You’d think by now IT leaders would have digital transformation in check and be pros at overseeing initiatives to help their organizations improve business processes, stay competitive and enhance customer experiences. But in reality, many are faltering.
A recent report by Capgemini and George Westerman of MIT found that while 39 percent of organizations today say they have the digital capabilities required, that level is the same as in 2012. The real eye-opener was that only 35 percent say they have the leadership capabilities required to succeed at digital transformation — a decrease from 45 percent in 2012.
There are myriad reasons, including organizational complexity and the difficulty of working across silos, says George Westerman, principal research scientist with the MIT Initiative on the Digital Economy.
Additionally, “Companies are mired in legacy spaghetti,’’ adds Westerman, who is also co-author of the book Leading Digital: Turning Technology Into Business Transformation.
Effective leaders, according to Westerman, are those who possess vision, engagement and governance skills and are adept at building strong IT/business relationships.
“Great leaders will be able to build [relationships] and have the vision and communicate really well and negotiate the governance processes, and build momentum and keep that momentum going,’’ he says. They have a “constant dissatisfaction with the state of things,” and an ability to constantly re-envision how processes can be changed.
As part of the vision, they also understand that while most of the talk about digital transformation is focused on the digital, the hard part is actually the transformation, Westerman says. “It’s not really a technology challenge but a leadership challenge,” he says. “Technology provides no value to your company but changing the way you work does.”
Of course, effective digital leaders exist, and they, along with industry experts, point to their secrets of success.
Being a good communicator and listener
“You’re always going to have a number of requests for improvements or new projects that will outstrip the cost of being able to deliver those projects,’’ observes Eric Sigurdson, CIO practice leader at Russell Reynolds Associates. A good leader helps the business prioritize and communicate and articulate the value proposition that can be delivered and in what time frame. They also know how to negotiate vendor relationships as well as how to negotiate with internal stakeholders on what projects should be worked on.
“They are excellent listeners,’’ he adds. “They have strong abstract reasoning, and what I mean by that is the ability to decipher and separate the wheat from the chaff and understand what is needed versus what people tell you they want. They think the glass is half full in terms of driving behaviors around them and driving the art of the possible.”
Learning how to listen better was a lesson for Dave Castellani. The senior vice president and business information officer at New York Life says he would get very passionate about an idea and he began realizing that this unwittingly made him “unavailable for the alternate opinion.” Getting excited about something and wanting to get to the end game quickly sets you off on a path where you are likely missing all the signals around you, says Castellani, and a potentially, a totally different way of thinking about a project or concept.
Simplifying the approach and helping the business practice agile
There are so many different things for leaders to spend their time on. For George Brady, executive vice president and CTO of Capital One, focus is key, as is learning to simplify the approach. “At Capital One, we’re constantly looking at what we’re doing and how to simplify that work and how to do it efficiently and stop doing things that no longer make sense,” he says.
New York Life’s Castellani takes a similar stance, saying that if you want to digitize, you have to simplify your assets and be really good at process improvement. New York Life has been around for 173 years, so it has accumulated a lot of legacy systems and “technical debt,” he explains, and “most organizations kick the can and add instead of simplifying.” That makes it hard to add new apps that are tied to older ones, he says. “People say, ‘I want to be digital,’ and you must engage in high-level thought in execution around simplification in order to be digital.”
He also views agile as a business play, not a tech play. “If you don’t have the business fully engaged with the core processes of agile, forget it. Technology is simply there to enable.” Coming at it from that angle gets Castellani thinking about how to engage the business first and not lead with the technology, which he says was a fairly substantial shift in the company.
Hiring for intellectual curiosity and a company-first mentality
Skilled leaders know they need other people who have bought into the organization’s digital vision and are comfortable trying to innovate, says Westerman.
Of critical importance to Capital One is hiring people who put the needs of the company ahead of their own, says Brady. “When you think of what stands in the way of digital transformation … it’s people. So you need people who are interested in challenging themselves and putting greater needs ahead of their own.” He also looks for people who are “authentic and genuine” and when they encounter obstacles, are willing to work across disciplines to solve impediments that get in the way of digital initiatives.
Castellani believes there is a fundamental need to hire people with intellectual curiosity and a mindset for learning new things in a world that’s moving at a rapid pace. That has changed the way they view hiring, he says.
“One of the key characteristics of top leadership today is having a team in place that challenges conventional wisdom; people who will say, ‘I don’t think you’re right and here’s why,’’’ Castellani says. The rapidly changing nature of work requires having different mindsets, and a synthesis of ideas leads to the right approach, he adds.
“New hiring practices was a highly collaborative approach. I didn’t sit down one night alone and say, ‘Here it is, guys,’ nor do I think it’s a great way to create buy-in. When it’s owned people tend to implement it faster,” he says.
Castellani’s also learned “later in life” that it is so easy for leaders to hire people similar to them because there’s a comfort level and a validation of your beliefs when you do that. “But I learned I don’t need another me,’’ he says. “I have some profound weaknesses and I need someone to fill those gaps and … they may be the polar opposite of me. Once you have a team with a diversity of thoughts and behaviors and open it up … it’s off to the races.”
Getting in the trenches
If you want digital to succeed, you have to be a participant and not a spectator, says Srini Koushik, CIO and CTO of Magellan Health. Digital is not something leaders should read articles about and then turn over to their teams to execute, he stresses. “Your teams learn better when they see their leader participating,” he says. “If I tell them to use emerging technology to build products but I’m stuck in the old world, any change I hope to accomplish will be surface level and will be because I’m watching.”
“Digital transformation is hard and as a leader, you have to accept that no one has all the answers,’’ adds David Gledhill, CIO of DBS Bank. “You need to roll up your sleeves and get into the trenches with your teams. Be a part of the weekly meetings and get into the nitty-gritty details.”
Accepting that mistakes will be made and embracing them
Castellani likes to take what he calls the Godfather Principle: deliver bad news quickly. “Often, it takes people too long to get to bad news and you have to make it really, really safe to say it and let’s bring it to forefront and make sure there’s no repercussion to failure.” It’s also important to make sure people understand failures are actually quite good, he maintains, “because it’s in the failure that wisdom occurs.”
Good leaders also don’t rush to conclusions and are really strong proponents in understanding the root cause, he adds. “Too often with a crisis we go instantly to a fix and we patch, and we don’t actually take the problem away. If an organization is built on a series of patches it will break again.”
Having a well-defined problem makes it easy to find creative ways to work through the challenge, says Ben Ninio, head of digital at Syngenta. “As is often the case with digital, many of our initiatives fail, and not trying to get them back on track is also an important skill. We try to kill initiatives quickly if we see that they are not proving valuable.”
A big part of embarking on a digital transformation is accepting that you won’t have all the answers, notes Gledhill. “Instead, we learn how to fail fast. We focus on learning and moving forward instead of pointing fingers and blaming others. The more often you fail fast, learn and move on, the less likely you will have to recover from big missteps.”
Since it’s inevitable issues will occur with any effort, the goal for Larissa Tosch, vice president of Information Technology and CIO of Glatfelter Insurance Group, is for those items to bubble up sooner rather than later. Echoing Ninio and Gledhill, she says, “If there is risk to fail, I’d rather fail fast, so we try to front-load our projects with the riskiest areas first.’’ Tosch also has a three-step formula: Acknowledge the mistake, fix it and learn from it.
She also believes in full transparency. “The risk is that the IT department has fully exposed the ‘sausage-making process,’ which is typically still raw,” she admits. Yet, when teams are comprised of business people and IT, which is the case at Glatfelter, they will know anyway when IT makes a mistake.
At the same time, Tosch also stays calm and likens a good leader to a duck. “We may be paddling like crazy underneath the water, but we should appear smooth and graceful on the surface.”
Making friends — not just in high places
The Capgemini MIT research found that digital masters have very strong relationships within both IT and the business, so if you don’t have those, work on it, says Westerman.
“Do everything to help business leaders understand how to make their business better and that technology can make it possible; whether more intimate customer engagements or more flexible and agile processes,’’ he says. “Help them understand and envision how they can be better — because the technology is there.”
He also advises IT leaders to make sure they’re able to deliver if business leaders decide to go on the digital journey with them by having agile methods and the right skill sets in place.
Tosch says she started at Glatfelter as a developer, working on policy and claims systems. Then she was asked to lead a team of business analysts in the underwriting division where they implemented a new policy rating and issuance offering.
“This role gave me a unique perspective to see IT from outside of IT,’’ she says. “At that point, I realized that it was not about ‘alignment,’ but an ‘alliance’ — it was not enough for the IT department to simply work on the business priorities as they were prioritized.”
To truly be impactful, IT needs to first understand the nature of the request, then evaluate the opportunities for transformation and automation, work to educate business people on the possibilities and then execute with frequent touchpoints, she says.
“We have all heard horror stories of IT departments forcing systems on users, and of business folks circumventing the IT department to implement solutions independently,’’ Tosch points out. “Neither yields long-term success and certainly not a foundation on which to build further automation. Shadowing users, listening to their ideas and respectfully challenging their requests creates a strong sense of win-win.”
Looking to the future
Capital One’s Brady doesn’t rest on his laurels and isn’t content with the status quo. “For me, there’s the constant looking around corners,” and not assuming what his team is doing is good enough or fast enough. The company culture is to think differently about where the world is going, he says. That approach makes him think about “where there are advancements that would give the company a leg up.”
Effective leaders need to build apps for the future as opposed to building from technology from five to 10 years ago, says Koushik. People may be more comfortable with a known entity but then they have to scramble to figure out what their system will look like in the future.
“I think a lot of people, in IT especially, used to rely upon prior experiences to decide what they wanted to build,’’ Koushik says. He likes to find out what the best practices are and spends time talking to consulting companies to figure out the best way to do something. “You really have to partner with forward-look companies so they’re engineering your environment for the future.”
While it’s good to plan for the future, at the same time, practice patience, advises Syngenta’s Ninio. “Resist the temptation to ask if it’s possible to reach the vision and instead focus on the next pragmatic thing we can do to get one step closer.”