Four Guiding Principles for Leading Digital Transformation

Quite often, when addressing digital transformation, organizations focus on one area. A recent study from MIT Sloan asked organizations where digital transformation is led at different stages: early, developing, and maturing. Most indicated that early leadership came from IT while developing and maturing leadership came from the CEO’s office. Unfortunately, operations fell to the bottom of responses in both early and developing digital transformation, suggesting that the link between technology advancement and business operations is less important to stakeholders than other areas, such as marketing and information technology.

It Shouldn’t Be Limited to Technology

Though digital transformation must involve technology, and is typically driven by the IT at the outset, it should not be limited here. When digital transformation remains in technology, organizations frequently have advanced technology with no foundation on which real business progress and success can be built. When this occurs, the technology either doesn’t meet the organization’s needs or is not used, making it a waste of resources. Considering that the intent is improve profitability, this is highly counter-intuitive.

Organizations that limit digital transformation to technology often do so because they know it’s necessary to remain competitive in the industry, but do not have a business goal tied to the digital transformation. Without a stronger understanding of why changes are being made and how they will be used within the business plan, it is likely that the efforts will be unsuccessful.

It Shouldn’t Be Limited to External Efforts

Another reason organizations implement digital transformation is to improve customer relations or customer-facing operations and processes. Quite often, the goal of these efforts is to make things easier or more attractive for the customer, and so IT works closely with marketing to make this happen. While this is often beneficial for the organization in the context of customer retention or similar goals, there is more to digital transformation than external efforts. Recognizing this can lead to greater success.

Digital transformation can be useful for an organization’s internal processes as well. By implementing technology that works internally, staff members can accomplish their objectives more effectively and efficiently, which, in turn, benefits the company financially. After all, customer-facing components are only one part of what makes an organization successful. By ignoring internal digital transformation, companies may be doing a disservice to valuable stakeholders who can have a substantial impact on achieving goals.

It Shouldn’t be Led Only by the C-Suite

Though it is important for digital transformation to have strong leadership from the top of the organization, it should not be led from the CEO’s office alone. It’s only logical that, as digital transformation matures, the C-suite plays a strong role, as these efforts must be aligned with the overall business strategy and budget.

However, if these efforts are led by the C-suite alone, there will likely be a disconnect between what is intended and how it is executed throughout the organization. Even the best intentions put in place by CEOs and others in the higher levels of the organization can have unexpected implications in different areas of the business. By using leaders and champions at all levels of the organization, the C-level executives will have greater support. In addition, the changes put in place can be aligned with the needs of employees throughout the company, making them more likely to be successful after implementation.

It May be Driven by Products

Often times, regardless of where leadership in digital transformation exists, companies implement changes and advancements because they relate to specific products and product lines. When digital transformation is product-driven, it is frequently externally-focused, but not always. Companies develop technology that links with products or their uses for customers, so as to improve their experience. However, these digital transformations can also occur as part of an effort to make the development, manufacturing, and distribution of products more efficient. This can be seen frequently in the automotive industry, in which technology is developed to more efficiently manufacture vehicles to keep up with customer demands.

Even when digital transformation is product-driven, it is important that the efforts not be limited to one area of leadership, as discussed above. Though product-driven transformation grants technology a purpose within the company and its strategy, leadership must be spread throughout the organization to ensure that these types of transformation are successful in the long term.

Whether digital transformation occurs to keep up with competitors or to streamline operations and improve customer relations, it is clear that these efforts must take a holistic approach in order to be successful. By involving a number of departments throughout all levels of the organization, companies can use digital transformation to more effectively achieve their business goals and objectives without creating challenges down the road.

This piece was written by David Chou, a digital transformation consultant and longtime advocate for leveraging technology as a competitive advantage. He has held leadership roles with several organizations, including University of Mississippi Medical Center, Cleveland Clinic, and most recently, Children’s Mercy Hospital. To follow him on Twitter, click here.