Emerging role of Leadership in Digital Business Transformation

Leadership in Markets smitten with Digital

Rapidly changing market conditions and growing propensity of customers to engage digitally, call upon CEOs/CXOs across the globe to embrace new, faster, more flexible digital approaches. Business Leadership seldom requires any convincing to look out for ways to transform their businesses by leveraging Digital Technologies, now-a-days. New Technologies like Cloud, Artificial Intelligence, Analytics & Machine Learning, Mobile Apps, Blockchain, Augmented Reality, the Sharing/Hiring economy and also Robotic Process Automation, Internet of Things, Platform Economics have risen up with a visible impact across industries. Business Leaders are now tinkering with ‘challenges’ like Legacy Assets, Rigid Cultures and Pre-defined Channel (suppliers) Relations. Sometimes these are perceived as hindrance to the growth of Business, especially if the leaders are trying to re-align their Business Units in present technology environment. The strength of existing businesses like access to capital, established brands, deep domain experience/industry knowledge and people resources that are recognized for expertise, is easy to fathom. However, these need to align with the areas/trends/values from where most of the industry/business’s present growth is coming from. Digital technologies are having a formidable disruptive impact, here. Increased access of technology to most remote parts and even to low income strata people has ensured customers flocking towards technology led solutions and this trend is unabated for a foreseeable future.??

Earlier, the Digital wave could be brushed aside as a blip in trends or some fad. However the momentum seems to have sustained and the Business leaders are now staring at the challenge to find/discover a ‘new business/operations architecture’ and guide existing talent to glide through this path. Broad indicators suggest that some leaders find it difficult to respond to this effectively. Any efforts to make changes in this regards is further impeded by legacy systems, established supply-partners (who feel threatened) and rigid cultures. The fact is that some organizations have responded to the situation by setting up an entire new ‘Digital distribution channels’ to maintain some connect with new age customers, as a fresh start. However reaping benefits by being able to wrest lost market shares from new age competition, might be a far cry. Rise of the Digital Value vultures in the market-share sweepstakes starting from negligible and high visibility of this phenomenon, underlines the need to respond to these opportunities.????

In spite of the above, confusion prevails around ‘what Digital Business Transformation really implies’. For many, it tantamount to ‘mere technology upgrade’ by harnessing anyone of the technologies. Quite a few leaders may describe it as improving the ‘experience’ of customers with the existing Digital assets. And intuition here is that this propels some more customers to shift to the Digital mode of engagement and achieve some set ‘goals for Digital Transformation’. Some others would prefer to put a larger slice of service bouquet online, harnessing improvements in interfacing capabilities with same legacy applications & better networking. Yet a few might bank on ‘Responsive Web Designs’ to support customers using mobiles and make services available ‘on the go’ and also to first time users, hitherto cut-off from the internet itself. Digital Value vultures, now ubiquitous in most Metro cities in India like ‘Fintech(s)’ & ‘Digital Start Ups’, point to quite another thing. Here, it seems that new business models are being discovered/invented on the back of digital technologies that impact entire organization/unit’s structure rather than just re-design of a few processes. Quite a few sub-units within the overall working structure of these Fintechs or Start Ups are structured much differently in terms of size, operational processes and goal orientations as compared to a traditional organization/business unit in the same space. Technology has served only to support the new business model, and this seems to be the primary cause for Value Discovery.

Transformations in Digital Era

Quite a few businesses have responded or are responding to this by partnering with some Fintechs/Start Ups to master the trick. Comfort derived out of existing Tech-vendors to spruce up their technology, may have stalled some of the other leaders. Level of understanding of Digital Business Transformation may be a challenge for some. Some executives engage with Tech vendors to incorporate ‘some digital technologies’ for bringing efficiency to one or more silo-ed process/es. Digital Business Transformation through a systematic re-engineering of business process and technology, is yet to progress up the maturity curve. Re-engineering of existing core business processes and incorporation of new technologies to be taken up simultaneously was perceived as a risk, hitherto. So process re-engineering and technology upgrades were usually separated thus far, but unlikely going forward in the future. Digital Business Transformation wherein tech and business processes are transformed simultaneously, may impact organization structure (or how people are deployed across multiple unit) and thus a ‘visible change’. Some leaders shy away to ‘call for this’; often due to internal resistance, complexity involved, risk & compliance related issues and lack of surety about vendor’s capabilities. Past experience for undertaking such projects is lacking and stories of failure abounds in own as well as other organizations. So for a Digital Business Transformation, key is to get the unit’s process-leaders engaged with ‘past’, to put their focus firmly towards ‘future’. Attempt is to create/device something better in terms of ‘much more rule-based’, ‘more customer centric’ and ‘efficient’ based on a vision/roadmap. The leaders need to meet the unit’s quarterly financial and operational goals while getting ready for the future; and also demands from audit & compliance, routine activities and defense against competition.

Planning for Digital Transformation Projects

Some leaders embark on digitization projects as they feel like they are doing something and see themselves as tech-savvy or cutting edge. Yet, the core of their organization remains unchanged, so the Organization/unit remains vulnerable to disruption. Issues like ‘culture’ forces many unit leaders, often rising from the ranks of process-leaders, to think about bringing efficiency to the silo-ed processes and thus help the process leaders now reporting to them. So there is a degree of inability to think holistically about units’ engagement with external customers or suppliers and reimagining overall solution. Generational and cultural differences can further complicate things especially in larger units or those spread across multiple locations involving people with different skill-sets, age groups, cultural backgrounds etc. Middle managers as unit leaders face the greatest pressures as they are expected to execute the transformation in an environment where the culture, system of incentives and the resources remain unchanged. No wonder, failure of Digital projects at the execution stage are commonplace stories and new projects require considerable amount of shepherding from the Board/Top Management, besides the key executive/s or the project manager himself/herself.

To improve quantum of success for Digital Transformation Projects, one needs to improve planning for these Tech-projects.

·?????????????Impact on ‘Going to market’: What ‘product or service’ are offered to customer? Is it the right fit for him/her? How do you reach-out to your customer? What are the changes envisaged in these processes?

·?????????????Stakeholder Engagements: How are routine ‘transactional activities’ carried out with customers, partners, employees. How would Transaction origination and fulfillment cycle change on account of such projects?

·?????????????Operations: What are your processes, IT infrastructure and capabilities? Key ‘gaps’ to support ‘rule-based processing’, input complexities for the processes, exceptions at different layers and availability/orientation of key people for fulfilling these ‘gaps’. The enhancements and redundancy on account of digital transformation?

·?????????????Organization: How are you organized? How do you incentivize? Receptivity of technology in your culture? Overall orientation towards ‘change’ and ‘task re-assignments’ within organization/unit. Well defined rewards policy for people contributing to growth/project’s progress, culture to take a calibrated risk for such projects.

Any Transformation project need to create Value for the unit and Digital Transformation Projects can’t be an exception to this.

For Value creation, Digital Business Transformation should be seen to deliver along the below lines:

·?????????????Cost value by reducing cost to customer, through re-design of the process or engagement model and allowing for more customers to be on-boarded or impact bottom-line

·?????????????Experience value by improving customer satisfaction and allow for cross-sell/repeat purchase/word-of-mouth etc.

·?????????????Platform value where customers gains more value by engaging with business unit/organization and so purchase improves

This is different from focus on individual processes and cutting down ‘costs’, to which most unit managers & process managers seem to be married to. Besides, we of course have the ongoing hunt and push from executives for new and reliable processes on the back of rising Digital Technologies with varying degree of acceptance from compliance/audit regards their efficacy & effectiveness. Thus, a lot of confusion prevails about Digital amongst Business unit leaders and this is further muddied by a host of Technology suppliers working for ‘quick-kills’, or high fees to solve a ‘stated need’, which may not sustain an overall Digital Business Transformation in a given market context.

Addressing ‘Culture’

While giving shape to project plans, managing internal culture and employee motivation to work towards success of such projects, remains a challenge. Some CEO/Boards are attempting to overcome this by ensuring that the Transformation projects too become part and parcel employee work routine. Towards this, annual appraisals are being tweaked to measure as per below key areas:

1)?????Ability to perform: This is depicted through regular performance metrics with 70 to 90 percent weightage. This is already a part of most appraisal mechanism in the organization/business unit.

2)?????Potential to Transform: The rest weightage is applied to measure employee’s contribution to generate Transformation ideas, participate in projects with cross-functional teams, the acceptability of their contribution in such teams and contribution to achieve project goals. Besides in some appraisal system, ability of employee to connect and generate support across different Business units/departments, vendor teams and client teams is also measured on a 360 degree basis, with some level of rigor.

The weightage varies with ranks, business function and unit’s priorities and is applied to people managers and senior resources of the unit/organization, so that Business Transformation thoughts and goals become embedded part of ongoing activities. There are existing and ongoing challenges that may be faced as Transformation projects tend to depict meaningful outcome or progress after a duration, often greater than a year. Normal operation measures performance in a well-defined period, usually a year. The methodology may still be a work-in-progress for some companies even if with a degree of subjectivity involved. The outcome is greater openness to change, more receptiveness and alignment of people towards Business Transformation plans and greater participation. The executive management push for Business unit heads to have a transformation roadmap with participation of staff also gets to see greater traction. The technology led Digital Business Transformation is able to score as people feel transformation using technology is more sustainable as well as scalable.

Digital Strategy & people

Other key concern is lack of a well thought out “Digital Business Transformation Strategy” amongst business as well as critical technical resources. The challenge is to ensure that units’ human resources not only generate ‘new ideas/themes’ that win over customers, but also become ‘comfortable about usage of emerging technologies’ to tap them. The leadership needs to guide the ‘key talent’ about the direction of growth markets and organization’s plans for the same, including technology upgrades underway, directions & trends. The resources should be able to identify Business Transformation projects suited to their capabilities & acumen and pro-actively participate while aligning with organization’s/unit’s goals. This will ensure that their business and technical capabilities are honed up further to take on such technology led Business Transformation projects and the unit benefits from their ability to foresee risks/costs and to take on the associated challenge of execution. Often resistance to digital projects is seen on account of a rather misplaced but deep-seated notion of it resulting in job loss rather than job transformation. But with right support measures, it helps to generate a friendliness for technology and greater momentum towards Business Transformation. For an Organization/Business unit, having a common idea about a direction for future across a large cross-section of employees, by itself is a lovable goal which generates immense energy. And being able to execute the same…..