A CEO’s guide to digital transformation

For an organization to embrace digital transformation, it must be open to cultural change; a change that starts with the CEO, who must sign up for the process and embrace a digital-oriented mindset. Technological know-how is fundamental, but just as important is a leader’s ability to choose from a myriad of digital initiatives that best match with the company culture.

The job of a great leader demands a set of fundamental characteristics, such as listening, understanding, or inspiring a team. However, digital leadership requires an added skill set - a skill set that when implemented will shift behaviors and change mentalities across an entire organization. To leverage digital transformation effectively, CEOs must build a culture that supports and accepts it. To build momentum and ensure success, the new strategy should adhere to the following steps:

1. Before everything else, brainstorming strategic outlines

Digital transformation is a journey. CEOs must set visions and brainstorm strategic plans without running off-course. There’s no one-in-all recipe for identifying the right strategy for the digitalization of one’s organization, meaning that CEOs must come up with a broader outline as well as a purpose and context for the change. Brainstorming strategic outline involves rethinking the business as a whole and drafting the new roadmap. Being open to feedback from customers, employees, and partners is fundamental as it translates to adaptive leadership.

Adaptive leaders develop an inner capability to build a shared sense of purpose; their approach to management is through influence, not command and control. The four dimensions of adaptive leadership involve creating a customized leadership framework. For Barclays Bank, the new strategic outline was to divide the business into two separate units: investment and retail. To streamline processes, the restructuring plan was centered upon incorporating new technologies such as 3D printing, voice recognition, and bot customer service to transform customer-oriented operations. The company also launched a digital investment platform with lower fees for existing customers.

2. HR alignment - finding great talent to enable change

Following the new strategic outline, the next step would be to align HR with the upcoming shift in digitalisation. Jumping on a digital transformation journey is directly linked to finding great talent to enable change; which might turn out to be a double-edged sword. CEOs must decide whether it’s best to hire new people, or train existing employees, and prepare them for the digital journey ahead.

With 84% of CEOs committed to transformational change (2017 survey by McKensey), searching for talent open to digital transformation begins within the company. Given that HR transformation is underway, the general term “personnel management” has morphed into “employees experience” and “people and culture”. Driven by cloud capabilities, a deeper focus on the availability of pioneering technologies like AI and machine learning compels HR to reimagine ways to deliver new strategies and services.  Whereas the conventional overview of HR transformation focuses on improving processes,  the next generation will be all about learning to complete new tasks. After decades of being separated from top management, HR finally gets a seat among CEOs and CFOs.

How can HR help CEOs find the best talent?

• By using advanced optimization and prediction techniques to help shift the focus from inefficient screening processes onto productive HR tactics and business models that enable strategic growth
• By helping employees find tailored career paths, while also recommending customized learning based on competencies and skills
• By predicting employee flight risk and providing mitigation strategies

However, HR alignment and technology are not enough to enable digital transformation because at the core of a company lies the people - also known as its most valuable asset. Boosting motivation and engagement fosters an essential factor: innovation culture. A great example of HR alignment done right is by implementing the agile methodology. Developed on the principles of “employee empowerment” rather than on a strict hierarchy, agile enables rapid iterations based on feedback, while also driving a broader cultural shift to enable best practices like:

• Creating an appropriate working environment for employees
• Acknowledging and celebrating success
• Asking for help and receiving suitable guidance
  
  

3. Preserving the company culture

After settling on new strategic outlines and aligning HR with the company’s upcoming shift in digitalization, the next step would be to learn from the best without losing focus. The needs of one company may differ from the needs of another, and in spite of pursuing similar goals, digitalization should be a step-by-step process in sync with the company culture.

Adopting every pioneering technology out there is not a good sign of going digital; it actually indicates that the company doesn’t have well-defined goals. Before making a choice, a smart strategy would be to get both HR and employees involved in the process. After assessing their needs, the final step is to settle on types of technologies that can best enhance those goals.

A company’s culture is fundamental to its digital maturity; and by creating a rewarding, engaging and fun environment for employees, productivity can spike to as much as 12%. Although changing infrastructure, processes and technologies is possible, changing perceptions among employees is a far more complicated process. As a consequence, it demands an approach that embraces the people, any organization’s greatest asset.

When Jonathan Becher joined SAP, he realized that the key to digital transformation of the company was the company culture. After identifying cultural issues related to the needs of the business for a hands-on approach rather than expert input from outside the organization, Becher decided to make internal tweaks at SAP. The people within the company were given the learning tools they needed to learn, adapt and boost their skills. 

Another concern spotted was the need to accept and embrace failure; not treat it as something negative. In order to change mindset, SAP executives jumped on an ongoing journey to repurpose the company culture. Following a series of experiments centered at placing small bets rather than one big bet, SAP managed to successfully cultivate a work environment that can evolve, constantly learning from failure rather than blame it.

4. Embracing the digital from a technological perspective

How does a CEO choose the digital tools for employees to use and digitize the company? The answer: he doesn’t, because he can’t possibly know what’s right for some and wrong for others. Embracing the digital is all about settling on tools together with employees; or even better, hiring fresh talent with a whole new vision and skillset to grow the company.

In 2018, enterprise software company Atlassian welcomed a new CIO, Archana Rao from Veritas Technologies. The goal was to prepare the company for an upcoming growth. To make that happen they acquired OpsGenie to be able to create supporting processes, including onboarding OpsGenie employees, integrating sales and purchases, as well as other operations. For 2019, Rao seeks to embrace the digital by automating repetitive tasks using RPA (robotic process automation) in data entry, IT support, financial services, and HR. 

Conclusion

Even though advanced technologies play a fundamental role in transforming service delivery and business operations, the people within an organization are the ones that accelerate digitalization. It may start with the CEO, but in the end it all comes down to every single employee in the company. Contrary to popular belief, the CEO is not a Jack Welch of all trades; which is why investing in people, training them, and enabling them to participate in the overall digital transformation journey of an organization is the key to success.