The term digital transformation is rapidly becoming the Y2K rallying call of our times.
Every business knows they need to do it, yet there is a lot of confusion about what it really is and how to best get started.
In Digital Transformation for Dummies I tried to answer these questions.
Now it is time for the equally important follow-up question of "Who should actually kick-start everything?”
The quick and obvious answer given by most is "the CEO, of course".
Our experiences, however, suggest that the answer is not so clear-cut for many organisations.
And even less so for mid-sized businesses, our favourate customers at Xuviate.
The good news is that there are two fairly widely-used approaches for narrowing down our options.
The bad news is that these two approaches lead to two completely different recommendations.
Fortunately, however, we have identified a third approach which seems to be used more and more.
It combines the principles of the other two to create a surprisingly elegant way to find the person/role best suited to kick-start the digital transformation journey today.
And in this article I will show you how you can easily apply this thinking to your own business.
But first I need to warn about a very common obstacle in any digital transformation initiative:
The Organisational Silo.
Warning: Digital Transformation should always be a Team Sport
Over the course of the last few decades, businesses have become finely-tuned machines where every part knows exactly what is required from it to achieve a specific business outcome.
When a problem appears, our natural tendency is to look for the person in the organisation whose mandate it is to handle similar matters and to then assign accountability for a quick resolution.
And this works!
Well, mostly at least!
But unfortunately, it is the completely wrong way to go about digital transformation.
The reason for this is that a successful digital transformation requires cultural, structural, strategic and habitual changes that affect every single part of the business (see also blog article BTM is the new IT) and cannot be attempted in a piecemeal fashion.
Ok, now that we agree that everybody (but especially the leaders) will need to be involved, we can turn ourselves to the question of who on earth should kick-start this major change effort.
Our first step is to understand who the most likely role players would be.
Who are the Role Players in a Digital Transformation?
The Relevant IT framework with its 4 Value Propositions of IT provides a useful starting point for answering this question.
Every Value Proposition (VP) focuses on a specific business outcome that can only be achieved by applying information technology.
Each VP, in turn, is linked with clearly identifiable leaders.
The framework starts with VP1 (which usually is the core deliverable of the IT function) and moves via VP2 and 3 to VP4 where it supports CEOs to pursue ever more effective technology-supported business models.
Apart from these core leadership roles, there is one more senior role that could have a very positive effect on getting results from a digital transformation initiative.
I am referring to the relatively new role of the Chief Digital Officer (CDO) who is specifically appointed for driving digital transformation across the business.
Although I am currently not aware of any mid-sized business who has created this holistic responsibility, it is my opinion that we will soon see leading businesses go down this route.
Only the CEO has more influence and authority than the CDO.
Now that we have a clear picture of the likely role players we are ready to explore the first of three approaches.
Who Should Lead the Digital Transformation for Best Results?
Most people agree that digital transformation is a massive, whole-company exercise.
It is therefore only reasonable to expect the CEO, who is the person with the most authority and vision, to lead the charge in a top-down fashion (VP4).
And this is exactly where everything should start, given ideal starting conditions!
When a transformation message is driven from the top it immediately has the correct level of attention and all the many mindset-changes which have to be made along the way become so much easier.
Enter your text h
The next best person, with only slightly lower authority than the CEO, is the specially created role of the CDO.
Since growth and the acquisition of customers is a major promise of any digital transformation effort, the Chief Technology Officer (CTO) and Chief Marketing Officer (CMO) or similar role-holders are next in line when it comes to decision-making authority (VP3).
Unfortunately, many mid-sized organisations still don’t have an effective CTO/CMO combination and their most senior decision-makers are usually functional leads who have a knack for using technology to automate and optimise business processes (VP2). This could be anybody from the business-focused CIO to the CFO, COO or similar role-holder.
Last on the list is the technical CIO or IT Manager in the organisation (VP1).
The business has seen these roles for such a long time as merely a supporting function (and a non-strategic one at that) that they rank lowest in terms of perceived ability for starting a digital transformation.
Given this ranking, isn’t it funny to still see so many people who believe the CIO is the best person to drive digital transformation?
Who Is Fastest out of the Starting Blocks with Digital Transformation?
Any significant change effort needs some early wins to demonstrate the value of doing things differently and gain momentum.
From this perspective, the most likely person to start and show results for their efforts is and remains the technical IT leader of VP1.
They already have significant operational budgets, technical skills and most importantly, a good grasp (and potentially vision) of what technology could really do for the business.
If it only was just used correctly, they say!
And therein lies the rub.
And the reason why they often are not even considered for this kick-starting role.
Their biggest challenge is often of a personal nature and lies in realising that the value is less and less in the actual technology but rather in how it is employed in the pursuit of business objectives (such as reliability, cost-effective capability and agility).
This requires them to regularly step out of their day-to-day fire-fighting and find time for more strategic matters.
If successful (and our BTM Mastermind peer-groups prove that any IT leader can achieve this), their initiatives will signal to the rest of the business that IT is open for business and ready to collaborate with whoever wants to take advantage of an increasingly capable and flexible platform.
If the VP1 leader doesn't use this opportunity for demonstrating value, a VP2 leader is next in line to potentially book some quick wins.
This usually happens in organizations who are fortunate enough to have a strong, business-focused CIO or even a technically astute CFO.
Such leaders often use a Business Analytics project to demonstrate value as good, actionable information is highly desired but difficult to produce in mid-sized businesses.
Unfortunately, however, their efforts will be slowed down significantly if they can’t rely on a solid and agile IT platform to build on.
We can follow this same line of reasoning all the way up the CEO who, notwithstanding their authority in the business, faces the most significant hurdles when it comes to kick-starting any digital transformation initiative.
Although a key champion of transformation efforts innitiated by other leaders they will only really have the mandate to kick-start a digital transformation when the business is under strain and everyone agrees that something major has to be done to get back on track.
But since businesses want to be pro-active and in control of their future, waiting for this to happen is rarely a good idea.
Who Should Really Start the Digital Transformation?
Ok, let’s summarise what we have learned so far.
We know that seniority and authority of the person starting a digital transformation play a major role in how successful the effort will be in the long run (VP4 is best).
We also know that the most technical leaders in the business (usually VP1) have the best chance for getting quick results, an essential requirement for getting a major transformation initiative off to a good start.
Ok, now that is really confusing!
The two requirements for a successful digital transformation lead to two completely different suggestions.
The best way to resolve this conflict is to use a simple formula:
Probability of getting results x Likelihood of starting fast = Suitability for starting the effort
It can be visualised as follows:
What this means is that the CTO and CMO leaders of VP3 are best positioned to kick-start a digital transformation AND deliver meaningful results.
Many service providers are also realising this and they are busy repositioning their portfolio away from just product development or digital marketing to a more integrated set of services.
The challenge for VP3 leaders who follow this advice, however, is that they need the capabilities of the IT platform (VP1) and its process layers (VP2) to be effective.
Fortunately this is easier than it sounds.
And if really all else fails there is always the option of using a low-code development platform (e.g. OutSystems) to manage the entire technology stack.
A bigger problem for many mid-sized businesses is that they don't yet have a clear VP3 capability and their next best option for getting started is a VP2 leader.
Although not as exciting as the growth focus of VP3, there is still a substantial opportunity for creating momentum as process automation and optimization often lead to real cost savings.
And with such an early win from either VP2 or VP3 under the belt, the next step of making digital transformation a holistic company initiative (through either the CDO or even CEO) is so much easier.
What is very interesting, however, is that the two most commonly suggested roles for starting a digital transformation (the CEO and the CIO) actually face the biggest hurdles for getting early traction.
Yes, that is correct.
Neither the CEO nor the CIO of a mid-sized businesss should start the digital transformation effort!
Don’t Underestimate the Value of a Digital Transformation Advisor
Now that we have a better idea of who is best positioned to kick-start the digital transformation effort, it makes sense to yet again revisit the obstacle of “silo thinking” I highlighted previously.
Irrespective of who leads the charge, the fact that businesses use functions and departments to split responsibility and accountability still makes it very hard to move forward from an initial project in a specific function to a wider digital transformation effort across the entire business.
It is exactly for this reason why Gartner decided to introduce the role of the Chief Digital Officer (CDO) and why IT consulting companies everywhere provide digital transformation advisory services.
While it is not impossible to drive major organisational changes exclusively from within an organisation it is usually best to obtain strategic support and input from more impartial role-players who don’t have a vested interested in maintaining the current status quo.
As we often say to participants in our Mastermind groups for IT leaders:
Only somebody outside of the current power structure will ask the important questions that everybody in the organisation knows should be asked but is too afraid to actually ask.
Contrary to popular belief, it is neither the CEO, nor the CIO that should kick-start a digital transformation in a mid-sized business.
Instead, it is the CTO/CMO duo who is responsible for driving growth and who have the best chance of making digital transformation stick by achieving some quick wins.
This is certainly not the common view, but is the conclusion we have reached after working for many years with business and IT leaders of mid-sized businesses in South Africa.
What we don’t know and really would like to figure out, is how applicable these insights are to different sizes of organisations and across countries in the world.
Please leave a comment and share your own views on this topic.
There is so much we can learn from each other!