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Module 5: Leading Digital Transformation

Module 5: Implementation, Performance Measurement and Digital Leadership 

Module 5 focuses on the issues and challenges facing organisations in implementing digital transformation programmes.

The module asks you to identify the main barriers and obstacles to successful transformation in your own organisation, proposing solutions on how these can be overcome.

We also touch briefly on the issue of digital transformation performance measurement and the key traits of a successful digital leader.

As we move from the WHY to the HOW of digital transformation, greater attention is now being paid to implementation issues, especially the main barriers and obstacles standing in the way of effective change. There is growing acceptance that the main change barriers are organisational, people and cultural related rather than technological; legacy management thinking rather than legacy technology.

One of the best books on digital transformation implementation is Leading Digital: Turning Technology into Business Transformation by Westerman, Bonnet and McAfee (2014).

The following blog post provides a short summary of the book, together with links to a slidedeck and video - Leading Digital Transformation.

A more recent interview with one of the main authors of the book can be found here - Two years on, who is leading digital? Probably not your Board

You should read through the above before completing the exercises for this module.

Questions 19 to 24 of the Interactive Polling Tool will give you a good overview of the wide range of issues to be considered here. You can access these by going to www.menti.com using the code number 337826 to login.

Question 19:

List the main barriers and obstacles to transformational change within your organisation.

Question 20:

Does your organisation have an implementation plan to overcome these barriers?

Question 21:

Who is leading digital in your organisation?

Question 22:

Is your organisation facing a digital leadership crisis?

Question 23:

How will digital performance and business impact be measured?

Question 24:

List five key traits of a successful digital leader.

Leading Digital Transformation: Are We Ready?  

The core theme of this elective class has been organisation transformation to remain relevant in an increasingly digital world. It would be appropriate to conclude the class with a few words on progress being made, where we are and the main barriers to be overcome.

As organisations, are we ready for the coming digital tsunami? Is your organisation ready to #adaptordie?

Much of the recent research on digital transformation has focused on implementation and performance issues. A short summary is presented below:

In terms of performance measurement, two main conclusions emerge:

  • ‘Leading digital’ organisations outperform others: Compared to a few years ago, we are now seeing a growing volume of evidence supporting the proposition that ‘leading digital’ (digitally mature) businesses outperform others across a range of financial measures (for example, see Digital Leaders Outperform Digital Laggards). The same is also true at a national level with leading digital nations outperforming digital laggards (see - Which Countries are Leading Digital?). There will be ‘winners’ and ‘losers’ in the digital age. ‘Winners’ will be those organisations who leverage the full potential of digital technology for driving competitive advantage in at least five key areas: engaging and connecting with customers; building digital operating advantage; deriving actionable insight from data; supporting collaboration and knowledge sharing; business transformation.   
  • Many transformation projects will fail due to faulty implementation. References provided in Module 4 discuss this in more detail:

In terms of implementation, the need for organisations to transform digitally is now widely accepted in both the public and private sectors. Few senior executives remain to be convinced (do they?). The focus has shifted from the WHY to the HOW of transformation.

In a recent interview, Didier Bonnet, author of the highly acclaimed Leading Digital book stated:

CEOs and their teams are now much more aware of the impact of digital technology on their businesses. However, most struggle in successfully implementing digital transformation. The challenge for many large firms is not so much where to put the investment (The What) but more on how they adapt their organisations to gain competitive positions (The How).”

Much of the recent research in this area has focused on the implementation challenge especially the barriers and obstacles standing in the way of effective change.

There is growing acceptance that transformation for the digital era is NOT about IT. The main barriers to successful transformation are organisational, people and cultural related rather than technological. Legacy management thinking not just legacy technology.

Successful transformation requires the effective integration of strategy, people, processes, systems, organisation, culture AND technology.

A paper from MIT encapsulates my own thoughts very nicely.

In Unexpected Benefits of Digital Transformation, the authors use the concept of ‘affordances’ to highlight the fact that successful transformation for the digital era requires a combination of technology and organisational change.

Used in a range of diverse fields such as psychology, human-computer interaction and ecology, the term ‘affordances’ refers to the different possible actions that someone can take with an object in a particular environment. The analogy of a beach ball is used to illustrate. This can be batted into the air, floated on water, sat on or popped. An ‘affordance’ is a shift in focus from the characteristics of an object to what one can do with the object in different situations.

The beach ball analogy is highly relevant when discussing digital transformation. Having the right technology in place is obviously critical. But on its own, technology does not lead to transformation. It is how that technology is used that makes a difference.

Just as a beach ball can be used in different ways, so can technology. The greatest business value is derived when technology is used to transform processes and systems, becoming a more efficient, agile, fast moving organisation ‘fit for purpose’ in a digital age.

There is a mutually dependent relationship between the organisation and its use of digital technologies. Digital technology creates new opportunities for working differently; working differently creates new opportunities for leveraging the full potential of emerging technologies.

As a starting point, there needs to be much greater recognition of how these two forces work together; yes focus on the technology but also what your organisation actually does with it. Digital transformation is much too important to be the preserve of the IT department.

The failure to recognise this mutual dependency is one of the main reasons why so many organisations struggle to derive maximum value from technology.

Other recent studies have also identified organisational culture as one of the main obstacles to successful transformation for the digital era.

For those wishing to study this aspect in more detail, you will find the following references to be of interest: 

The Digital Culture Challenge

A recent study by Capgemini (with digital analyst Brian Solis), based on 1,700 respondents across 340 organisations in eight different countries, identified four main barriers to digital change including archaic IT systems and applications (48%); lack of digital skills (43%) and lack of a clear leadership vision (38%). By far the most important barrier, however, was inflexible corporate cultures, identified  by 62% of respondents as the biggest barrier to transformational change. The study identified a major digital culture gap based on seven key measures: collaboration practices, innovation, open culture, digital-first mindset, agility and flexibility, customer centricity and a data-driven culture.

The study concluded that for successful digital transformation to take place, senior leaders need to consider broader changes to business processes and structures. Managing culture change at the same time as managing technology change is critical. The effective management of organisational culture is one of the key differentiators between digital leading companies and the rest?

As the authors of the report conclude – “businesses that make digital culture a core strategic pillar will improve their relationships with customers, attract the best talent and set themselves up for success in today’s digital world.” Change the culture as well as the technology.

The report sets out some key elements of adopting a digital culture:

  • Deploy digital change agents and empower employees to drive a digital culture.
  • Design new digital KPIs that focus on behaviours.
  • Make digital culture change tangible.
  • Invest in the digital skills that matter.
  • Clearly communicate a digital vision and have visible leadership involvement.
  • Use digital collaboration tools to increase transparency and to reach out to employees.
  • Adopt a systems thinking approach to culture change. 

Fujitsu Digital PACT Study 

Organisations worldwide are struggling to balance the elements needed to deliver successful change management projects and programmes Of the 1,625 business leaders surveyed, one in three had cancelled a project in the last two years at an average cost of £423,000; one in four (28%) had experienced a failed project costing an average of £555,000 per project

The main reason for poor project performance is the disequilibrium that exists in bringing together four vital ingredients of digital transformation success: People, Actions, Collaboration and Technology (PACT).

Digital Culture: Your Competitive Advantage 

Based on a detailed study of 20,000 employees working in European medium-to-large size organisations across different industries, recent research by Microsoft, in association with London Business School, identified three major benefits of digital workplaces defined as organisations making full use of modern technologies combined with strong digital leadership and digital cultures.

  • Higher productivity - in digital workplaces, employees become more productive, working smarter, not necessarily harder. Quality, efficiency and competitiveness increase.
  • Creativity and collaboration - with employees working in more creative and collaborative ways, the digital organisation becomes more responsive to the dynamic changes taking place in the external business environment. Digital workplaces, therefore, help to future-proof the business.
  • Talent recruitment and retention - individuals working in organisations with a strong digital culture are much more likely to feel engaged and empowered. This helps the business to cultivate and attract the best talent.

 Brian Solis – The 207 State of Digital Transformation 

Many companies are still struggling with the technological and human challenges of Digital Transformation (DT). Poor digital literacy is restraining the scope and extent of innovation to respond to consumers’ new expectations. Many company cultures are too risk-averse and short-term. Politics, egos, and fear are the main obstacles to achieving the collaboration and solidarity needed within companies to make the changes digital consumers want.

Business Transformation Starts with Leadership Transformation 

Culture change does not lead with words; it leads with action. By changing the way we behave, our actions begin to change the way we observe, experience, and eventually see the world. By seeing and experiencing the world differently, it changes the way we think about the world. People do not change their mental models of the world by speaking about it; they need to experience the change to believe and feel it.

The Key Traits of a Successful Digital Leader 

Given the above, leaders of change for the digital era are urgently required.

As stated by Didier Bonnet, it is critical to have a strong transformational leader at the top of the organisation to drive digital change, but Board evolution for the digital era has been very slow:

  • 80 per cent of company directors state that they are not satisfied their boards have the sufficient digital proficiency to anticipate the competitive technological threats and opportunities for their firms.
  • Less than 20 per cent of Fortune 500 companies feel fully equipped to deal with the technological challenge.
  • Boards require 'transformational digital talent' - people who fully understand the power of new technologies but also the complexity of using these technologies for business impact in large complex organisations.
  • There is a lack of urgency around investing in digital skills and digital leadership.
  • 90 per cent of companies lack major digital skills to successfully execute their digital strategies
  • Everyone is aware of the problem, but very few are tackling it in any meaningful way.

With a growing body of evidence highlighting the fact that successful digital transformation requires strong digital leadership, it is a legitimate question to ask, who is developing the digital leaders of the future?

Successful transformation is more about changing people, organisation and culture than it is about technology. Digital is just the facilitator of change.

As a consequence, a new breed of senior executive is required - leaders of change for the digital era; leaders who can combine high level business knowledge, experience and understanding with the ability to develop and implement digital transformation strategies fully aligned with and supportive of agreed business outcomes. Leaders who possess both the confidence and personal skills to drive digital-led organisational change.

How well do your own leadership abilities benchmark against the following key personal traits of a successful leader of change in a digital era?

  • Hyper awareness of the external digital landscape.
  • The ability to develop a clear digital vision and strategy.
  • Identification and prioritisation of the key digital actions and initiatives that need to be implemented.
  • The ability to win senior management/board support, commitment and resource to drive organisational transformation.
  • Strong project and programme management skills.
  • Change management competencies.
  • Hybrid management skills (technology AND people) to break down organisational silos, restructuring the organisation around customer journeys.
  • A strong focus on performance measurement.
  • Informed decision-making.
  • A future looking perspective to cope with the rapid pace of digital change taking place.

With most organisations remaining woefully ill-prepared for the coming digital tsunami, does our management development and education system require a complete reboot to equip leaders for a digital future?

Hopefully, this programme will help you on your way to becoming a future digital leader. 

In conclusion, you may find the two articles listed below to be of interest.

Module 5: Background Reading 

Most of the required readings for Module 5 have been embedded in the module itself.

In addition, you may find the series of articles produced by McKinsey on next generation operating models to be of interest.

Please do feel free to leave any comments you may have below. To avoid spam, registration (free) is required to allow comments. This only takes a minute or so. It goes without saying that your information will not be used for any other purpose.

As stated in previous modules, I post regular updates covering new developments and new thinking on digital transformation on my Linkedin and Twitter accounts. Please do feel free to connect with me.

Dr Jim Hamil

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Dr Jim Hamill

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