Three Key Differentiators for Great Leaders of Digital Transformation

Modern businesses have been undergoing digital transformation for the past decade—it’s a necessity for remaining viable as the future of work becomes increasingly automated and agile. According to a Gartner Digital Enterprise 2020 Survey, 67% of business leaders agreed that their companies must become significantly more digitalized to stay competitive.

Surprisingly, many digital transformation efforts fail, even at some of the world’s most profitable, innovative organizations. According to CNBC, companies poured $1.3 trillion into transformation initiatives in 2018, 70% of which failed at companies such as GE and Ford. Most digital transformation cost for companies is associated with investment in data architecture, IT infrastructure, application operations and maintenance, and operating model, but do we think leading successful digital transformations is just about getting the technical imperatives right?

Three leadership focus areas exist as differentiators for leadership practices in the age of digital transformation. Instead of solely getting the technical imperatives right, these leadership areas promote the engagement of employees and inclusive considerations for individualized perspectives, emotions, motivations, and problem-solving for creating transformative futures.

Storytelling for narrating the new tomorrow

Digital transformation efforts target a future that is entirely different and new for companies. Although undergoing a digital transformation can be a valuable strategy for any company, most leaders encounter employees accustomed to the origin story who are resistant to its evolution.

Storytelling helps leaders be more effective in the age of digital transformation and can be useful for setting a vision, defining values, sharing crucial lessons, and explaining who we are and what we believe. An extended narrative of a story that connects employees to the past and propels their sense of belonging forward into the digital future and the unknown is influential and persuasive and allows a company to engage employees by elevating their buy-in to the bigger picture. Storytelling is not merely about sending company-wide communications from top leaders. Here are a few questions related to storytelling for leaders to consider:

• Do we have an inclusive story that not only resonates with tenured, but also newer employees?

• Besides our CEO, who are the leaders that reinforce our renewed story around digital transformation so that it trickles down into every meeting and every informal conversation in the hallway?

• How do our leaders empower employees to become storytellers and champions of our digital transformation journey?

Sensemaking of employees’ emotion and motivation

One of the most relevant emotional needs of employees in the age of digital transformation is “homeostasis”. It means that human beings don’t like to change. Imagine a renewed company story designed to resonate with employees, the starting premise of any digital transformation effort can still often be “we are changing everything” and then the emotional turbulence triggers and impacts employees’ desire and motivation for a change. Digital transformation leadership that does not address employees’ emotions and motivations is less likely to succeed and can cause high employee turnover. And this is expensive. The Society for Human Resource Management has found that it costs 6-9 months' salary on average to replace a salaried employee.

A lack of sensemaking exists in almost every leadership and digital transformation model today, yet part of a leader’s effectiveness, currently when businesses are forced to transform so quickly, is sensemaking. It’s about making sense of the context in which teams and employees are operating so that leaders can take actions aimed at engaging employees in terms of where they are at with their emotional and motivational states. So, what questions can leaders ask themselves to figure out how to approach sense-making?

• Do we have a culture in which employees are able to have meaningful and honest conversations , where they feel safe in expressing their fears of the unknown or of losing control of their expertise? If not, how do we, as leaders. take the initial step in that direction?

• Do we know if our employees are motivated? What motivates them for going through an end-to-end transformation?

• Research in neuroscience has found that emotion and perception of events are tightly intertwined. If so, how do we reinforce positive emotions and perceptions that employees form of our transformation process, progress, and fellow team members over time?

• What technologies can we select that are intuitive and personalized so that their flexibility allows our employees to assimilate them into their completely new work lives?

• Can our employees be given any control in regard to developing the functions, look, feel, and processes of the new technology?

Shared leadership in process design

Many sources identify the key goal of digital transformation as revolutionizing customer experience, operations, a business model or domain. Regardless of a specific goal, a transformation’s impact ultimately lies in what how the standard and nuanced processes are different around a new internal or external product. Designing and developing processes means thinking systemically about the new steps involved in a holistic, future process in order to ensure that they are actionable, practical, and repeatable.

However, hierarchical functional organizations that face digital transformations run businesses with high-level management making decisions with little input from employees, while employees are hired based on specific skills in order to execute specific day-to-day processes by working with customers. On the other hand, shared leadership embraces employee involvement by recognizing the value that employees bring when a new process is brainstormed, discussed, tested, and evaluated in more detail by employees. Not only do employees provide feedback on aspects of new process that leadership might not have considered, but they also have views related to how to support customers through the transformation.

While completely changing from a hierarchical organizational culture to a shared leadership approach or flat hierarchy does not take place overnight, these initial questions can help leaders gauge how to involve employees as part of transformation process:

• Is our company a hierarchical or flat organization as it is related to engaging employees?

• Do we have an open-door culture? Are employees comfortable with speaking up for giving inputs and ideas?

• Is the size of our company manageable? If we were to engage feedback in a large quantity, how do we manage that properly?

Full, long-term successful digital transformation requires outstanding leadership mindsets and capabilities for the digital world. Best-in-class leadership practice that differentiates recognizes that a transformation becomes successful because of business ecosystems that go above and beyond merely staying comfortable within technical imperatives and when leadership plays a key role in the transformation. Successful digital transformation efforts look at both business dimensions of change as well as the people dimensions that engage employees. It requires a greater reliance on thoughtful storytelling, individualized sense-making, and decentralized problem-solving to create fully engaged teams for overall success. As technology continues to advance, industries will continue to be forced to transform. Leading digital transformation in a multi-dimensional way will help companies achieve greater success than those who do not.