Digital disruption and transformation: What executives need to know

IMD recently interviewed professors Amit Joshi (digital marketing and analytics expert), Jennifer Jordan (digital leadership expert), and Michael Wade (digital business transformation expert) on the challenges facing executives in the digital sphere today.

What do you see as the biggest challenges companies are facing around digital today?

Amit Joshi: Understanding exactly what their analytics strategies should be, and how they should use analytics to fit into their overall strategies is on top of the list. Too often, companies are using analytics for analytics sake, without any strategic objectives.

Jennifer Jordan: The first challenge is mindset. People struggle to adjust to the new way of working and pace of work. Most people are used to a linear way of working with approval processes and buy-in necessary along each step of the process. Now, it’s all about agile working – two-week long sprints, measure the outcome, pivot, and try all over again. The second is the unpredictability with which (and by whom) they are disrupted. We used to talk about competitors. Now we talk about disruptors – and these are often not the disruptors one would ever see coming.

Michael Wade: The biggest challenges I see are all around execution. Executives all know they need to do something. Many of them even know what they need to do. Very few of them have any idea of how to do it. Specific challenges include: how to organize for digital transformation, how to either build a platform or successfully use someone else’s platform, how to balance short-term projects with the longer term, more disruptive objectives, how to build the right digital capabilities, how to respond to more agile and digitally-savvy competitors, how to find and retain digital talent, how to retrain existing talent, and how to transform organizational culture and mindset.

What are the skills or competencies you think that leaders need most in the digital age?

Amit Joshi: In the context of data analytics, the biggest issues are in finding the right people and finding the right reason to do analytics – the strategy. In terms of people the difficulty is in ensuring that you have both technical proficiency (data scientists), as well as domain knowledge and implementation skills – business intelligence experts, for example.

Jennifer Jordan: Speed of execution is important for sure. But the leader also has to be very thoughtful with how he or she executes – with hyperawareness of what is happening externally and by bringing in the relevant data. Having a clear vision of where he or she is going but being humble and adaptable in how to get there is also crucial. Leaders also need to be able to convince others of the value of their vision to get the buy in. And through that, to create a competent network to carry out the digital transformation.

Do you think that companies should set up a separate digital unit to successfully carry out a digital transformation? Or should they keep it fully integrated in the overall organization?

Jennifer Jordan: Many companies struggle with this very question. It is a bit of a paradox. Unless the digital unit is separated from the “mother ship”, it is often too hard for it to break out of the old way of thinking and working and not to be constrained by the old rules. At the same time, if it is not parked close to the “mother ship”, it will not receive the resources, attention, and support from the C-Suite that it needs to be successful. Thus, the sweet spot seems to be a balance wherein the digital unit is independent and sets its own rules of working. But close enough in contact, support, and geographic position to get the needed support and attention from the top management team.

Michael Wade: That depends entirely on the context. There is no right or wrong answer to this question; both approaches have pros and cons. At the most basic level, the decision can be phrased as: ‘If you want to improve, integrate digital. If you want to transform, separate digital.’ However, even if the decision is to separate it, this is normally a short- to medium-term activity. We do not recommend the establishment of a permanent digital unit, which runs the risk of creating a new bureaucracy separate from the main lines of business. If a decision is made to separate digital, planning should already be in place to reintegrate it.

How do companies attract and retain digital talent?

Jennifer Jordan: Good digital talent seems to attract other good digital talent. Once companies recruit one person who is an anchor for the digital community others seem to follow. But companies struggle to have fresh talent adhere to the same, old traditional corporate rules.

Michael Wade: For many, with difficulty! Traditional organizations need to spend significant time, energy, and resources on employer branding to attract and retain digital talent. They should also endeavor to involve new talent in highly motivating ‘transformational projects’ where possible.

When it comes to digital transformation, we often hear about what best practices, but what are some of the worst practices you have encountered?

Amit Joshi: First, not knowing why they are analyzing data. Basically, not having any analytics strategy at all. Second, and related to the previous point, I have seen companies use data analytics for purposes that are diametrically opposite to what their strategic requirements are. For instance, a company that is seeking to expand its customer base, focusing its analytics capabilities on data protection, privacy, etc., rather than on acquiring customers. And lastly, putting too much emphasis on the technical aspects of data analytics and ignoring the managerial and implementation aspects. This often leads to data being analyzed competently, but not acted upon.

Jennifer Jordan: I see three primary reasons why digital programs fail in organizations. First, they don’t have a clear strategy, in which digital plays a role. That is, the question, “why digital?” is not articulated. The company “goes digital” just because they think they have to jump on the digital bandwagon or risk being disrupted. The second is a lack of support from the top management team and board. Without a member of the C-Suite (and the board) truly backing the initiative, it rarely is successful. Lastly, companies that put insufficient (financial and human) resources into the digital transformation such that it never develops a sufficiently tangible outcome or an outcome that is sufficiently meaningful for the larger organization to see its value. Inevitably, the momentum and resources dry up.

Michael Wade: There are many, such as treating digital transformation as a digital project, or even worse, an IT project, lack of a clear vision for transformation, lack of clearly articulated top management support for the transformation initiative, hiring a CDO without giving that person a clear mandate, only looking at close competitors when considering opportunities and threats. Try to ask, ‘what would Amazon do?’, and ‘three-year plans’!

What is the best piece of advice you have heard from leaders you work with about responding to the digital revolution?

Amit Joshi: Any analytics is better than no analytics. The future will be won by managerial intuition + analytics, rather than one or the other.

Jennifer Jordan: I heard this from the head of digital at Nestle, Pete Blackshaw: “Diversity in one’s team is key to an organization’s success in the digital age.

Michael Wade: From Eric Schmidt at Google: “Don’t fall in love with your products. Instead, fall in love with your customers’ problems.”

Find out more about IMD’s wide range of Digital Transformation Programs.