Today’s environment of disruption and digitization is pressuring businesses of all types to transform. Get it right, and there are new opportunities; get it wrong, and the organization risks its market share. However, at the heart of this evolution, the role of leadership is often overlooked. Leaders of all businesses — large or small, legacy or startup, mom-and-pop or multinational — are challenged to transform for the digital age.
Transformative companies have leaders who are not afraid to ask hard questions and adapt new strategies or novel processes. Executives at businesses ranging from heritage investment banks to commercial cruise lines to startup digital media platforms can all establish an effective digital transformation strategy by asking themselves four key questions.
1. Do your goals pave the way?
Digital transformation is not just about technology. And there’s a lot more to scaling innovation than having a good idea.
To successfully adapt, companies and leaders must clearly define a set of business goals to serve as the guiding light for digital transformation. It’s crucial that goals focus on creating market distinction through four key areas: customer experience; employee experience; supply chain reinventions; and new products, agility or trust (depending on the situation).
Leaders today often fail to integrate and acknowledge these vital focus areas when defining their goals for transformation. Balance is essential — a leader’s overinvestment in one pillar can collapse the entire company.
2. Do you truly know your audiences?
Strongly established goals are nothing if you don’t know whom you’re trying to reach. Today, big data makes it easier than ever for companies to know who their customers and employees are, how they behave and what they are interested in.
Transformative leaders create different experiences based on individual preferences. In the era of customization, leaders need to know how to make stakeholders of all backgrounds feel a sense of belonging within their organization. And as Gen Z enters the workforce and begins to revamp the workplace, the new generation can’t be overlooked. I’ll discuss varying generational preferences more in depth in a later article.
3. Are you transforming at the pace of change?
Leaders need to think about the power of exponential technology to accelerate digital transformation. Until very recently, technological innovations have been linear. Take, for example, transformation in the manufacturing industry: production evolved from human hands to assembly lines then combustion engines and now computers.
Yet, like never before, multiple technologies are today being invented and deployed simultaneously, resulting in exponential disruption. As technologies grow and evolve at this increased velocity, leaders must not only keep pace but accelerate their own digital transformation by leveraging and integrating these technologies successfully. From artificial intelligence to quantum computing to blockchain, various innovations and future predictions will be at the forefront of conversations about business success and resiliency in the Transformative Age.
4. Have you identified where the transformation needs to begin?
The last question, arguably the most important one, brings together these goals, audiences and technologies into a change-management framework, one that’s largely understated in discussions on digital transformation. Leaders may do an impeccable job answering the first three questions, but they’re bound to fall short without knowing where to begin and executing accordingly.
Best-selling author Geoffrey Moore positions this mindset in his book Zone to Win. Moore divides a company into four different zones based on their role — performance, productivity, transformation and incubation. Leaders must evaluate which zone they’re operating in to best adapt to change. Only then can teams be tasked appropriately with driving innovation forward.
To maintain a competitive edge over more nimble startups or competitive threats that don’t even exist yet, leaders today must push their organizations to rethink and re-engineer conventional management principles. If your organization doesn’t have an actionable plan for change, achieving your digital goals is virtually impossible.
Navigating through digital transformation starts with leaders who have considered these questions and made a plan. In my next few articles, I’ll take a deeper dive into each of the four questions I outlined above and explain in greater detail how each can serve as a baseline for an effective transformation strategy.
The views expressed by the presenters are their own and not necessarily those of Ernst & Young LLP or other members of the global EY organization.
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