The terms “digital transformation” and “e-transformation” are on everyone’s lips in the business community. There are also an increasing number of job postings for vice president of digital transformation, chief transformation officer (CTO) and chief digital officer (CDO), with companies vying for qualified candidates. But what is really behind this trend that is changing the way companies do business and dividing opinion on boards?
PIXCELL discussed this matter with several digital transformation executives and consultants, board members and risk management specialists with the aim of identifying issues and obstacles and, most importantly, finding solutions. Here is the first article in our series on this topic.
First, let’s clarify the meaning of this trendy term.
Carrying out a digital transformation involves leveraging technological possibilities to integrate new cash flows into a company. This takes many forms, all of which constitute new financial levers: artificial intelligence, cloud computing, mobility, internet of things, etc. This is a global trend affecting every industry. And it has a worthy goal: to harness technology for the benefit of companies. However, achieving this end is no simple task and involves establishing a real culture of innovation. In most cases, companies need to implement cross-functional changes. One such change is particularly challenging: a change of culture.
What, then, is digital optimization? This refers to the automation or digitization of various processes: manufacturing, production, distribution, sales, customer service, etc. Digital optimization is less cross-functional than digital transformation. Nonetheless, hiring a digital transformation executive is often critical to this endeavour.
A few years before the COVID-19 pandemic shook the entire economy, experts were already talking about the “age of disruption”: the fateful moment when, due to a lack of digital preparation, companies would see their business models fail. Deloitte published a white paper on this topic in 2015. It goes without saying that the current pandemic has moved most companies worldwide closer to this crisis point.
Today, many boards and senior executives are beginning to realize that their business model is not as solid as it used to be—or is altogether broken. There are many potential causes: a gap or weakness in the supply chain, a competitor’s innovative product or service offering, changes in customers’ consumption habits, etc.
It is becoming imperative for companies to integrate new channels and leverage technology to ensure profitability. Digital transformation can be a lifesaver, but companies need to be aware of its impacts.
Faced with this alarming situation, the CEO and board will determine that they need to hire a vice president of digital transformation, a CTO or CDO to ensure that the company remains competitive. This person will need to understand the company’s business challenges, the available IT solutions and the formula for a successful digital transformation. The role of this executive goes far beyond proposing and deploying technological solutions and creating the desired financial leverage: the new CTO or CDO will also be responsible for breaking down silos, implementing new business models and driving multiple changes in order to establish a culture of innovation.
Before sitting down to write a position profile, it is critical to understand the importance of this commitment. Even if someone highly competent is tasked with this job, the company and all its stakeholders must accept and anticipate the impact of such a transformation. Otherwise, the work of the digital transformation executive is doomed to failure.
A digital transformation may appear mainstream and inevitable, but senior leaders should not underestimate how much effort it requires and how deeply it will impact the company.
Digital transformation must be driven by a real need. Its implications are enormous, and there are many potential obstacles: insufficient risk management, lacking or absent change management, directors or managers who refuse to confront political challenges, a reallocation of human or financial resources, etc. When underestimated or ignored, these crucial factors can cause a digital transformation to fail, resulting in thousands if not millions of dollars in losses.
We will discuss these factors in detail in the next article in our series: Ensuring a Successful CTO Hiring by Being Well-Prepared
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