Brand Insights

How can leaders guide successful digital transformation

Overview

In a recent survey by PwC of more than 650 business leaders, 60% say capitalising on digital transformation initiatives is very important to their businesses. Whether it's for improved revenue growth, customer experience or competitive advantage, leading a company on a successful digital transformation journey can have huge benefits. But the majority of companies who start digital transformation don't ever realise the full potential of the transformation to their business. We believe that's because it takes certain leadership skills as well as digital technologies for a digital transformation to be successful.

Scope

Here we will explain some of the main reasons investment in digital transformation is crucial, how CEOs can use technology investments to disrupt their industry, and the qualities they need to be successful digital leaders. We'll also look at some examples of digital transformation and case studies of companies that have successfully used digital transformation to improve their business processes.

As the conversation around Chat GPT-4 and other extraordinarily powerful AI tools swells, it would be difficult for any leadership team to ignore the significant impact that digital can have on their organisation. But how can leaders navigate an ever-changing digital landscape to bring them business success? How can CEOs harness the tools, digital data, and technology available to become digital leaders - transforming not just their products and processes, but the whole business model, and their entire organisational culture?

Most CEOs now recognise the digital imperative as part of their company's future. They may have already instructed their IT departments to look into cloud computing. They understand that 'going digital' is a necessity for keeping up with competitors, gaining market share and attracting the best talent to their organisation. But there is a gulf between knowing it needs to be done and knowing how to do it.

This article will explore the qualities CEOs need to become digital leaders, and how they can successfully guide their organisations through the business transformation journey and use digital technology to disrupt their business before others do. We'll also look at the qualities digital leaders display when guiding their businesses into the digital revolution.

Why CEOs should invest in digital transformation

For almost the entire world, Covid19 was the catalyst for a huge shift in the way businesses operate, in the way consumers make their choices, and in the way people do their jobs and view the workplace. Suddenly technological infrastructures that may otherwise have been dots on the horizon had become a priority - imperative for enabling people to continue with their jobs, and for companies to continue to function.

This sudden baptism into the world of digital and technology for organisations that had previously only dipped their toe into the water led to a clearer, first-hand understanding of the benefits of operating within a digital landscape. Benefits such as increased efficiency, the ability to operate internationally, and opportunities for software development and new revenue streams all became widely apparent while people were thinking and working more innovatively.

Efficiency

More businesses are in a position where they need to do more with less. That means increasing efficiency and reducing the cost to serve is high on the list of priorities for most CEOs. Automating processes and using digital project management tools to streamline workflows will eliminate manual processes, and the errors that often come with doing things manually, whilst using software to take on those repetitive tasks can also free up employees to do more creative work, focus on customer satisfaction or manage teams and processes more effectively.

Customer satisfaction

It's not just about being able to give people the digital and online services they have come to expect. Full-scale digital transformation has far wider benefits than that. The ability to store and process data gives digital leaders the opportunity to gain greater insights than ever before about what their customers want. Their day-to-day behaviours, their shopping preferences, their cultural pass times, and so much more, can all be used to develop new, personalised experiences, higher quality marketing, self-service options, data security and biometrics, and more joined-up daily encounters with the brands they care about.

Agility

The next 10 years are not going to be like the last 10. The pace of disruption has increased exponentially. When Facebook launched in 2004, it took 4 and a half years to reach 100 million users worldwide. It took TikTok 9 months in 2020. The pace of change is break-neck, and the attention span of audiences rivals that of a goldfish. Digital technology is the only hope for most business leaders to be able to respond to changing market conditions and meet constantly shifting customer needs. Being able to pivot quickly and allocate resources where the data points will help CEOs to innovate around the unmet needs and pain points of their customers.

How digital leaders can use technology to disrupt their industry

If CEOs want to disrupt their industry through business transformation, they will need to become digital leaders. For all their business processes, for products or services, for the very model in which the business operates, as a digital leader they will need to question how they can use technology and big data to gain a competitive advantage and improve customer satisfaction.

End-to-end change

Digital leaders think “end to end” about where they can use tech to produce a step change in performance and value for their customers. They use digital transformation to cover multiple areas, including marketing, back office, product ideation, sales efficiency and customer care. This enables them to do things that were previously impossible or impractical. A traditional retailer could use augmented reality to create immersive shopping experiences, or a bank could use blockchain technology to offer peer to peer loans.

Collaboration

To disrupt their market, a CEO needs to think about their whole business model alongside their market position. Because if they want to challenge traditional industry norms, they can't do it with a traditional business model. They'll need to embrace models that sit within the wider digital eco-system - the network of companies, contributors, institutions, and customers that interact to create a supply chain of mutual value. The close collaboration of digital leaders with these partners can enable them to work towards a common goal that extracts value from disparate knowledge and experiences.

With increased price sensitivity around energy sales, a traditional energy company could collaborate with big data to diversify services and provide valuable insights for predictive maintenance of home appliances and technical equipment.

Collaboration across a broader ecosystem creates new opportunities to address consumer needs. Technical foundations, or platforms, that allow devices, applications, data, products, and services to work together in new ways become core to strategy.

Data

Data is, in fact, the key to disruption, and the ability to analyse and monetise that data using artificial intelligence will give organisations the power to find new markets, launch new products and personalise marketing campaigns.

Leaders can use data to run predictive analytics programmes that can be used to anticipate and respond to customer needs, manage them and get in front of their competitors. In retail, data can anticipate the demand for products across the season, ensuring they can manage stock levels.

Leveraging data can help companies create education campaigns for their customers to solve their pain points, tailor promotions via customer segments based on their past behaviours, improving customer engagement and loyalty.

Digital Transformation Example: BP

British Petrolium is an important case study on disruptive innovation and digital transformation, particularly in a FTSE 500 company. Here's an example of a traditional organisation - a multi-national oil and gas company - that created a digital transformation strategy t0 disrupt their industry; a traditional organisation, disrupting a traditional sector.

In 2017, BP realised they needed to modernise their operations if they wanted to stay competitive in an industry that was evolving rapidly around them. So they launched a digital transformation initiative to harness the innovation they were seeing around them, creating opportunities optimise and improve every area of the business with smarter use of resources and more streamlined leadership.

BP invested heavily in technology, including AI, data analytics, software development, and the Internet of Things (IoT). They brought all this technology together in a single digital platform, BP Launchpad. Launchpad is an investment unit and business scale-up that backs and rapidly scales disruptive energy start-ups, meaning BP can access and benefit from the innovation coming out of smaller, more agile, technology-led companies that might otherwise have become its competitors. Through this they saw diversification of income and revenue growth.

BP also leveraged digital technology to enhance its exploration and production capabilities. The company developed a digital twin of one of its offshore platforms, allowing engineers to simulate and test scenarios before making decisions. This helped the company to optimise production, reduce downtime, and improve safety.

By embracing digital technology adoption, BP has disrupted the oil and gas industry and positioned itself as a leader in digital innovation. The company has been able to improve its efficiency, reduce costs, and enhance its operations, while also reducing its environmental impact.

BP's digital transformation programme is an excellent example of how FTSE 500 companies can use digital technologies to disrupt their industries and create new opportunities for growth and innovation. By investing in digital transformation and embracing new internal systems and models, companies can position themselves for success in a rapidly changing world.

 

Qualities CEOs need for guiding digital transformation

Guiding an organisation through a digital transformation journey requires a head for innovation and a strong leadership team. It needs a clear vision for the future - including an understanding of customer experience and employee experience, a strong business strategy and an openness to emerging technology.

They'll need to navigate complex technological changes, such as updating legacy systems, as well as managing cultural shifts to increase operational efficiency and add new capabilities to the team, all while bringing people along with them on the journey. You'll need to inspire teams to embrace change. But there are certain behaviours that CEOs can cultivate that will help their organisation to move towards an agile approach.

Speed up decision making

The first step is to create a framework for decision-making that enables change to happen faster. For every suggestion or potential change, company leaders need to ask questions. Get out of the habit of saying 'no' and instead become curious. Replace 'no' with 'why' and 'how'. Discover objections and address them early so they don't slow down the process. This will support accelerated digital transformation and faster business outcomes.

Simplify work

The value of a task doesn't come from how complex it is. The value comes from its outcomes. More often than not, keeping things simple generates far more value. Set up agile teams that work across departments in short sprints with set deadlines, to prevent scope creep. Use junior employees to sense check and simplify work and processes and adopt machine learning to take on repetitive tasks. This can lead to significant operational cost savings as well as the potential to use ai driven insights to improve performance.

Eliminate unnecessary tasks

Get rid of work that doesn't need to be done. While it can be a challenge to champion 'doing less', agile and digital leaders know that outputs and outcomes are not the same, and switching to an agile working model removes the temptation to measure 'busy work'. Instead, implement a traffic light system to discuss what work teams should start, stop and continue, and measure the outcomes against agreed objectives and key results (OKRs). Training cross functional teams to focus on the specific things that matter will improve operational efficiency. Implementing internal technologies like protect management systems across the entire company, will streamline work, reduce duplication, and measure progress against actions.

Benefits of undergoing digital transformation

Innovation has the power to take failing businesses to safety. By implementing digital  technology in the right places, and challenging traditional thinking in others, digital transformation can be the key to winning back market share or expanding services across the world stage.

Domino's Pizza

In the early 2000s, Domino's was struggling. It was competing against a saturated market, and it was criticised for having bland pizza and slow delivery. In 2008, they began to explore new technologies and working methods to help address its issues. They introduced a mobile app, online ordering, and its pizza tracker (Dom), which uses real time data to enable customers track their orders. The company also revamped its menu and pizza recipes and continues to innovate with customer preferences - offering both vegan and gluten-free menu options.

 As a result, Domino's won back the market share it had lost and then some. Its stock price has risen more than 3000% since its technology adoption. 91.2% of orders are digital, with 42% coming from the app. Giving customers easy access to ordering and tracking has made it a firm favourite.

Starbucks

Starbucks was also competing in a highly saturated market, but its main challenge was that it had become too big - its operations were costly, and it was so large it struggled to keep up with shifts in customer needs.

In 2011, Starbucks underwent a huge digital transformation; using technology to give customers increased convenience. They launched a mobile ordering and payment system which customers could access via an app. This meant instead of waiting in line to order, then waiting again for their drink, customers could place their order in advance and then pop in to pick it up when it was done.  

Today, more than 20% of transactions come through the app, and two-thirds of its business comes from collection, delivery and drive thru. It has considerably diversified its income streams by moving away from its roots as a third-space, physical coffee shop.

But despite this, they haven't damaged customer loyalty and engagement. Due to the increase in online ordering and app usage, Starbucks has been able to use the data they collect to create personalised customer experiences. It can create offers and recommendations based on previous purchases, and it can send push notifications to users to let them know when there are new options available.

Starbucks also used gamification in their digital loyalty scheme, setting 'stars challenges' to help customers reach gold level, where they could unlock certain discounts and freebies.

By embracing these digital transformation initiatives, Starbucks gained new customers and customer loyalty.

Conclusion

Digital transformation is no longer a choice but a necessity - especially for CEOs of FTSE500 companies. By investing in a digital transformation strategy and embracing disruptive business models, CEOs can create new opportunities, and improve customer experience, operational efficiency, and business value. Successful digital transformation requires innovative thinking and new operating models, but the prize is worth it - expanding audience and market share and becoming a business that can compete in a digital era.