Digital Transformation - Governance

How to lead a digital transformation

Many CIOs are making sweeping organizational changes, adding key roles, reskilling employees, setting up innovation labs and experimenting with emerging technologies to meet strategic mandates issued by their CEOs and boards.

While necessary, these steps won’t work without buy-in. IT leaders must align themselves with any executive with enough clout to negotiate the changes required and get the requisite buy-in from the board of directors as well as the rest of the business, MIT Sloan’s Westerman says. Such partners could be the chief digital officer or chief marketing officer. CIOs and their partners must then loop in product managers and other functional heads to build digital services intended to boost customer engagement.

“You need technology on one axis while the other axis has to include the ability to envision and continuously drive change,” Westerman says. “Put those two together and you get [companies that are] digital masters. If you only have one you're going to be off diagonal.” Westerman, who wrote a book on the subject, Leading Digital: Turning Technology into Business Transformation, says that digital masters are 26 percent more profitable than their industry competitors. 

Of course, not every CIO is collaborating with Gartner or has the benefit of courting MIT academics for advice. So how do you know if what you’re doing constitutes a digital transformation? The key lies in the other “D” word.

Ask yourself whether what you're doing is disruptive to your business and to your industry. If you can say yes with a straight face, you may well be conducting a legitimate digital transformation.

Digital transformation misconceptions

A lot of people believe the term digital transformation is interchangeable with technology. It does, of course, include technology, but with emerging digital capabilities affecting all areas of the business, it’s important to remember that the transformation is just as much about leadership as it is about the technology itself, says Janice Miller, director of leadership programs and product management at Harvard Business Publishing Corporate Learning.

But perhaps the biggest misconception of all is that digital transformations are “done” when they reach a certain stage. Digital transformation is a journey; completion of one stage is often a stop-gap or bridge to the next leg. As emerging technologies and market forces heap new disruption upon the enterprise, the company must adapt to survive.

Why digital transformations falter

Digital transformations are lagging or even failing for several reasons, according to research from Digital McKinsey, Wipro Digital and other consultancies. The main culprits? Lack of agreement on what digital transformation means; little to no senior executive buy-in; diffuse focus, with too much emphasis on back-end execution; lack of budget; talent deficit; and, of course, unwillingness to change.

A July report from Capgemini Digital Transformation Institute and MIT Sloan School of Management says transformations are falling prey to poor leadership, disconnects between IT and the business, lagging employee engagement and substandard operations, among other reasons.