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Why digital transformation must be led from the top

(Image credit: Image source: Shutterstock/Wichy)

Over the last 12 months, ‘digital transformation’ has been on the agenda of businesses across almost every industry that is eligible for the change. However, with research finding that 70 per cent of digital transformation projects don’t reach their stated goals, it is clear that the majority of businesses are struggling to implement change. Often, the reason for this is that transformation projects are being built from the bottom up. However, to succeed, digital transformation has to be a collaboration of minds that is led from the top and requires every member of the board to play a key role in the process.

The roles of the board

Digital transformation is all about changing the way a business operates in order to become an organisation that is agile, data-centric and capable of evolving rapidly. For this to be successful, everyone in the c-suite 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 its people and what it holds them accountable for has to change and the business must ensure that its employees have the authority, understanding and capability to adapt, learn and evolve.

Finding the right approach

Once each member of the c-suite has been assigned a role, it’s time to move on to the digital transformation process. Beginning with a single business unit is a recommended approach as this minimises any risk. Too much change at once isn’t feasible and is likely to mean the c-suite loses control of the process. Therefore, by adopting a contained approach to the digital transformation journey businesses will be able to gain insights and learnings which, in time, they can apply to other parts of the company.

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.

What level of involvement is required?

While the c-suite should be involved in the entire process, from the planning stage right through to implementation, they shouldn’t be afraid to delegate. However, they 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.

The c-suite should also 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 per cent 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.

Adopting this approach in a smaller business

Smaller businesses without a traditional c-suite shouldn’t be deterred from undergoing digital transformation. In some ways, these organisations have an advantage as they have shorter 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. 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.

Digital transformation is undeniably hard, as evidenced by the fact one in five digital transformation projects fail. However, if businesses get it right, they stand to see substantial benefits, and the involvement of the c-suite is vital to get to that point. While the c-suite is unlikely to drive day-to-day implementation, their continued support and involvement is crucial, particularly in getting the rest of the organisation to buy into the process.

Jon Payne, Manager - Sales Engineering, InterSystems

Jon Payne is a database engineer at InterSystems.