The CEO role determines digital transformation success. The second part of Transforming Organizational Culture for Digital Transformation Success explores the importance of the role of the CEO and executive team in successfully driving digital transformation (DT, DX, digital transformation). Emphasizes the importance of executive support and leadership in cross-organizational collaboration and change management.
Contents
The early challenges of digital transformation and the role of the CEO
There is a common process that many new organizations go through. Initially, there is a lot of interest and support from the management team, and other organizations around them are also interested and supportive. However, when it comes to the actual execution phase, there is a lack of cooperation from other organizations. Inter-organizational interests and political logic make it difficult to get the right information and hinder the progress of the project. As a result, the new organization is not satisfied with what it has created and naturally dissolves or is absorbed into an existing organization.
DX organizations are no exception to this problem. DX organizations are even more likely to follow this path if they started as a separate entity, rather than a small group of people based on an existing IT organization. They are destined to have DX execution be their only accomplishment, not their other existing tasks. It’s a different story if you’re already clear on what you’re trying to accomplish when you create it, but if you’re creating an organization and then defining your company’s DX direction, time to explore is essential. Here’s where the problem comes in.
Overcoming barriers to cross-organizational collaboration and the importance of the CEO
As mentioned earlier, a new organization doesn’t have a complete understanding of the company’s history and deliverables, its culture, and its politics. This is one of the reasons why it’s a good idea to organize all the people involved into one organization if possible. In one form or another, when a new organization has limited access to information, the original problem it’s trying to solve is never even close to being solved.
For example, if you’re running your servers on-premise (i.e., not in the cloud, but in the company’s own computer room), and the DX organization says you need to move to a public cloud environment, the business unit organizations, including the traditional IT organization, are very resistant to that, and they feel that the DX organization is invading their territory.
The traditional IT organization may not be ready for DX because of their own circumstances. The existing organization may appear to be cooperating, but in reality, they are resisting because they don’t want to take away their territory. They feel that being open about the work they’ve been managing is a sign that they’re being compromised, and they feel very insecure. As a result, collaboration in the workplace moves at a very slow pace. Departments are likely to be as uncooperative as they can be within their power, including being slow to open up data and grant access to information. For established organizations, this can be a fight to protect their turf, or it can be a natural resistance.
The need for active executive support for DX success
How can this situation be resolved? First, the executive or decision maker who is sponsoring the DX initiative must recognize the discomfort of the legacy organization. Make it clear that the IT organization and line of business have not been doing anything wrong, but that this is about growing the company with the changing times. They should be asked to take on a new role as key participants in the important work ahead. It’s important to make it clear that the new organization is there to help them with their problems, and to give them the expectation that the information that the DX organization gains through access to data will eventually solve their problems.
Failure to control this emotional climate in the early stages of DX implementation can lead to deep antagonism between organizations that should be working together to create synergy. Therefore, the CEO needs to explicitly declare that the DX task is the CEO’s to execute, and that the DX organization, a fledgling entity, is responsible for its progress and accountability. It is also important to intentionally invite DX leaders to participate in various decision-making processes to get their input and make decisions based on it.
For the traditional business units, they need to understand that the IT systems and data they’ve built don’t belong to them, they belong to the company, and they need to recognize the importance of leveraging them to drive the company’s continued growth. In addition, the C-suite will need to give the DX organization undue attention and regular progress reports until the initial tasks are clearly defined. This is to give the entire organization a sense that the C-suite is on board with DX.
I once heard an anecdote about a new government minister who was selected through a difficult process. The new minister had been selected by the president through a painstaking process, but was not well-received not only by the people in the ministry, but also by ministers in other parts of the government. What the president did was to end the cabinet meeting and take the new minister aside in front of everyone for a private meeting.
The president did not have anything in particular to say, but only to show that he was alone with the new minister. However, as this was repeated over and over again, the policies that the new minister wanted to promote gained momentum, and internal and external cooperation naturally occurred.
Focused attention and support from the CEO is key to DX success
Similarly, the odds of DX success increase slightly when decision makers are sufficiently informed throughout the organization that they care, that they see it as an important challenge for the company, and that they are empowered to do so.