Digital transformation efforts often start with the CEO—but a lack of change in C-suite teams, organizational structure, and company culture hinders digital shifts at many companies, experts say.
"With the exception of chief digital officer, there's been a relative stability in terms of how the CIO thinks about their management team," said Gianni Giacomelli, chief innovation officer at Genpact, and head of its Genpact Research Institute, which has studied digital transformation. "With the rate of change and innovation you have in the world today, the CEO still says, 'My organizational design is pretty much the same as before.'"
"It's an intriguing mistake—you cannot feel that everything else must change, but the organizational structure should stay the same," Giacomelli said.
A tension remains between what digital transformation is and who should own it, said Brian Solis, principal analyst at Altimeter. "The challenge is that businesses don't yet fully realize the promise of digital transformation or the purpose of it—they still look at it as a technology play," he said.
In Solis' 2016 State of Digital Transformation report, he found that digital transformation was led by the CMO in 34% of organizations, while it was led by the CIO in 19% of companies.
"There is an innocuous change in the C-suite directly related to digital transformation, and that's the elevating role of the CMO," said Vincent Firth, leader of Deloitte's CEO program and managing director of Monitor Deloitte. He equates this to the time in the late 1990s when the CIO, who had primarily reported to the COO or CFO, shifted to a more strategic leadership position, reporting directly to the CEO.
"I see a similar evolution around the CMO," Firth said. "A lot of the digitization of business, particularly at the front, consumer-facing end, is very much CMO-led."
However, deeper shifts to the C-suite remain to be seen, Solis said. "Companies haven't changed the C-suite yet because there is nothing threatening it," Solis said. "Their perspective is, 'If we invest in new technology, we remain competitive.' But that's not the promise of digital transformation."
Solutions for CEOs
Giacomelli, Firth, and Solis offer the following tips for CEOs to maximize the value of their teams and digital transformation efforts:
1. Emphasize new ways of operating among their C-suite team. That means more training for those at the senior level, with the incentive that if they do not adapt, their skills will eventually become obsolete. "If it comes down from the CEO, people will pay attention to it," Giacomelli said. CEOs can create groups that are able to use company resources to experiment. This allows for the business to create a set of entrepreneurs who can deliver on innovative ideas.
2. Step away from the traditional roles and create new job descriptions and titles. "If you think about the C-suite, you see the same job titles exist as did 50 years ago, with the exception of maybe the chief analytics officer or the chief digital officer," Giacomelli said. "The reality is, today digital is so pervasive that each position will need to start having a bit of the role of the CIO. It's important to recognize that [C-suite] jobs will have very different things associated with them in the future."
3. Build a multigenerational team. In recent years, companies have rushed to hire millennials in the hope that they will help with innovation efforts, Giacomelli said. However, organizations need alignment across the front, middle, and back of the organization, which is impossible with only young employees because they lack institutional knowledge about how the organization is built.
"You need to have the ability to create multifunctional teams that have a bit of the old guard with their domain expertise and institutional knowledge, as well as new folks, and give them a common way to communicate with each other," Giacomelli said. A multigenerational team can also help CEOs achieve ambidexterity, or the ability to lead a business that is at once the most optimized, and the most adaptable, Firth said.
4. Create a common goal for a team, and guide them to create a solution for that goal. For Genpact, the question was "How do we change our core so that we eliminate a lot of the work we do through digital?" "We didn't want to improve it, but to radically eliminate a lot of the work we do, because machines can do it," Giacomelli said. He recommends design thinking training, which better facilitates those conversations and collaboration.
5. Become subject matter experts in digital transformation. "They need to understand the full breadth of what the global cross-industry digital transformation is all about," Firth said. "Who are the players, who are the companies in each sector who are excellent, what are the techniques they're using, what is the network of talent driving the big programs and companies across sectors."
6. Make the investment. "Digital transformation is a cost, or an investment, depending on how you look at it," Solis said. "There is a lot of work ahead with ROI and short and long term planning in this, where one day the CEO would say 'We're going to focus on this change and invest in a long-term strategy." From there we will start to see evolution of the C-suite, he said.
7. Innovate, don't iterate. Digital transformation is meant to provide the opportunity to create, and do new things to create new value. "Some people think that tech companies are innovating, but they haven't changed the game," Solis said. "That's where tech companies can be the best possible partner in digital transformation." This also means fostering a culture of experimentation, Giacomelli said.
SEE: Ebook—IT leader's guide to achieving digital transformation (Tech Pro Research)
As a tech company, building that partnership with a client means not selling your product as the sole solution for digital transformation efforts, Solis said.
"Too many tech companies are forcing blinders on companies to think about solutions in very narrow ways," Solis said. "I would love to see solution providers become enablers for bigger transformations around those solutions—asking, 'What are your challenges, and how are your customers and employees changing?' so we can figure out the solution and new outcomes."
- Why CIOs must step up to lead digital transformation efforts (TechRepublic)
- 3 things you can learn from the NFL about digital transformation (ZDNet)
- The digital economy will steamroll your business if you don't adapt (TechRepublic)
- Effects of the Digital Transformation on Businesses - Helpful Use Cases (ZDNet)
- Innovate like Amazon: Put values and tactics ahead of strategy (TechRepublic)
Alison DeNisco Rayome has nothing to disclose. She does not hold investments in the technology companies she covers.
Alison DeNisco Rayome is a Staff Writer for TechRepublic. She covers CXO, cybersecurity, and the convergence of tech and the workplace.