5 ways non-tech CEOs can avoid digital transformation hype

Some CEOs have digital in their DNA. Ulrik Bengtsson comes to mind, the former chief digital officer of William Hill, appointed to lead the company earlier this year. Or Sarah Wilkinson, the former chief digital, data, and technology officer for the UK government’s Home Office, who then became CEO of NHS Digital.

But at a time where nearly every industry is seeing disruption cycles outpace economic cycles as a destabilizer of business, what if you, like many CEOs, don’t come with a deep background in digital or tech? How can you make sure you are taking the right actions for your business?

It is vexing, especially now that the initial digital transformation hype we experienced earlier in the decade has given way to a mixed picture of reality. I can remember back in 2014, when no one was talking much about digital transformation at all. Then, within months, it gripped the business world and remained high on the agenda of CEOs for the next several years. Firms like AlixPartners saw many companies rushing to digitize themselves, driven by fear of disruption and the promise of higher performance.

These initiatives included things such as moving to the cloud, agile product development, adopting AI and machine learning, automation, and enhancing customer experiences. The rush to complete them was understandable. But, as we have seen over the years, not every effort was successful.

As an example, I can recall a large European Financial Services company that embarked on an ambitious digital transformation. Management felt great enthusiasm over a new customer portal and agile delivery approach, and were eager about the impact this would have on their business. But then the challenge of integrating this with legacy systems slowed progress. The business case was revised downwards, targets were missed, and reality set in. Today the company continues on this important journey, but with a more realistic outlook.

As we reflect on this first round of investments, we can see some bright spots. Successes often were found through transforming customer journeys, for example. However, an AlixPartners study with MIT’s Center for Information Systems Research indicates that, unfortunately, focusing on customer experience alone drives growth but not profit. Digitizing the core operations of a company proves a deeper and more difficult challenge.

For many companies, the mistakes made have been old ones: not thinking carefully enough about the business objectives, leaving too much to the IT team, adopting technology that isn’t mature and forgetting about the people. These pitfalls are so common, every business should have been on the lookout. Perhaps though, without a strong digital DNA, these simply looked too different to many CEOs.

Going into 2020, we all have something to learn from this. Now that the hype bubble is behind us, it is time for leaders to take stock of what was done in the first round of digital transformation and very consciously consider what they need to do next.

Most importantly, digital must not be thought of separately, but as a dimension of all the things your business does. If it is not, there is little prospect of achieving a real transformation, and you will be left with a digital annex or worse, a veneer. Beyond that, there are a few other things I have learned through the years:

1. Surround yourself with advisors you trust. There are many vested interests in the technology world and it sometimes is difficult to get honest advice. When it comes to people, most CEOs tend to have good instincts -- use them just as you would in any other aspect of business advice. Make sure you find people who have done real implementation work too, as they will be more realistic and aware of the risks.
2. Your business is still your business. Digital brings new possibilities but does not require everything you already know to be disregarded. Technology is often at its most powerful when it helps to solve your current problems.
3. Remember digital is all about people. As with any kind of transformation, nothing happens or lasts unless people change their behavior. CEOs are the most powerful agents for change in most organizations and are therefore vital to the process, even if they are not at all technical. Communicate often and do not be afraid of overdoing it.
4. Help your Board understand cyber-risk. Most executives and Board members have a natural fluency with operational, financial, and market risk. Cyber-risk is new and often expressed in technical terms. Make sure you get a translation into business risk so you can make the right governance decisions about it.
5. Build your digital muscle progressively. As with most challenges, it is better to start modestly until you have some genuine capability to execute. After that, you can accelerate rapidly. Resist the temptation to try and change everything at once, top-down.

While the first phase of digital transformation is behind us, there is no doubt the digital revolution has only just begun. The first wave of digital disruption was not primarily a technical challenge. Like all transformation it was a blend of strategy, business change, picking a great team and providing clear direction. That is what CEOs do and, even if digital is not in your DNA, it is what our organizations need from us now. Bring on wave two!