Digital transformation (DT or DX) is a term used daily in business today, and more than ever since the arrival of the pandemic. The definition of digital transformation can be different for every organization because every business is unique, but refers to leveraging technology to create differentiated ways of doing business to drive growth in new and existing markets. Digital Transformation impacts businesses and the markets they serve in a big way, and will undoubtedly segregate companies that will strive from those who will be left behind.
Why is the digital transformation needed?
Digital technology has transformed the landscape of customer service, sales, supply chain, marketing and more, in ways that impact every area of business. Every company has now become a technology company. Managing this transition to a digitally-driven business model will not only critical in winning over competitors but also crucial for survival itself.
Here are three key reasons why digital transformation is needed urgently:
- Acceleration of Change – The new normal or business and work has made it very difficult to maintain a position of industry leadership, and requires an acceleration of new digital solutions brought to market
- Digital Competition – Companies are under ever-increasing pressure to compete digitally, and long-established business models are being disrupted by “born digital” start-ups
- Customer Expectations – Customers expect a good experience across all digital touchpoints and are less dependent on physical service
Why are digital leaders needed?
Global spend on technology and services that enable digital transformation is estimated to reach $1.97 trillion in 2022 (IDC Worldwide Semiannual Digital Transformation Guide). The reason companies will not only adopt some form of Digital Transformation but also embrace this spend is the estimated 10x return in value. The World Economic Forum is suggesting that the value of digital transformation for both society and industry could reach $100 trillion by 2025. Yet, according to Mckinsey, about 70% of organizations fail at Digital Transformation.
This is because organizational leaders approach Digital Transformation by thinking first about technology infrastructures, process changes, customer journeys, and cost impact but overlook the most important element of change – leaders themselves. Developing leaders with digital mindsets can have an enormous impact on the success or failure of an organization’s Digital Transformation. Changing expectations from organizational leaders have necessitated a change in the way leaders are identified and developed as compared to traditional business models.
Digital leaders can embrace the 3 main changes in leadership:
Digital leaders embrace the 3 key changes identified above by simplifying what these mean to employees. They encourage employees to harness technology and subsequently create a competitive advantage. They innovate and collaborate in new ways and are humble enough to move into the role of a facilitator. And they act as agents of change – sparking a multiplying effect across their areas of responsibility.
Building a pipeline for future Digital Leaders is where many companies struggle, and only 35% of organizations say they have the leadership capabilities required for digital transformation. However, by creating a Digital Leader model, companies can have a measurement framework to identify leaders they will need for successful transformation.
The Digital Leader Model
The Digital Leader model is built on a set of foundational competencies that are not only relevant today but can withstand the test of time. Such foundational competencies are crucial in moving a company forward despite changes in volatility, complexity, and ambiguity. The following research-backed competency framework can serve as the foundation to help develop a Digital Leader Model.
These 3 pillars are defined as below:
- Agile Mindset
- An Agile Mindset is about being open-minded and learning-oriented, willing to reflect own strengths and weaknesses, intellectually curious, and displaying a positive attitude towards change and development.
- Leading Change
- Leading Change is about showing interest in leadership in a volatile work environment, promoting and inspiring collaboration, empowering team members to embrace change and drive their self-development, being self-aware and willing to move into a role of a humble facilitator.
- Driving Business
- Driving Business is about global networking, identifying and developing business opportunities, generating solutions and taking calculated risks, and ultimately driving business success. It is also about integrity, reliability, and resilience which are needed to handle pressure and continuous regulatory changes.
How to identify digital leaders
Now that we have presented a model for Digital Leaders, the next challenge is how to identify such leaders. Fortunately for us, there exist a wide range of tools in the market today that can produce results to quantify the Digital Leader model.
The measurement framework below shows how this could be done:
|Framework||Agile Mindset||Leading Change||Driving Business|
|Traits||Learnability Agility Curiosity||Drive To Lead Championing Collaboration Humility Empowerment||Handling Data Strategic Solutions Business Acumen Digital Communication Mental Endurance|
|Tool||Psychometrics + Cognitive Assessments||Adaptive Leadership Simulation||Business Acumen Simulation|
|Measures||The ability for a person to unlearn and re-learn information and the willingness one has to continuously learn||The ability for a person to take over a team and adapt leadership style according to the individual’s needs while maintaining their results, performance, and morale||The ability for a person to lead a business by understanding the different functional parts of a company and make decisions according to market trends and future business needs|
With a model in place and the appropriate tools to measure potential, organizations can now start building leadership pipelines and redefining succession planning. Using such a framework that will not only help their business in Digital Transformation but also develop leaders that will guide the organization through such complex situations and events such as the ongoing pandemic.