They need to offer sparring for the executive management team in defining and executing the company’s digital transformation instead of simply demanding change. And this can be achieved by beginning with a shared framework.
No less than 84% of companies fail at digital transformation (Jeff Rajeck, E-Consultancy, 2017). One reason for this depressing statistic could be that it is necessary to realise that digital transformation is not about IT but about different ways of working and thinking in the organisation. Employees, customers and competitors are dynamic factors impacting the organisation, and it is therefore important for the board to acknowledge that there is no end destination to a digital transformation! Your organisation should never strive towards a static goal defined in a five-year plan but should instead strive towards achieving agility and adaptability with short-term, flexible targets to be able to cope with the rapid changes in the market.
Digital transformation is NOT about IT
Let us begin by clarifying what digital transformation is and what it is not. First and foremost, it is essential to realise that digital transformation is not about IT at all. In other words, it is not just about acquiring the latest ERP system or even using AI for your forecasting processes.
Digital transformation is instead about the pervasive use of technology to radically improve the performance and reach of an organisation. Digital transformation is the integration of digital technology into all areas of a business, fundamentally changing how you operate and deliver value to customers. It is, in other words, the integration of a digital mindset into all elements of the value chain. It is also a cultural change that requires organisations to continually challenge the status quo, experiment and get comfortable with failure. Only by constantly challenging status quo can the organisation stay innovative and relevant with respect to the ever-changing needs and demands of customers and employees.
The drivers for digital transformation are the constantly changing consumer behaviours, improved connectivity, big data/AI, the emergence of ecosystems, servitisation and lower barriers of entry into markets and customer segments. These factors drive boards to push for rapid change in the organisation. However, many initiatives for digital transformation are never fully realised, and we would argue that one of the reasons is a lack of a shared framework for the transformation process and insight into the as-is situation in the organisation.
How digitally mature is your organisation?
It is a common challenge that neither the board nor the executive management team (nor the rest of the organisation for that matter) are aware of the current digital maturity level of the organisation. The problem with this is that it is impossible to plan your next steps if you do not know where you start.
A recommendation would be that the board takes the initiative to have the digital maturity of the organisation assessed, i.e. how big is the gap from as-is to to-be? By using a shared framework for the organisation’s digital transformation, the cooperation between the board and the executive management team will become more efficient and ensure that each part fulfils its role optimally. And by knowing where the organisation is at in its digital development, it is easier for the executive management team to select the right initiatives in moving the organisation forward in its digital transformation. If the digital maturity level is very low, there is no need to begin by pushing for the most complex and advanced digital technologies as other elements would need to be in place to achieve the maximum effect of the effort.
The board should initiate and support the digital assessment of the organisation prior to mandating change. Only this way can the actual organisational capabilities (the baseline) be established and a correct roadmap towards the desired goal be developed. A digital maturity assessment creates a clearly articulated journey for a digital transformation, with defined stages and options. It creates a common framework and language. It defines all the elements of a digital transformation and helps to bridge gaps between strategy and execution. To ensure a 360-degree view on the organisation, a digital maturity assessment should preferably include the following domains:
Go slow to go fast!
The model can be used in a variety of ways, the most powerful being to create a common vision and prioritisation of initiatives that provide the greatest opportunity for improvement, innovation and transformation. However, it is crucial that the analysis and the new roadmap are done with:
- Complete agreement among board and senior management
- A clear understanding among the entire organisation that it must break away from its legacy business model to successfully change
- An updated data collection and analytics capability to support the change with the needed metrics; both internally and towards the customers
A given prerequisite for the organisation to succeed is that the underlying foundation is solid. It is necessary to have a clear and communicated vision that is supported by the underlying values of the organisation. It is not the mission but rather the shared values that will enable success in any form of transformation. The foundation must be strong in order for the organisation to have sufficient executional powers.
The board must track digital transformation progress
It is crucial that the board regularly tracks the digital transformation progress. Use the maturity assessment tool to continuously assess the digital transformation progress using the seven domains of the digital maturity assessment. This way, the board will, in addition to traditional progress tracking, have full transparency in the development of the needed underlying capability and competences needed for the organisation to sustain the change. It is all about making the changes stick at all levels of the organisation.
Another recommendation would be for the board and the executive management team to regularly meet to evaluate the development in the organisation’s digital maturity to gain a shared view and understanding of both the as-is state and the to-be state of the digital transformation. These meetings will also help the board in determining when and where the executive management team could benefit from sparring and input and when the board should pull back and let the executive management team execute the planned initiatives.
So dear board, it is time to take action. Engage with your executive management team in assessing how digitally mature your organisation is now to plan a successful digital transformation with a shared roadmap.