Know Your Company’s Digital Transformation Coordinates

Carsten Linz

How to manage digital transformation successfully is a frequently asked question these days. But are you clear as to who is in charge for the challenges ahead?

Finding the leader in charge

Many regard the CIO as natural owner for this strategic shift; however, the number of business leaders who are taking the lead for digital transformation initiatives is growing exponentially. This conversation, meanwhile, has reached the C-Suite, as shown in a recent Gartner survey: 16% of the CEOs interviewed stated that they believe they should be leading their company’s digital transformation. Only CIOs, with a close 15%, are seen as the other key navigators of their company’s digital transformation!

We have described recently the prerequisites for next-generation CIOs to be regarded as digital leaders by their CEOs. Our team at SAP, the Center for Digital Leadership, meets with more than 100 C-Suite executives every year. From these meetings we know that there are also some strong chief digital officers who demonstrate measurable business results. In one company, our team even found a CIO-CDO-CTO triumvirate. Eventually, what are we striving for when it comes to digital transformation?

Digital transformation is a business challenge, but it is certainly foremost a leadership challenge, as it must effectively drive a broad program of non-linear change through the organization. Probably best that the organization knows who is in charge.

Sharing the same digital path in the leadership team

Although it is not a new topic, no common definitions exist for digital transformation. This fuzziness is often a first barrier for success. The Center for Digital Leadership has analyzed several transformation programs. A key factor is that a shared understanding is critical for digital transformation success. To lay a foundation, we define digital transformation as “organizational change by applying new digital technologies to enable innovation (offering as well as process innovation) and next-generation business models to gain or regain competitive edge.”

One of the worst things a company can do is start its digital transformation journey without truly understanding their current coordinates or transformational state within the process. How can you get to where you are going if you don’t know where you are? That is why we need to understand our status quo first.

Find your current coordinates

Many times, digital leaders concentrate on isolated aspects like cloud transformation or smart factory. The digital transformation framework, which SAP is applying internally, helps digital leaders and their teams look at all eight key dimensions of digital transformation.

These eight dimensions include leadership and strategy; business models and offerings; becoming customer-centric; company and customer culture; people and skills; digital foundation; company and technological processes; and structure (including innovation capabilities and use of data) and governance (the structure of tech and work processes).

In order to guide a company’s digital transformation, understanding the status quo is not enough. There needs to be a planned destination, or end state. As evidenced by the Gartner CEO survey, digital transformation is regarded foremost as a business enabler and not as a disruptor. As endless opportunities regarding outsmarting processes, innovating offerings, and creating next-generation business models arise from several breakthrough technologies that hit scale together – like infinite computing, sensors, robotics, hyperconnectivity, 3D-printing, and artificial intelligence – this change in processes requires clear direction.

Alignment amongst the leaders of a company is needed in order to guide the ship on the right navigational path. It is important for the digital leadership team to share a common goal and understanding of where their company’s destination lies.

Create proofs of the new behaviors, and don’t stop too early!

What GPS devices do for car drivers—specifically, gather coordinates to provide navigators the guidance needed—this digital transformation framework does for digital leaders. The framework, which has now been released for external use, was co-developed by SAP’s Center for Digital Leadership and SAP’s Business Transformation Services. It helps identify focus areas for digital transformation initiatives, benchmark against industry averages, and provide recommendations how to drive your digital transformation in a maturity-based manner.

Can you put your digital transformation on autopilot, then? Definitely not. You need to over and over again create proofs that the new approaches do work. Demonstrate islands of next practices and bring the brave forerunners on stage. If people see that something works, others will follow and you can start a movement.

Last but not least, leaders must allow the time for the strategy to take hold. In change settings, when the top leadership team has already left the “valley of tears” behind, their middle management is still yet to follow and the employees are mainly left in this most difficult valley phase, when the pain of the change prevails and the positive results of the targeted end state are still too far away to be motivating.

Golden rule: Don’t stop your digital transformation program too early.

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Carsten Linz

About Carsten Linz

Dr. Carsten Linz is an entrepreneurial leader with more than twenty years of business experience and a proven track record for driving innovation, growth, and transformation. As the Business Development Officer at SAP SE, he repeatably leads the build-up and scale-out of new businesses. In his role as Global Head of the Center for Digital Leadership, Linz acts as an advisor to other CIOs and C-level executives by showcasing next-generation digital innovation and transformation approaches. He also serves as advisory board member, coaches CEOs of fast-growing companies, and is an active member of the investment committee of Europe’s largest seed stage fund. As senior lecturer, he teaches in executive education programs at top-ranked business schools, publishes books and articles in renowned journals, and is a sought-after keynote speaker. He supports social innovators as advisory board member of Social Impact Berlin.