Transformative technologies and digitalization are redefining organizations everywhere, boosting business capabilities, and creating new growth opportunities.
Across the world, CEOs acknowledge that the erstwhile physical world has slowly but surely moved into the digital realm, with markets, clients, and the workforce itself using new-age technologies and operating on virtual platforms.
In a recent MIT Sloan Global Research Report, 93% of workers stated that they needed to be digitally savvy to perform well in their role.
Much has already been spoken about the very real need for organizations to keep ahead of the disruption that this entails. While technology and tools play an important role in sparking this transformation, it also needs a cultural, organizational, and operational shift that has to start at the very top.
What this means is simple: for a successful digital transformation, leaders must first transform themselves!
The New Leadership Playbook for the Digital Age, a research initiative sponsored by Cognizant and undertaken by MIT Sloan Management Review, brings forth some concerning facts.
Out of the 4,394 global leaders who took part in the survey, while 82% felt that their leaders would need to be digitally savvy to lead them into the digital economy, fewer than 10% believed that their organizations had the right leaders to help them compete and thrive. Sobering statistics indeed.
The stakes are high, and there is a pressing need for change. However, senior management must understand that this change begins with them and that aligning leadership is the first step before starting a digital transformation process in any organization.
So how can managers redefine their team’s roles in a digitally-driven context? Let’s explore the role of a leader in an organization that is on the path to unlocking a digital future.
Building digitally savvy leaders
Companies that have survived and thrived in the digital age have one thing in common: strong leaders who have embraced the digital revolution, implementing the right tools, training, and processes to empower their employees and catapult business growth. Conversely, the absence of such a leader can lead to a complete breakdown in digital initiatives.
We’ve identified the key skillsets of leaders who have proven themselves in building and sustaining an effective digital strategy.
Leading by example
Good leaders steer their teams from the front, leading by example. They provide a clear and compelling vision and directives for organizational transformation. Navigating through the turbulent waters of change is hard, and if the leader is unable to motivate and inspire others, then the organization as a whole will fall short of what they are trying to achieve.
Rather than forcing change by exerting authority—which many employees will resist—successful leaders use personal influence to secure employee buy-in to the change.
Satya Nadella, Microsoft’s dynamic CEO, is not afraid to see things as they are. A leader who is a true visionary, Nadella shapes the future and is today riding the crest of digitalization.
As he recently put it, “We’ve just seen two years’ worth of digital transformation in two months.” When the pandemic struck, Microsoft was already ready with its state-of-the-art cloud services Azure, pushing the company’s valuations to new highs every quarter.
Spearheading a cultural change
One of the most significant obstacles to a successful digital transformation is lacking the right culture and mindset. Many employees do not feel the need to change existing ways of working, which they have grown comfortable with, especially if they have been proven to work well in the past.
But to keep up with organizational change, there has to be a fundamental change in this mindset, and every employee must understand how important their role is in driving this transformation.
When SAP’s Chief Digital Officer Jonathan Becher joined the company, he knew that company culture was every bit as important as business transformation and technology for facilitating a digital transformation.
However, the SAP culture, steeped in old-world values and traditional ways of working, needed a sea change for the change to become effective.
He correctly pointed out that this transformation needed a more hands-on approach from the inside out, and Becher gave the people the infrastructure and tools to learn, enhance their skillsets, and adapt.
This paid rich dividends, as when the upgrades in technology were initiated, the employees had all the skills and the required mindset to pull off the transformation—and did not have to rely on guidance from outside experts as they had in the past.
Change will be successful only when the entire organization—across all levels—is aligned with the digital transformation strategy in mind and spirit. This starts with the leadership.
Encouraging collaboration and communication
Getting people together is an important part of the digital transformation process. However, for true change to happen, the business must be set up to promote effective teamwork and the sharing of information.
When colleagues forget to share important documents or messages—or do not work well together—they cannot foster a spirit of collaboration, which causes widespread confusion, which could make people think the transformation isn’t working.
When a leading construction company in India chose to go digital, they used Microsoft Teams for internal collaboration. All documents and construction drawings were stored on SharePoint, allowing engineers and architects to have real-time updates on any change requests and progress of work.
Minutes of the meeting were stored in an online repository, and reports could be generated and referred to as and when needed. Resource allocation was optimized, and tasks could be smoothly shared between team members, streamlining project progress and enabling deliveries on time and within budget.
Leaders must do all they can to be strong communicators themselves, setting the right tools for team collaboration and messaging and encouraging team members to use them effectively.
Identifying the right technology and tools
A digital transformation is, after all, driven by new-age technologies. A leader who is proactive in identifying and adopting technological innovations is on the right track to success.
As far back as 2006, the senior management at Target felt the need to adopt a digital strategy to boost their growth. So the popular retail giant launched its digital transformation by adding the latest technologies across its physical stores, introducing online sales, and expanding its web presence.
In addition, they worked on a digital strategy where customers could learn about brands on social media and access and buy their brands online. Since starting its retail digital transformation, Target has seen its stock value rise from $53 in 2006 to around $250 today.
By embracing digital platforms and innovative tools, leaders can drive the organization forward to outpace the competition. They should stay abreast of data capabilities and emerging technologies and identify new opportunities along with their associated risks. They should also ensure that their management, particularly the C-suite leaders, fall in step with these innovations.
In a world where change is the only constant, leaders must adapt, learn and re-learn constantly. They must have quick reflexes—thinking, quickly grasping, and taking forward new practices, without getting clouded by whys or what-ifs.
Leadership agility requires making intelligent, effective decisions in a VUCA world by being flexible and always thinking of improving your organization’s bottom line.
Erik Nordstrom, Co-President of Nordstrom, feels strongly about the need for the company’s stores to adapt to digital transformation. ”The way customers are choosing to shop in a more digitally connected world continues to change, and we know we need to find ways for our stores to evolve with them,” he says.
While this is indeed a challenge, he feels there is tremendous opportunity in this as well. As a result, Nordstrom works to leverage their stores in ways that will allow them to serve customers in the future better than anyone else.
Initiating employee training
It is not enough to just invest in new technologies—unless employees are trained to leverage the tools at their disposal effectively, there will be hiccups in rolling out the change. Likewise, legacy tools that have outlived their usefulness can be phased out only when everyone is onboarded to the new systems and ways of working.
Employee training is a critical component to help make this transition, transform the workforce for the future, and scale new capabilities across the enterprise.
Employees who do not have the skills to succeed in critical roles will not measure up to a digital transformation, and upskilling is the need of the hour.
In a bid to counter the challenges that digitalization poses on its workforce, Henkel has launched a digital upskilling initiative for its 50,000 plus strong global workforce. Dr. Rahmyn Kress, Chief Digital Officer (CDO) of Henkel and founder of Henkel X, feels this is an imperative that cannot be avoided.
“Digital transformation offers us the opportunity to strengthen and extend our global business. This can only be fully leveraged when the whole organization has the right mindset and knowledge to drive this together,” he says.
The courage to take risks does not always come easy, but it is an imperative for an innovative leader. Bold thinking and the willingness to risk the chance of failure is the only way forward—and the failure to move with the times will inevitably lead to stagnation. Companies that do not innovate are sure to be left behind by those that do.
In China, a healthcare CIO took the risk of making an entire years’ worth of technology purchases in a single month in early 2020 when Covid-19 first struck. Then, as she saw how the pandemic affected hospital workers, she fast-tracked a digital transformation in the healthcare industry, which paid off.
Forward-thinking leaders are capable of eradicating the fear of failure while at the same time having the wisdom to be able to mitigate risks. By understanding worst-case scenarios, a wise leader will build a plan to keep the organization safe while driving growth through innovative digital practices.
Any transformation is hard, and digital transformations prove to be even harder. McKinsey’s research has found that the success rate for digital transformations is even lower than 30 percent. But with a digitally savvy, agile, and courageous leader at the helm, these figures are sure to see a significant uptick.
When people in leadership roles are fully committed to the digital transformation—and inspire and motivate others to follow suit—they can successfully reshape the organization’s future.
Subramanyam Reddy is the CEO of KnowledgeHut, an upGrad company that is the trusted skills transformation partner to over 500 organizations across 70 countries. Since 2011, KnowledgeHut has been helping individuals and enterprises across industries and sectors develop new capabilities and enhance growth.