The path to transforming into a tech-driven business
Competitive innovations, business agility and adaptability. Being tech-driven comes with clear advantages in a rapidly digitalising market. But while the transformation into becoming a tech-driven business is inevitable, it’s not the business that sets the pace. It’s the people.
And to kick off with the people leading the company: the average age of a sitting Fortune 500 CEO is 57.7 for companies in the Russell 3000 and 58.6 for the S&P 500. According to data from head hunter Crist Kolder Associates as reported by Reuters, the average CEO is now eight years older at hire than 15 years ago. Older age is typically associated with more entrepreneurial success, but research from Rensselaer Polytechnic Institute (RPI) found that younger entrepreneurs are more adept at inventing new technology. Growing with technology themselves, younger generations are more tech-savvy and show less resistance to changing the way of working.
Laying the path
Transforming your business starts with strong leadership, but who should take this role? The CIO, with the traditional focus on mitigating risks and optimising performance, the CTO, with the view for where technology is going, or the CMO, with the practical need for creating a single customer view out of all the data sources that leads to a large tech-stack? The truth is that transformation has to include every department, so also HR and finance, for instance. It’s a multidisciplinary path that should lead to a common goal. Power struggles, political games and silos keep an organisation looking inwards, while transformation is all about changing the whole organisation to better meet the needs of the market. Therefore, the best sponsor at C-level for transformation is the CEO, with a vision that incorporates every department and process.
One of the risks of putting the wrong person at the helm of digital transformation is called the Agile Theatre. Despite all the good intentions to truly transform the way of working, it is nothing more but window dressing for the stage. Lack of knowledge, lack of support and corporate restraints can prevent the organisational changes needed to transform. You need someone who actively pulls the cart. An interesting role to consider for this is the Chief Digital Officer (CDO), which is yet a relatively fledgling executive role. With the overall responsibility to drive digital growth and transform analogue business processes into digital ones, McKinsey dubbed the role Transformer in Chief. The CDO translates the corporate strategy into concrete steps and ensures these are carried out quarter by quarter.
The roadmap to embracing technology
The key to digital transformation is understanding that there is not just one transformation. There are many digital transformations, on various axes and in different timeframes. Although Covid-19 put digital transformation high on everyone’s agenda, the underlying business case will be different for each organisation. Businesses may come in many shapes, but digital is always a key component either now or in the near future. The following steps are consistently followed for realising digital transformation:
Set and spread the corporate vision
Work, business, shopping, family life and personal contact: Covid-19 left virtually no stone unturned. For companies to grow and thrive in a post-pandemic world, a renewed sense of purpose is called for. Things have changed and are still changing, and C-level has to show how your organisation will continue to create business value for your customers. This may mean you have to give up business models, target groups or legacy systems, as certain changes will be needed if the organisation is to stay relevant in the future.
Identify the barriers
Next, consider the approach to make your digital vision a reality. Identify and address those factors that undermine digital transformation. These can be manyfold, from resistance to change and working in silos, to legacy systems, lack of support in the organisation, a risk-aversive culture and a lack of talent. Even though the pandemic and the resulting shift to remote work have broken some barriers, a few of them will be persistent and need to be changed gradually. Often, the supporting infrastructure needs to support guided, incremental change and become evolutionary. And the company culture will need to welcome big changes, and therefore, uncertainties.
At most organisations, the current road map to digital transformation has been set aside to deal with the most pressing needs. Therefore, take stock of the company’s starting point. Look at the progress made through the pandemic by the company, competitors and markets. At most organisations, the digital transition went in overdrive during lockdowns to ensure immediate survival. Identify which tools and technical skills are now necessary and determine the level of digital mindset within the organisation, including leadership and culture. This is where you consider either to Build, Buy or Partner.
Set the pace
At the core of digital transformation lies the adoption speed at which the organisation embraces technology. The main challenge comes with accelerating. On the one hand, Covid-19 provided momentum by forcing companies to transition the whole of their operations to remote working at an unprecedented pace. Both customers and employees went along and grew a more digital mindset. On the other hand, there is a dire need for certain things to go back to ‘normal’. The challenge is to develop a digital plan that creates sustainable advantages within the constraints.
Develop digital competencies and mindsets
Digital transformation is, at the very heart of it, purely a matter of competencies and mindsets. Can your employees act and think digitally? This not only means updating the hiring process; it’s also about aspiring to certain levels and making continuous steps that help your organisation as a whole to get there. This is where digital transformation becomes feasible in the day-to-day work of your employees: physical customer interactions become virtual sales and support, old processes are re-engineered or become obsolete and experiments with innovative technologies are conducted to learn.