We are living in an age where the line between the pre- and post-digital world no longer exists, according to a recent article from INSEAD, one of the world’s largest graduate business schools. In this digital era, there is no distinction between “business” and “digital.” Rather, all business is now digital, and all digital is now business.
While this may be an accurate way of describing the seismic cultural shift brought about by the astonishing cumulative impact of the digital revolution on business and organizations, the idea that all business is now digital may nevertheless come as a surprise to those business leaders who are still struggling to effectively implement digital transformation within their organizations. In order to help these leaders, INSEAD has developed the following 11 guidelines for effective digital leadership, distilled from the insights gathered in a 2016 survey of 1,160 top corporate executives, managers, and directors:
Digitization requires an objective understanding of the external environment.
Traditional physical barriers to entry and drivers of competition are rapidly being replaced in today’s market by forces that are less tangible, such as a relevant purpose or mission, a sense of authenticity, and consumer relationships built on trust. Unlike in the pre-digital age, these forces cannot be overcome simply through cash or industry prominence. Rather, they require a clear and unbiased understanding of the state of the market and the role of businesses within it.
A firm’s mission may need to be reformulated in response to digitization.
Given the sweeping effects of the digital revolution, “business as usual” is no longer possible for any company. Some firms—or even entire industries—may find their very existence challenged by digitization. Leaders must be prepared to question all previously held assumptions about their organizations, even down to their mission and business model.
The impact of digital on a firm must be clearly defined.
While it’s natural for organizations to seek a blueprint to guide them through the steps of digital transformation, digitization is not a one-size-fits-all endeavour. Instead, leaders must be ready to create their own digital road map, which will involve a clear and thorough assessment of exactly what digital means to the firm and where it is expected to take its business activities.
Firm-wide digital capabilities are needed.
One of the major lessons that business leaders need to learn about digital transformation is that digital efforts cannot be siloed or confined to an isolated area of an organization. Rather, all functions within a firm must boost its digital understanding and capabilities, and it must be prepared to cooperate across distinct business units.
An organization’s corporate culture must support digitization.
Even the most sophisticated digital transformation efforts will not successfully take hold unless they are firmly supported by the overall organizational culture. Leaders must understand that digitization is a cultural revolution and not just a technological one, and as such it requires significant leadership support and buy-in.
Digitization demands collaboration.
Continuous collaboration, ongoing exchanges, and conversations are all hallmark of digital transformation—not just between business units as described above, but among all company stakeholders, including executives, boards, frontline employees, and shareholders. In addition, reaching out beyond traditional industry lines is becoming more critical as digitization brings disruptive transformation to conventional industry categories.
Digitization demands greater public engagement.
The digital revolution has drastically changed the relationship between companies and consumers. Now, customers are the most important driver of all business activities, and it has never been more critical for leaders to be in touch with consumer demands and expectations, as well as to source ideas from customers themselves in order to be able to deliver exactly what is wanted.
Digital business strategy is a continuous process.
The days of five-year strategic plans is over. Given how quickly trends and dynamics can shift in the digital market, strategy formulation and execution need to occur in real time, with leaders and decision-makers constantly assessing and processing necessary strategic changes in a seamless feedback loop.
Data must drive decisions.
The ever-increasing amount of big data available to firms of all sizes is a force that leaders must be ready to utilize. The insights available through data and predictive analytics provide firms with a degree of responsiveness to their customers’ expectations that was previously unheard of, and organizations that are unable to make the most effective use of these insights will quickly find themselves falling out of touch with their target markets.
Digitization is a journey into uncharted territory.
Digitization is a new realm, and as such, it necessarily involves some degree of risk for those entering it. The uncertainty and ambiguity that traditional businesses long sought to avoid are now qualities that leaders must become comfortable with as they launch new and ambitious experiments and prepare to learn from their failures.
Digitization is based on continuous change management.
As we currently understand it, there is never a point in digital transformation when an organization has “arrived.” There is no specific point when transformation is complete and change is finished. Rather, continuous change is now an operating principle that must be fully integrated into the very fabric of a company in order to keep the business relevant and responsive.