Almost every large, established company is somewhere along the digital transformation spectrum today. They have recognized the need to transform and to ride the disruption wave to their long-term benefit. But why isn’t this all moving more quickly?
Tuck Rickards can point to a number of reasons, some easier to overcome than others. Rickards is co-leader of the global Digital Transformation Practice and member of the CEO/Board Services Practice at executive search and advisory firm Russell Reynolds Associates.
He says that digital transformation in its purest form involves using today’s and tomorrow’s technologies to reinvent the core of an established business and carefully aligning the new and old aspects of the organization.
“That is quite difficult,” he says, and it becomes even more difficult if a company lives in fear of a newcomer disrupting the industry.
Perceptions and leadership
“I advise companies to stay away from seeing themselves battling renegade upstarts,” Rickards says. “Instead, strive to understand the digital capabilities that can reinvent your business. Make sure you have talent that understands the possible, and build the organizational structure to deliver on that.
“The most important leadership trait going forward is blending disruption and a practical approach to transformation.”
“We are at a point where no company in any sector will be immune from disruption. The challenge is to look within at all their assets, how they leverage those, and how they can harness new capabilities.”
That requires strong and visionary leadership, for all the usual reasons, but with a digital transformation twist.
“The most important leadership trait going forward is blending disruption and a practical approach to transformation,” Rickards says. “Lots of people have done digital in all shapes and sizes. But the ones who can step back and understand business impact and how you move a large organization forward will be the most impactful.”
In the latest survey of senior executives by Russell Reynolds, digital transformation strategies are being led by a variety of executives, from CIOs to CMOs to COOs. But Rickards says ideally the leader should be the CEO.
“If you want to drive an integrated approach to digital transformation, it has to be the CEO,” he says. “It shouldn’t be marketing driven or technology driven, it has to be thought about holistically across the company.”
It’s all about people
One of Russell Reynolds’ key functions these days is filling the need for digital talent in large organizations.
“Chief digital officers, chief analytics officers, heads of e-commerce, and CTOs can be catalyst hires that bring new skill sets into an organization and can build new capabilities that are and will remain critical. The talent is critical, but so is the organizational construct in how these roles fit within the organization.”
Rickards’ colleague, Nora Viskin, knowledge director for the Digital Transformation Practice, says executives in their survey point to the lack of digital expertise as the biggest obstacle to advancing their transformation.
Rickards concedes that in the technology space, this is really nothing new; it is just becoming much more noticeable as the tech itself becomes more advanced and more foundational to businesses.
“There is always a dearth of talent. We have a problem which goes back to the STEM (science, technology, engineering, and math) crisis, with not enough kids doing math and science and not enough people pursuing computer science degrees,” he points out. “We have a shortage of people coming through the pipeline, and this is a big issue that I don’t see going away.”
Unfortunately for some regions of the country, hiring the right talent will be even more of an obstacle. While San Francisco, for example, may have an overload of digital talent, it may be tough to get those people to relocate to Omaha or Oklahoma City.
The six step program
Rickards spelled out six steps toward becoming a digitally transformed organization:
Dream it. Step back and reimagine your company as a digitally enabled business, and how the future state of the business would look. This is much more than seeing digital as merely an added new channel, for instance, and requires a transformation of your perspective to be successful.
Remap the organization. Look at your current organizational structure, (probably top down and directive), and imagine how the customer journey will be different. Consider what you need to do in your organization to enable that customer journey.
Assess your team. Closely evaluate the core capabilities of your team. Evaluate what talent you have in your organization currently, what you will need to reach that future state, and what gaps there are that will need filling.
Embrace new talent. It will take a variety of new people, with a multiplicity of skills, to create the platforms that will support your “new” business.
Evolve your culture. As you bring these new people and their innovative capabilities into an established organization, culture change becomes a hugely important issue. The culture must become one that is fully open to listening to customers, to integrating different points of view, and to enabling agile decision making.
Keep the board close. Your organization’s board should play a vital role in your transformation – not just in risk management and governance, but in strategic oversight and succession planning.
“Companies need to take a very creative look at the next three to five years,” Rickards concludes. “Every person working in a large organization needs to recognize that the skills and what made people successful yesterday are quite different from what will be needed in tomorrow’s CEOs.”