May 2016

Today we are in the midst of a digital revolution that is transforming industries and forcing companies to adapt to new challenges and opportunities. Rapid advances and the convergence of mobile, social media and data analytics have profoundly changed the playing field, giving rise to disruptive innovations that are impacting businesses of all sizes and sectors. Companies that fail to recognize the digital tide are at risk of being surpassed by nimbler competitors who are embracing technology to engage consumers, develop their people or enable a more effective workplace.

With the accelerated pace of change in the digital world, the expectations for today’s senior business leaders are also changing. While organizations need to welcome digital transformation to stay competitive, in order for that to happen it is critical that the CEO and senior managers have a grasp of the technological shift, so they can make the effective decisions needed to address the requirements of their business.

Research conducted by Capgemini and MIT’s Center for Digital Business found that companies that have invested well in both technology-enabled initiatives and the leadership required to drive digital transformation are more profitable than their industry peers.1 Creating digital transformation requires this combination of both top-down leadership and bottom-up innovation. Those companies that are succeeding have leaders who share the vision for transformation and are setting a clear course for adoption throughout the organization.

For company leaders, digital fluency does not mean they need to be masters of the technology. What is important is that leaders have an understanding of what technology can accomplish for their business. They must be able to envision and articulate the value of digital transformation to their company’s future, and set the culture and roadmap to lead this change.

According to a research report from MIT Sloan and Deloitte, it is strategy, not technology, that ultimately drives success in the digital arena. This is understandable, given the often dizzying pace of change, where technologies can evolve within a matter of months. In their report, the researchers found that 80% of surveyed companies that were considered “digitally maturing” said they had a clear and coherent digital strategy. By comparison, only 15% of those considered less digitally mature said they have a strategy. The less digitally mature organizations tended to focus on individual technologies to achieve their specific operational goals, whereas the most mature organizations were setting their digital strategies with the aim of transforming their businesses.2

The researchers of the study also highlighted the efforts of digitally maturing organizations to build the skills needed to support their strategy. Digitally maturing organizations, for example, were four times more likely to develop the needed skills in their employees than the less digitally mature companies.3

Didier Bonnet and George Westerman, in an article published in the Harvard Business Review, offered a similar view of digital leadership. According to the authors, it’s not the technocrats who will become the new managers of the digital age, but those with the leadership capabilities and a human-centric approach that will fuel innovative organizations, enable fulfilling work and create value.4

Digital leadership, as the authors assert, involves a number of key facets. First, it requires that leaders adopt a transformative vision for their business. CEOs need to envision how their business will be different in the digital world and then drive initiatives that will support the organization in developing this vision. In other words, don’t focus on the technology; focus on the strategy you want to achieve, and use technology to help you realize your strategy.

Secondly, in order to make their vision a reality, leaders need to also engage employees to create this change. Whether it’s in the the digital tools and platforms they will use to make their work more efficient, or new ways that people will collaborate, a company’s digital transformation will ultimately revolve around its people. And those companies that provide employees with the needed skills to realize their strategy are the ones that are coming out ahead. What’s more, employees across all age groups are seeking to work for businesses that are committed to the digital progress.5 This focus is critical to organizations seeking to attract and retain the best talent.

Lastly, businesses also need to break down the silos at the leadership level. Digital transformation cannot simply be the purview of the IT department. Both business and IT leaders must combine their skills and perspectives, so they can make decisions that align with the company’s strategy and drive digital transformation together. To be successful, digital transformation needs to be enterprise-wide.

While digitally fluent leaders are needed to deal with transformation, ultimately, it is how well those leaders are able to bring about the desired change that matters. Companies that have leaders who share the digital vision, can engage and develop their people in the process, and drive the transformation throughout the organization will ultimately be the ones who win in the new digital age.

1 George Westerman, Maël Tannou, Didier Bonnet, Patrick Ferraris, and Andrew McAfee. “The Digital Advantage: How digital leaders outperform their peers in every industry”. Capgemini Consulting and MIT Center for Digital Business. November 2012.
2 Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron And Natasha Buckley. “Strategy, Not Technology, Drives Digital Transformation: Becoming a Digitally Mature Enterprise”. MIT Sloan Management Review and Deloitte. 14 July 2015.
3 Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron And Natasha Buckley. “Strategy, Not Technology, Drives Digital Transformation: Becoming a Digitally Mature Enterprise”. MIT Sloan Management Review and Deloitte. 14 July 2015.
4 Didier Bonnet and George Westerman. “We Need Better Managers, Not More Technocrats”. Harvard Business Review. 30 September 2014.
5 Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron And Natasha Buckley. “Strategy, Not Technology, Drives Digital Transformation: Becoming a Digitally Mature Enterprise”. MIT Sloan Management Review and Deloitte. 14 July 2015.