It’s not easy to manage the radical changes required of digital transformation. The DX leadership profile can reveal your strengths and weaknesses (or your boss's).
Most organizational leaders struggle with digital transformation. While this isn’t the sole reason that digital transformation projects fail at a rate of up to 70%, there’s a big difference between a good leader and one who will steer your project into a digital dead end.
I’m here to help. As the author and instructor of the Watspeed Digital Transformation Certificate Program at the University of Waterloo, I’ve studied organizations big and small to learn what skills are needed to lead digital change. I’ve also developed a simple model you can use to analyze your own digital transformation leadership skills and those of the managers in your organization.
Organizations are usually designed to do what they already do well—this is necessary to survive. Understandably, their priority is achieving performance objectives that allow them to succeed today, providing jobs and returns to owners and shareholders. In the past, change was relatively slow and managers and leaders were appointed based on their skills in maintaining the status quo.
At the same time, organizational structure was based on achieving reliable levels of quality and productivity. Activities were divided into specialist silos and assigned to those with a high level of specific capability. Organization culture supported this orientation. Doing the same things well every day was, rightly, highly valued, while activity which diverted attention away from achieving short term targets was frowned upon.
Against this background, it is not surprising that most senior leaders of organizations struggle with the introduction of large-scale change. They were not appointed to lead it and have little relevant previous experience. The members of their senior management team and the people who report to them have similar challenges. Further, the organization objectives, structure and culture directly conflict with radical change.
Operation and transformation
Much has been written on the characteristics of effective digital transformation leaders. They usually concentrate on elements that are important in managing change, including being innovative, risk taking, a visionary and an effective communicator. These are all important elements for radical change, but insufficient for ensuring an effective transition in an organization that must continue to successfully operate during the transition. In addition, they don’t give enough emphasis to how the technology will impact performance.
These were our concerns at the University of Waterloo when we looked at how we should develop digital transformation leaders. We reviewed the research in this area and what others had written and then developed our own simple model that integrates leadership of change with daily operational good performance. We identified the following areas as encompassing the range of capabilities needed:
Innovative: Digital transformation requires development and implementation of new products or services, processes and business models. Organizational leaders need to be oriented towards doing this themselves and, importantly, with others. After initial implementation, innovation is critical in exploiting the change.
Systems: Systems thinking involves understanding complex systems and the relationships between the elements within them—how the system fits together and functions as a whole. When digital transformation takes place, it is usually within a system. Leaders need to understand this in determining the impact that transformation will have in the organization, both in terms of existing daily operations as the transformation takes place, and after the implementation period is complete. This is critical in successfully introducing technological change in an existing operation.
Visionary: A visionary leader is someone who can imagine the future and excite others to work with them to create it. Visionary leadership is usually thought to be essential for effective digital transformation in creating the vision, focusing the organization’s efforts on it, and motivating the workforce to achieve it. Visionary leadership is necessary to overcome the inertia of a traditional organization.
Performance: Digital transformation should be designed to achieve a high level of performance, either within existing operations or within new operations. Maintaining emphasis on the performance objectives of the change being introduced, as well as the performance objectives of ongoing operations, requires a dual focus, which is difficult and often creates tension.
Collaboration: Innovation usually requires collaboration to achieve the combination of capabilities that can develop, implement and exploit ideas. In digital transformation this means combining business, technical and human knowledge with design, development and implementation. Leaders need to create an environment that encourages innovation throughout the organization.
Compassion: Digital transformation will only be successful if people in the organization are supportive of the changes being made. If employees lack trust that their welfare will be a priority as changes are made, they will not provide that support. Compassionate leadership is essential.
The DX leadership profile
The DX leadership profile allows you to evaluate the leadership capability of your organization as it undertakes digital transformation. Simply rate the performance of the above categories on a five-point scale and plot the leadership profile of your organization leader, the senior management team as a whole, or anyone with managerial responsibilities.
Here are a few common profiles that illustrate how to apply the tool. All organizations are different, and your own profile may not match the examples.
First is an example of a traditional organization focused on day-to-day operations—the traditional DX leadership profile. For this organization, digital transformation will require significant leadership development and change. The current leadership is highly focused on achieving short-term performance goals, does not have a strong vision, and while they are open to collaboration, compassion, and a systems approach, these attributes are not given strong emphasis.
Next is a profile implied by much of the discussion on digital transformation leadership. The popular DX leadership profile emphasizes capabilities that are usually thought to be important in management of change, and minimizes short-term performance. Systems focus is a significant challenge in this profile and there is room to improve collaboration and compassion.
Finally, take a look at the ideal DX leadership profile. This aspirational profile combines capability in ongoing business performance with leadership of radical change. Most leaders or leadership teams will not match the ideal profile, but they can and should make plans to address the areas of weakness, such as leader development, recruitment and accessing short term resources.
Conducting your own analysis
The DX Leadership Profile analysis tool will help you consider your own organization. The chart is based on your own judgement of your strengths and weaknesses. Its best application is as a focus for discussion amongst the members of your leadership team. Consider it at a team meeting and agree on your own profile. Then create a plan of the work you’ll do to improve—I’d love to hear about it in the comments below.
Looking for more digital transformation advice? Learn the easiest way engineers can plan for big technology changes.
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Peter Carr is the author and instructor of the University of Waterloo Watspeed Digital Transformation Certificate Program, available globally online, and focused on overcoming the challenges of successful technological change. The program is jointly offered with the Ontario Society of Professional Engineers.
