We discussed the origins of digital transformation in our first article of this series. In this installment, we focus on the key strategies to a successful digital transformation led by a vice president of digital transformation, chief transformation officer (CTO) or chief digital officer (CDO).
As with any restructuring initiative, a digital transformation should not be undertaken until the company has done its due diligence. The decision to implement this transformation must be based on objective information about the company’s state of affairs.
The purpose of these preliminary steps is to establish an overall picture of the company and clearly define its approach to risks and challenges. This puts the company in a position to overcome potential obstacles to a successful digital transformation.
Data plays a key role in every aspect of a digital transformation. The company must rely on data-driven key performance indicators (KPIs) to measure its success. This means establishing a culture of innovation rooted in data and thus breaking with the old way of doing business. The traditional model, which serves as the basis of the current business model, has reached its breaking point, hence the need to accelerate the process of digital transformation.
Attitudes within the company need to evolve in the direction of continuous innovation. Implementing data governance in a company often means exposing certain flaws or weaknesses. Leaders need to be ready to receive this message and remain committed to the process.
Risk management is a major issue in any digital transformation. In a company with very strict procedures and an aversion to risk, the vice president of digital transformation will not have enough leeway to really bring about change. If the board of directors or the CEO does not allow this executive to break certain rules and to innovate, conflict is inevitable, and the transformation project is doomed to fail. In response to this difficulty, many companies choose to create a separate entity or new division. Hydro-Québec did this with Hilo, Vidéotron with Fizz, TELUS with Koodo, Loto-Québec with EspaceJeux—the list goes on.
The new company enjoys greater freedom and a distinct culture. This parallel structure speeds up the pace of innovation and reduces risks, while preventing contamination between the two companies. However, it can result in added complexity, especially at the administrative level.
A lack of digital maturity among board members is one of the main obstacles cited by the executives and digital transformation consultants PIXCELL spoke with. Very often, the majority of a board’s directors lack digital literacy, which translates to a certain naivety about the implications of digital transformation.
The CEO and the executive committee must ensure that the directors understand the issues at stake, particularly in terms of risk management and corporate development. The board of directors should be first in line to learn about change management.
A lack of change management is a risk in itself. In other words, digital transformation can fail if those affected by it do not receive adequate support as the process moves forward. It is imperative to put in place a solid human resources committee to support major upcoming changes and ensure that all the key players embrace the company’s vision. Change management must go beyond a binder of best practices and a series of presentations; it must be integrated into the company’s day-to-day, measured with concrete deliverables and sustained.
The technological aspect of a digital transformation can prove complicated, but changing the behaviour of employees is even more delicate, as multiple viewpoints and emotions need to be taken into consideration. While change management is fundamentally based on objective and measurable data, subjective factors need to be brought into the equation too.
Middle management must be mobilized in the digital transformation process, if only from a change management perspective. It is important that managers not feel threatened by the process; in fact, they need to fully embrace it and thereby send the right message to their employees. Otherwise, resistance may arise sooner or later, hindering progress.
Having managers play a key role in the digital transformation is strategic, if not critical. When managers understand the context of the transformation, the company’s vision and the reason behind every action, they have an easier time accepting the different steps of the process, even if these disrupt their operations.
Before recruiting a digital transformation executive, the CEO needs to have laid the groundwork that will help the executive carry out the mission at hand. The role of the CEO is crucial to the success of the future CTO or CDO. This will be the subject of our next and final article in our digital transformation series: How to Hire the Right Person and Support Them in Their Mission.
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