Need for C-level leadership as organisations struggle with digital transformation

A new global research study into digital transformation reveals that while the potential opportunity is seen clearly by executives, the journey to get there is not.

The opportunity for radical business change offered by the convergence of new digital technologies such as social media, mobile, analytics, and embedded devices is the focus of the research titled ‘Embracing Digital Technology: A New Strategic Imperative’ released today by Capgemini Consulting, in partnership with MIT Sloan Management Review.

The study involved more than 1500 executives in 106 countries, and shows that the opportunity offered by new digital technologies is recognised. 78% of respondents said that digital transformation will be critical to their organisation within the next two years.

Where digital transformation is a permanent fixture on the executive agenda, 81% of people believe it will give their company a competitive advantage.

However, business leaders are struggling to translate this opportunity into a vision for change or a roadmap for execution. 63% of respondents said the pace of technology change in their organisations is too slow.

The top two challenges in executing a digital transformation roadmap were competing priorities and lack of digital skills.

Lack of urgency or no ‘burning platform’ was the number one most cited organisational barrier, indicating a imperative in getting leadership aligned and committed to digital transformation. Only 36% of leaders have shared a vision for digital transformation with their employees. But within the third that have shared a vision, 93% of employees are behind it.

Only about half of organisations create business cases for digital investments, and 40% said they had no formal governance practices around digital transformation. 26% are using KPIs to track progress.

Didier Bonnet, senior vice-president and head of global practices for Capgemini Consulting, says there is a clear call to action here for business leaders. “The C-suite plays a critical role in making digital transformation happen as only it is in a position to overcome some of the major hurdles, such as developing and communicating a vision, and governing the change across functional silos.

“The opportunities to improve company performance through digital transformation are clear, the execution is difficult. But, the only wrong move when it comes to digital transformation is not to make any move at all.”

The report highlights Starbucks as a company that has made a strong move, after its share price dropped by half in 2009. It created a vice-president of digital ventures role, hiring Adam Brotman to fill it. He brought in free Wi-Fi in stores that took users first to a landing page with free content from publications like the Economist.

Now chief digital officer, Brotman works closely with CIO Curt Garner, restructuring their teams to collaborate from the start of projects. Last year, they cut 10 seconds from every card or mobile phone transaction, reducing time spent in line by 900,000 hours.

Starbucks is also adding mobile payment processing to its stores, and is processing three million mobile payments a week. Customers will also soon be able to order directly from their mobile phone.

“Digital transformation needs to come from the top,” says David Kiron, executive editor of MIT Sloan Management Review‘s Big Ideas initiatives. Companies should designate a specific executive or executive committee to spearhead efforts and can take small steps, via pilot projects, so they can invest in the ones that work to advance their transformation goals.”