A perception gap risks holding back digital transformation.

Do your senior leaders have a clear and aligned perspective on their organization’s digital ambition? Our recent report, The Digital Leadership 2024 Perspective, based on research among 2,138 leaders, suggests not. Many boards and senior leaders are suffering a perception gap from the rest of the organization that we term ‘digital detachment.’

This digital detachment is resulting in organizations investing in the wrong technology, doubling down in the wrong areas, and leaving employees starved of the resources they require, leaving them frustrated. Closing the gap is increasingly urgent: it is slowing organizations down at a time when leaders are under pressure to accelerate their digital transformation, as speed is now the currency of competition. Leaders’ digital detachment is also destroying value. A high DigEx (digital expenditure) investment is typically required – and organizations are failing to deliver the necessary return on investment.

From detachment to digital determination

We have identified five key steps to move boards and senior executives from digital detachment to digital determination, as captured in our IDCLA© Framework (see above). The framework assists leaders in articulating their digital ambition and customer focus, and creating alignment across the organization. Discussing the five steps provides a structured digital conversation that enables leaders to articulate their organization’s digital purpose. The framework expands on the first strategic stage – Future Thinking – of our Ticking Clock Model©, which identifies the three strategic stages and 11 operational steps required to transform from a traditional to a digitally-driven organization. (See Dialogue, Q1 2020.)

1. Identify – digital ambition

Uncover how your customers are using, and want to use, digital in their interactions with you. 

DBS Bank in Singapore has been named as the world’s best bank for five years in a row. It drove its digital transformation by recognizing that banking was painful and that they could make it joyful for customers, by leveraging technology to make banking invisible. Today, DBS Bank has twice as many engineers as it does bankers: it has achieved its goal of being a mid-sized technology company providing banking services.

Outcome: Reveals the journey to better understand how digital technologies and ways of working will supercharge the customer experience. 

2. Decide – efficiency or customer or both

Articulate the driving force that delivers the expected value. Top-performing organizations recognize that their digital ambition can go far beyond cost efficiency and focus on creating great customer experiences. 

Bosch Mobility Aftermarket in China found itself under threat by digital natives looking to penetrate its market. The organization had been operating in traditional ways; it managed to digitally transform, resulting in its highest customer satisfaction standards, double-digit sales growth and two times investor equity value. The organization’s three-year journey focused on improving both internal efficiency and the end user’s experience. 

Outcome: Makes clear what digital transformation means to the organization.

3. Cultivate – transformation culture

Ensure the culture is evolving at the same speed that your organization is transforming (as it typically lags behind). Leaders are responsible for identifying what the culture needs to be in order to support and drive employees in taking the right actions. The failure to do so is one of the top three reasons why digital transformations fail (see Dialogue,
Q1 2020).

When developing its Covid-19 vaccine, Pfizer recognized it had to reinvent the way that vaccines were developed, shortening the time to market from 10 years to 10 months. To achieve this, they blew up the bureaucracy and did whatever was required to deliver rapidly. Team members were free to challenge the accepted norms with out-of-the-box thinking – and the CEO provided an open checkbook.

Outcome: Provides employees with the right environment and conditions to encourage and support them in performing digitally-driven activities. 

4. Leverage – data operating model

Develop a robust data operating model, driving faster and better decision-making across every part of
the organization. 

In the next few years, the simple truth is that any organization that is not data-driven is not going to be in business. 

Netflix was one of the first companies to adopt customer science: a fusion of data, behavioral science and technology – predominantly AI – used to understand and predict customer behavior. Netflix teams scrutinize individuals’ profiles for recommendations, run focus groups and test assumptions, generating insights that underpin tailored experiences and in-house content successes, such as the TV dramas Black Mirror and The Queen’s Gambit.

Outcome: Develops a powerful data platform that allows for better decision making, which results in better decisions and performance. 

5. Activate – awareness to action

Align the whole organization in taking the right actions. The digital ambition articulates what digital means to the customer and the business; its implementation requires employees to take the right actions in a culture of psychological safety.

Adobe is a classic example of an organization that restructured its business model and aligned all employees in taking the right actions. In 2012 they shifted from selling perpetual licenses for their software suite, including Photoshop and Illustrator, to offering these as part of a subscription service. 

As part of the transformation, employees were trained to understand the data so as to become more customer-centric, as well as how to innovate to improve customer experience and internal processes.

Outcome: Employees engaged in taking the right actions to drive digital transformation.

Align on digital ambition

The five-step IDCLA framework is a powerful way of ensuring that senior leaders are on the same page, customer-driven, and able to drive returns on their DigEx – and that the whole organization is aligned behind the digital ambition.

When digital detachment emerges, it can have devastating results. Leaders need to ensure they shift to being digitally determined.  

Jeremy Blain is chief executive of Performance Works International. 

Robin Speculand is chief executive of Bridges Business Consultancy Int and a Duke CE facilitator. 

The Digital Leadership 2024 Perspective is available via performanceworks.global.