Digital transformation is a hot topic. It’s a tricky term that promises as much as it panics business leaders. Big consulting firms report reoccurring lists of top digital leaders and best practices, universities have started to teach classes on digital strategy, and an Amazon.com search on “digital transformation” returns over 167 000 results. Even the World Economic Forum launched a digital transformation initiative in 2015 that still runs strong, examining the impact of all things digital on industry and society over the coming decade.
What exactly is digital transformation? A decade ago, digital was often another word for IT, and CIOs were responsible for upgrading their company’s data platforms and e-commerce systems. Now the scope and scale of digital change has expanded to address all the ways an organisation uses its technology and data capabilities to drive business operations and customer value. Consulting firm PwC defines “digital IQ” as the measurement of a company’s abilities to harness and profit from technology. Their data shows that digital has gone beyond the IT function, and CEOs and other senior leaders are now expected to champion the importance of a digital strategy across the enterprise. Other experts define digital leadership as the strategic use of a company’s digital assets to achieve business goals.
From my experience working with Global 1000 companies worldwide, digital transformation is about developing both the mindset and skill set for change. I often add “tool set” to that, because I have found that tools help teams accelerate their problem solving and develop a shared vocabulary faster.
Let’s delve into each of these areas briefly.
Much of what you will read about a digital mindset, while well-meaning, really describes the same characteristics that identify a good leader – such as having a long-term vision, being responsive, and communicating widely and often. What sets a digital mindset apart is the emphasis on quick learning and experimentation. A smart leader will advocate and reward these types of activities. For example, this leader will ask his or her team: how do we involve customers in our strategy and decision making? How can we become more collaborative across our offices and geographical boundaries? How can we test new ideas faster? Over time, repeated behaviours among managers and employees will become healthy habits that, in turn, will eventually embed an internal culture for change.
Even old-fashioned groups can change. In the traditionally risk-averse and stuffy industry of financial services, ING has taken a radical approach to becoming one global digital bank. Before starting its digital initiatives, the bank conducted market studies to gauge the pulse of its customers, and learned that most of its customers were increasingly doing their banking on mobile devices. Inspired by companies such as Google and Netflix, then chief operating officer of ING Netherlands, Bart Schlatmann, told consulting firm McKinsey: “We gave up traditional hierarchy, formal meetings, over-engineering, detailed planning, and excessive ‘input steering’ in exchange for empowered teams, informal networks, and ‘output steering’.”
Skills are another important aspect of becoming digital. It’s simplistic to assume that robots will replace jobs. It will more nuanced than that. While yes, certain tasks will be better suited for automation and redesign, another new set of human skills is emerging as being core to digital leadership. These skills include critical thinking, listening, and questioning – and some may argue that we’re just returning to good old management fundamentals.
I am fortunate to work with amazing experts at Stanford University, where we teach students and managers how to prototype at all stages of development, how to think in terms of three horizons, and how to collaborate in a “teams of teams” model. These types of skills will help people thrive in a digital world. This skill-building is also what brings me to Cape Town to help launch The Field, which aims to prepare all levels of leaders in transformative learning experiences and digital aptitude.
The third aspect relies on building a tool set. Beyond being familiar with the growing list of emerging digital technologies – such as artificial intelligence, internet of things, 3D printing, and blockchain – it helps to know how to work and co-create together in a rapid learning environment. Some of these tools are borrowed from designers, addressing user empathy and rough prototyping. Other tools come from the Agile software and Lean development communities, such as scrums and Kanban visualisation boards. We have also introduced tools in team-based innovation and foresight planning. This broad set of tools helps digital leaders learn and move quicker.
Where I live, in Silicon Valley, a hotbed for digital innovation, high-tech startup teams mix and match these tools as needed. Most of these startups wouldn’t label themselves as digital, even though they are born and grown as such. Consider recent startup star Tesla, which is a networked digital platform masking as a car company. Tesla CEO, South African-born Elon Musk, once told a reporter, “Tesla is a software company as much as it is a hardware company.”
Ultimately, by recognising that digital leadership is more than technology, leaders from all areas and organisation sizes can take the deliberate steps to build the mindset, skill set, and tool set for digital transformation.