“What use could this company make of an electrical toy?” asked Western Union president William Orton, brusquely turning down the chance to buy the patent for Alexander Graham Bell’s telephone in 1877. Over 100 years later, Nokia squandered its position as the global leader in mobile phones by refusing to recognize that data — not voice — was the future of communication. Though a century apart, both of these companies failed to heed the headwinds of new technology, to their detriment.
In hindsight, it’s easy to laugh at this sort of hubris, yet today, many CEOs and their executives are at risk of taking precisely the same approach with digital technology, and it’s putting their companies at risk. Emerging technologies such as artificial intelligence, big data analytics and virtual assistants are transforming business operations, product manufacturing and service delivery, while many new entrants and tech giants are capitalizing on their scale and (analytical) prowess to disrupt new industries. In today’s environment, embracing digital is no longer merely advised -- it’s a mandate for survival. In fact, a 2017 survey found that 56% of CEOs who adopted digital initiatives reported an increase in profits as a result of their efforts.
The good news is that the awareness and curiosity among CEOs continues to accelerate. The bad news is that too many CEOs are quick to delegate digital to downstream leaders. The logical and defendable argument for this delegation is the desire to defer to domain experts. The flaw in this approach is the risk of dislocation of strategic and operational priorities, and the inherent reduction in speed that comes without direct sponsorship from the top. Digital is too important and too pervasive to not receive the active involvement of the CEO.
Digital Here, There, Everywhere
The ultimate goal of digital transformation is a fully integrated system, woven into every aspect of a company’s operations and strategy. Leaders must identify the elements of the business that are most ripe for disruption and tackle those first.
This prioritization will often lead to initiatives that touch your clients, partners and prospects, for two reasons: First, and most obviously, these initiatives tend to have the potential for meaningful improvements in revenue, growth and customer loyalty — the old adage that “revenue cures all ills” has never been truer. Second, the consumerization of IT compounded in the mobile/social age has created a new set of expectations for all consumers.
(Not-So) Benign Neglect
Successful digital initiatives can have a huge impact on bottom-line and top-line business outcomes, including customer experience and loyalty, stronger brand awareness and perception, increased revenue opportunities, and business process and operational improvements. So why aren’t more leaders driving innovation?
According to a 2018 survey, most CEOs recognize the need for structural changes, but only 62% said they have a management initiative or transformation program to make their business more digital. Too often, executives neglect to fully integrate digital transformation into their strategy and leave digital initiatives exclusively to an IT group — which may be operationally and physically siloed from the rest of the company. This approach leads to merely superficial changes imposed on the extant business culture, which may be loath to embrace them.
A true, organic transformation demands leadership from the C-suite. Executives have the big-picture perspective necessary to ensure that technology isn’t adopted for its own sake but for what it can provide.
Get Digitally Literate
True digital transformation is holistic, and this can’t be achieved unless CEOs, their executives and their teams understand the technology they are implementing. Being able to speak fluently about these topics is crucial for executives who hope to confidently judge which digital strategies are wise investments and which are mere fads. They need to lead by example.
The Time Is Yesterday
Five years ago, there was a widely held view that, unless you were in the content business or transportation industry (think Netflix and Uber), you were immune from material disruption. That could not be further from the truth. Every company, in every geography, in every industry, regardless of scale, will either do the disrupting or be disrupted themselves.
Regional banks and credit unions are a terrific example. There has been a significant shift in assets under management (AUM) over the past decade, as the larger banks leverage financial and human resources to lead innovation in digital banking. This wave of disruption is now being extended by new, digital-only banks, by increased deregulation and the entrance of large consumer brands. Banks are under attack from both old and new entrants who are entering markets with completely new and disruptive business models.
How To Lead Your Company's Digital Transformation
First, don’t be intimidated. The pace of change is so rapid, no one is an expert and there are no stupid questions. Allocate the time to learn. Ask questions. Get dangerous. Set an example for your leadership teams.
Second, pick a goal and go. You will make mistakes, but you’ll also make progress. Make sure the goal is visible and that your initiative has the potential to move the needle. This will build cultural support for more transformative initiatives and create organizational muscle memory.
Finally, engage and leverage your teams, but don’t delegate. Get and stay personally involved. If you’re not uncomfortable, you’re probably not sufficiently engaged.
