the right experience, and working together as a team, as well as having a clear understanding of the challenge ahead, you will significantly increase your chances of success.
Sophie: Are you able to share some working examples of digital transformation efforts that have failed because of ownership?
Rich: The most common problem I come across is that digital or the challenge of digital transformation is owned by an individual that is positioned in the organisation but not empowered to deliver on it. There is this expectation that it is something that can be ‘done’ while you get on with ‘business as usual’.
For example, I worked with an organisation where the chief digital officer was not on the board or exec team and actually reported to a member of the exec. So that individual was given the mandate to transform the organisation digitally, but they did not have the authority or peer level group conversations to be able to raise this and start to steer the bigger picture and vision of the organisation. Instantly they were at a significant disadvantage to create a vision and help make that happen.
Similarly, another organisation had grown organically to a considerable number of brands across multiple countries. The digital organisation that had evolved was hugely fragmented, and the opportunity was colossal regarding cost-savings and efficiencies to be achieved by bringing that digital estate into one area. They did not think about the outcomes or end game, and how they were going to make that happen, and what that would mean to every level of the organisation. The message was a tough one to take into the boardroom because the management team had historically built that, and essentially they were saying that we created something that is not fit for purpose.
Sophie: Are you able to share some examples of strong leadership teams? Why were they successful?
Rich: I can think of a few examples, but the most powerful one that I have seen is an organisation that had commenced its digital transformation programme, and then realised that they had not been clear enough about their destination.
They had done a lot of activity, and most of it was correct, but what they were not clear about in their message to themselves, to their customers, or their organisation, was ‘what does this mean for us all?’.
We worked with them to create a vision that everyone could align behind. It was an outcome based statement – we will be doing this, and our customers will have this type of capability. It took three months for the team to buy into this.
We then took it down to the next level, by department and by area of responsibility, to work out the activities that they would be doing, and spent time looking forward as to what were the outcomes that we wanted to see. This meant at an individual level key personnel were clear on what his or her role and responsibilities were, and what they needed to deliver over the next three years, as well as how it would impact them.
It sounds like a relatively simple exercise, but without that vision, they were unable to align all of the activity they were doing to develop the organisation. This becomes more vital when you are talking about developing digital technologies because you have to adapt to build the technologies ahead of them operating, and capabilities need to be integrated to create that digital vision and outcome. You cannot just ‘do’ things differently as a human can, or have a manual process.
They have subsequently continued to deliver on the vision, and their digital transformation programme has accelerated. In fact, they have started to bring forward some of those outcomes, and they are generating real traction across their organisation, where previously they experienced reluctance and confusion.
Sophie: The other strategic change factor you cite for successful digital transformation is the right organisation and environment. Can you clarify what you mean?
Rich: Firstly it is around your organisation and incentives – making sure your structure does not block or inhibit the development or delivery of your vision.
Secondly, you have to empower individuals with the resources, the decision-making process and the governance, to make it happen.
To give you an example – we worked with a large organisation where 60% of its revenue was sourced through its digital capability. They wanted to expand this and look for ways to convert their off-line platforms to a more digitally enabled platform.
However, what they realised was their sales staff in the analogue world were incentivised to not focus on digital. They essentially had 1,000 + people in their organisation actively pushing against digital transformation. The organisation was fighting against itself. The environment – the incentives – were not aligned to drive more digital transformation. Internally they had challenges persuading people to alter their budgets and focus because they were personally were incentivised to do something different.
So, one of the first things you should do is to create an environment where you are all pointing towards the same task. By environment, we mean decision-making, incentives, and understanding why the employees want to come to work. Making sure incentives are aligned and structures do not inhibit. What we did, in this case, was to focus those 1,000 staff on selling a solution that would ultimately deliver digital sales. It was creating the right organisation focus and structure and environment.
Sophie: Do you think businesses generally have the right skills and talent in place to digitise themselves? Are businesses developing the right talent?
Rich: I think many organisations are very process orientated rather than customer experience orientated.
Digital, as a technology, is highlighting where customer experience is failing, or where a process does not give an excellent customer experience.
Organisations that are digitally advanced focus a lot on customer experience, and making it a good one. Humans in retail or on the phone can cover over the cracks of an imperfect customer journey or experience, online; you cannot get away with it.
Many organisations may inherently have the right skills and be customer focussed, but they may not have applied or translated them into the digital arena. In these cases, they often need help sourcing people that can help them with that particular element of the requirement. Then ideally you get people trained to provide exceptional customer experiences through digital and start to teach others across the organisation.
The other area around training and expertise is the role of senior management; helping them to understand that creating a great customer experience in digital takes time, analysis and trial and error (to a degree). It is not just a point about being ‘nice’ to the customer or taking away their pain. A customer may, for example, want to serve themselves. This may be the best experience for them, so you need to understand the customer expectations and be prepared to have multiple solutions to the same task. It is about giving a choice to the customer.
Building the right skills will take time because it is complicated, but people do learn fast.
Sophie: How important is attracting, developing and retaining the right talent into your organisation?
Rich: There is a skills gap, but, stating the obvious, the only way to bridge the gap is to train more people. Usually, it is far better to take your own people – who understand your customer and your environment – and give them the skills to become digital experts. This is better than going out and trying to replace your workforce with people who do not have a history. Far better to invest internally and train your staff to deliver better outcomes.
Sophie: What can go wrong? Can you share any examples?
Rich: Historically we have had clients who have invested a great deal of time and resource recruiting interims and contractors to bring about change and development internally. Those staff brought a lot of experience and expertise, and what these businesses didn’t do is accept that there is an overhead for cross-training and knowledge transfer. As a consequence when contractors left the organisation they took the knowledge with them. In one particular case, they had to call the person back into the organisation, at huge cost, because they had not done any knowledge transfer, and their specific experience was a vital element of the operation.
So, while recognising temporary resource is an excellent way to build momentum and pace in your digital change agenda, businesses need to invest time and resource to train their existing workforce. This allows employees to develop the specific digital skills and knowledge for the future.
Sophie: If you were going to give just two pieces of advice to executive teams trying to transform digitally, what would they be?
Rich: Firstly, set a crystal clear vision. This vision it should be outcome-based – this is what we will be doing – this is what we will look like.
Be as detailed in that vision as you can be about the expectations that you have of yourselves and your organisation as to how you will be operating.
Include in that vision your appetite – how will we get there? We will invest X amount, or we will acquire Y. Whatever that desire is, you need to demonstrate how you are going to get there, the resources you need and what it is going to mean for everyone in the organisation.
The second piece of advice is to live that vision. To start doing this as soon as physically possible. As a leader or executive in an organisation, you need to lead by example. More so now than ever – through things like social media and the way you communicate internally about what you are doing. Live that vision and start to articulate how other people will be operating as well. Executives need to be the campaign leaders for change.
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