Five Hard Truths About Digital Transformation
Recently, we surveyed our audience and asked them, “What does ‘Digital’ mean to your organization?”
Our audience selected between the following four options:
- The latest gimmick
- Any technology that builds our customer relationships
- Our approach to streamlining corporate processes and platforms
- Not sure
To be clear: there are many more potential definitions for the word ‘Digital’. In this survey we weren’t looking to create a scientifically valid method of finally locking down this often-nebulous term. Instead, we simply wanted to take the temperature of the general way the IT leadership community felt about both the term “digital”, and the movement towards digital transformation currently gripping the enterprise.
The results of the survey were illuminating—all four options received an equal percentage of votes. Read through the headlines in IT leadership publications, or speak with your technology peers, and you will arrive at a similar conclusion: there’s no clear consensus on “digital”.
Hoping to cut through this confusion and ambiguity, we dove into the best data, reports, and articles on the digital transformation—and pulled from our own 8+ years helping IT organizations meet the digital challenge—to try and find some hard and fast truths about this digital moment. By the end, we found five hard truths about digital transformation that every IT leader needs to know.
Hard Truth #1
You Can Lead, You Can Follow, But You Can’t Get Out of the Way
The best industry analysts agree on one point: digital is here, and it matters.
“If CIOs fail to step up on digital transformation IT won’t matter anymore.”
“Not only do CIOs expect, and aspire to, a leading role in digitization, their CEOs expect them to step up and lead the digital charge during this critical transition period.”
“Like it or not, expectations of CIOs are changing and they better prepare. 46% of CEOs would like to learn more about digital trends from their CIO… 33% said IT does not provide useful knowledge or understand which digital knowledge is important…”
“C-level executives tell us that ‘digital transformation’ is their top priority. They even acknowledge that it’s critical to their survival. But many also admit they struggle to define it, much less know how to achieve it.”
Digital transformation is happening in every organization. IT leaders are seeing digital strategy being conceived without them, independent digital initiatives being founded by each function in the business, and Shadow IT groups picking and implementing their own outsourced solutions.
While the digital transformation sounds like a natural fit for IT leadership, we’re seeing the opposite occur.
Hard Truth #2
Most Organizations’ Digital Transformations are Not Being Led by IT
Earlier this year, Forbes Insights surveyed 305 IT leaders in global enterprises with $250 million+ in annual revenue about their digital leadership. Forbes release their data in a report titled Forbes CIO Summit 2016: CIO Transformational Survey. They survey found only 13% of these IT leaders had taken meaningful action towards leading their organization’s digital transformation. The remaining 87% were either unsuccessfully trying to take the reins of their organization’s digital transformation, or primarily following their organization’s lead.
Specifically, Forbes organized their surveyed IT leaders into four categories.
Transformers: 13%: Leading as full partners to the business in their organization’s digital transformation.
Advocates: 43%: Piloting, evangelizing, or exploring digital projects, but they haven’t received a full organizational commitment.
Servicers: 37%: Providing digital capabilities only in response to requests by business units.
Plumbers: 7%: Remain focused on traditional IT tasks like server provisioning, coding, and day-to-day IT operations issues.
Right now, 87% of IT leaders are not taking charge of their organization’s digital transformation, and they are missing out on the substantial benefits digital leadership provides.
Hard Truth #3
Digital Transformation Offers IT Leaders Their Best Chance for Professional Advancement
Forbes found the 13% of IT leaders taking charge of their organization’s digital transformation are receiving disproportionate rewards for their initiative. The rewards the report notes include:
1. Pay: True digital transformation leaders receive bigger paychecks. “Close to half of Transformers, 44%, report their salaries rose by more than 10% over the past give years, compared with only 10% of Plumbers. One in five Transformers even report their annual salaries increased at a clip of more than 25% annually.”
2. Satisfaction: True digital transformation leaders feel more satisfied professionally. “71% of Transformers like it where they are. By contrast, only 14% of Plumbers want to stay where they are.”
In a report we released last year titled What IT Pros Most Want. We generated our report’s data by surveying hundreds of IT professionals about what they most want from their career. We found that pay, job satisfaction, and the ability to work on cool projects were the top three benefits all IT professionals wanted—from front liners to CIOs. Taking the lead during the digital revolution offers all three benefits.
The full digitization of the enterprise also provides IT leaders with the opportunity to connect to, embed with, and stitch together a business leadership role that spans the entire organization. Digital transformation may give IT leaders an unprecedented opportunity to advance their role. Salesforce CEO Marc Beinoff even argues CIOs are going to be the next CEOs, as digital transformations give CIOs exposure to the business and the board. He argues whoever leads the digital transformation will control the organization’s future growth produced by these next-generation services.
CIOs are listening. At a recent Wall Street Journal CIO Network event, 70% of the CIOs present said they saw themselves as a future CEO.
Today, leading a digital transformation offers CIOs their best chance to make this previously-rare professional leap.
Unfortunately, most IT leaders seem unsure about how to do so. Remember: the single largest group in Forbes’ survey were “Advocates”. According to the survey, 43% of IT leaders are trying to lead their organization’s digital transformation, but they just don’t know how to take the reins.
Hard Truth #4
Most Digital Actions Considered “Transformative” Aren’t Transformative
Two years ago, the Altimeter Group produced a report titled The 2014 State of Digital Transformation, which explored the actions IT leaders were taking to meet the digital challenge. The report found most of these actions revolved around “the rise of new digital teams”, the creation of “innovation teams”, and “digital circles”. All of these new groups were declared to be cross functional, but the Altimeter group argued very few of these groups interacted at the functional level. Altimeter ultimately found the state of digital leadership lacking: “There are steering committees, executive sponsorship and change agents—but no strategy for architecting digital transformation.”
It appears not much has changed over the last few years as organizations and IT leaders grapple with digital transformation. More concrete actions have been taken, but most of the digital transformation “best practices” and case studies the tech media discusses simply involve organizations adopting third-party digital services and technologies, such as:
- Creating mobile apps
- Providing tablets to the sales team
- Establishing a Twitter account to provide faster customer service
This wholesale transition to new digital services and technology is important, and IT leaders looking to lead their organizations’ digital transformations must also guide the acquisition and integration of these services and technologies. But adopting these new digital services and technologies is less about truly transforming, and more about keeping up with the existing digital landscape, and keeping pace with the competition—can you really say the adoption of third-party technologies is transformative, when any organization can adopt these technologies in the same way, to experience the same benefits?
True digital transformation can’t be just about appointing figureheads and keeping pace with the competition’s adoption of technology. True digital transformation needs to fundamentally change something about how the business operates. To be a true partner with the business in the organization’s digital transformation, and to truly lead this transformation, IT leaders need to find a way to use new digital technologies to advance the business’ interests in a way no one else in the business would think up—and in a way that no third-party vendor can promise.
Hard Truth #5
Your Digital Transformation is Uniquely Yours
Finding ways to transform your organization digitally is not easy. The answer won’t come from an generalized article on the subject. A good piece of data can point you in the right direction. For example, MIT Sloan Management Review found—in a study encompassing interviews with 157 executives in 50 global companies of ~$1b in annual sales—that “the most effective digital leaders were typically “transforming three key areas of their enterprises: customer experience, operational processes, and business models.”
But even solid data like this can only point you in the general direction of true digital transformation. Your digital transformation has to speak to the unique opportunities, problems, and positioning of your business. A transformative insight can only come out of deep intimacy and engagement with your business and your stakeholders.
How to Lead Your Organization’s Digital Transformation
We hope this article has provided you with a crucial discussion of why leading your organization is so important, why so few IT leaders are actually doing so, and what level of insight and activity is required to take the reins of your organization’s digital transformation in a meaningful way.
Since 2008, we have worked directly with some of the world’s top IT organizations to help them respond to this digital revolution. Our clients have included Fortune-ranked organizations such as Bayer and Teva, rolling up our sleeves and offering hands-on assistance forming their digital strategies. In part due to our support, the IT groups in these organizations have avoided the irrelevance that digital is creating for so many IT leaders, and used their organizations’ digital transformations as a lever to gain greater influence, standing, and respect with their business peers.
If you’re interested in learning more about how we assisted these clients, and how we can help you become a true digital leader, click here for more information on our digital strategy programs.