Digital transformation as a marathon in four stages
Sustainable digital transformation calls for stamina. The profound change in corporate culture required cannot be realized in a sprint, but more closely resembles a marathon lasting several years.
Four fundamental stages must be completed, with the CDO only becoming involved for the purpose of digital leadership from stage three:
- Awareness-raising: benchmark analysis, competitor analysis, identification of relevant technology
- Implementation: evaluation of the company’s digital status, strategic planning
- Transformation: evaluation of in-house implementation expertise, analysis of the organizational structure, appointment of a CDO
- Continuous innovation: restructuring and redesign of the company DNA, installation of an innovation leader to identify new trends and technology in advance and adapt in time
Five tips: how CDOs can master digital transformation
CDOs, who both advocate for and personify the transformation and break with tradition and usual work practices, are likely to encounter suspicion and pushback at the initial stages in particular. These five practical tips for CDOs highlight what needs to be considered, especially from the point at which a chief digital officer takes up their role.
#1: Clearly define the role, responsibilities and competencies in advance
It is crucial that CDOs have access to data across all areas of the company. They will only be in a position to comprehensively analyze how things currently stand if they can gain a complete overview of all data, applications and processes. This analysis is essential to deriving well-founded strategies and investment decisions designed to maximize efficiency, speed of action and productivity.
This requires a great deal of trust on the part of the company’s entire management team and entails immense responsibility for the chief digital officer. Ultimately, this means that both sides benefit when the CDO’s responsibilities, competencies and authority are clearly defined in advance based on the results of stages two and three.
#2: A CDO does not replace a CIO
Chief digital officers and chief information officers will find many overlaps in their job descriptions. Both should:
- develop visions and strategies
- maximize efficiency
- implement new technology and recognize trends early on
- practice IT controlling and project management
However, this does not mean that one position negates the other. While the role of CIO is increasingly limited to the technical implementation of the digital transformation, the CDO’s task profile incorporates the restructuring of all company divisions. Both the CDO and CIO must cooperate closely based on a jointly formulated digital strategy, especially at the beginning of the transformation.
CDOs do not fulfill a support function for the existing business, however, but are supposed to redefine the task of the business and the product strategy as well as influence operational decisions. Once the digital transformation is complete, the role of CDO is often obsolete and may become the CCO role. The CIO role, meanwhile, persists.
The CDO must have sufficient expertise to at least actively advise and support the CEO in the decision-making process. In any case, close collaboration based on trust is required between both functions.
#3: Focus on what matters
Obviously, the point of this entire undertaking and the reason for implementing digital transformation is to ensure that the company is strongly positioned for the future and to guarantee commercial success. However, two key success factors are often overlooked given the focus on revenue, TCO and number crunching:
- Customer experience: good CX has a direct influence on revenue and, thus, success.
- Employee experience: employee working conditions and motivation have an impact on staff performance and therefore TCO as well.
People and their needs, those of employees and customers, must be the main focus of any digital transformation. As emotions play a key role in all decisions, the CDO must confront the topic of human experience orchestration (HxO).
As digital transformation may pose a real threat to employees in certain areas, it is essential for the purpose of the employee experience to counter skepticism and pushback with transparency, openness, empathy and the practical presentation of alternatives right from the start of the transformation process.
However, the employee experience factor must remain a focus throughout the rest of the process as well. Everybody must be on board and in favor of the transformation, otherwise there will inevitably be gaps in implementation. Constant, intensive dialog with all departments is essential to this.
#4: Assume an interface role immediately
CDOs generally have five main areas of responsibility:
- Change management
- Process digitalization and reorganization
- Development of a digital vision
- Digital human resources and talent management
- AI and data analytics
Each of these challenges extends far into the core areas of responsibility of other managers within the company. It is vitally important for the CDO to network with all company divisions and collaborate with managers in all departments from when the implementation of the digital transformation begins.
This necessarily requires the managers concerned to cede some of their responsibilities. This must be communicated in a transparent and clear manner from the outset. Ultimately, it is the responsibility of the CDO to lead the digital transformation process in these business areas.
#5: Be a mirror to the future
As CDO, you not only lead the transformation as the developer of the digital strategy, but must also embody this transformation in your actions and approach. Depending on the size of the company, you will have to put together a sufficiently large digital team to implement the strategy, and establish this in all areas of the company. However, this team should not be seen as another self-contained, externally defined department, but as a fluid and flexible organizational unit.
The members of this organizational unit should be drawn from a range of functional areas and include internal experts, key figures within departments and digital specialists. The team should not have a hierarchical structure; it should see itself as a network covering the entire company and be willing to include external partners and, above all, take on board customer and employee perspectives.
Strategies should be developed jointly in iterative processes using modern tools, innovation strategies and agile approaches such as design thinking, lean startup and prototyping.
Digitality and digital working environments require agility. This applies not only to the organizational structure and work processes, but also to the establishment of new IT systems and applications. These must be able to adapt iteratively to changing market conditions. Proprietary systems are increasingly taking a back seat. Instead, open source applications are becoming useful for ever more purposes and are proving more flexible thanks to their open standards and corresponding interfaces.