20 senior execs from a wide range of industries as diverse as broadcast television, pharmaceutical, publishing and financial services gathered in New York last November as Econsultancy hosted another Digital Transformation roundtable.
Ever since IBM's seminal 2011 study 'From Stretched to Strengthened – Insights from the Global Chief Marketing Officer Study', CMOs have been reporting a concern that they are underprepared for digital - shorthand for changes in consumer behavior, an explosion in the volume of data, the proliferation of channels and device choices and the effects of social media.
According to a recent Econsultancy study, only 23% of the Fortune 500 could consider themselves to be in any way whatsoever shielded from the effects of digital.
It was suggested that those who might fall into that category are generally companies that dig things out of the ground and process them, but perhaps even they will see soon their industry disrupted by digital technologies.
Everyone who attended on the day agreed that true Digital Transformation is a heavy lift and there is often a greatly delayed gratification from the process.
Nearly all of the organizations represented at the roundtable had experienced significant disruption to their business models from digital.
The attendees told us afterwards that the most valuable part of the day was hearing from their peers in other businesses, learning what had worked for them, what hadn't and how they had overcome the challenges they faced.
Four keys rose to the top of the discussion...
1. Finding the right type of board level support
Most attendees agreed that at the board level of their companies, there is usually a 'good game talked' about digital transformation, but this often breaks down at the operational level.
Indeed, data from our Digital Transformation: Securing Board Buy-in Best Practice Guide shows that just 31% strongly agree that boards have a good grasp of digital.
One attendee talked about the problems of managing change when a top down mandate is not clearly communicated to the whole business. In their instance, the board were skeptical about the need to adopt new business processes and believed that they had mostly 'figured out this digital stuff' - or at the very least were well on their way to doing so.
There was no need to panic and incur unnecessary expense trying to change the way they had been doing business for decades.
This particular attendee overcame the challenge of disrupting the status quo maintained by coming together with likeminded colleagues in an informal collective who saw themselves as a ‘group of bandits’ driven by the need to change the business from within without a mandate from the top.
It wasn't until they spent had time doing grass roots research and were able to prove to their board that we live in a world that’s inherently different before digital, that everything started to fall into place.
By showing case studies from businesses that had failed because believed that digital wouldn't revolutionize their business - such as Kodak, Borders and Blockbuster - they were able to build a business case for pilots that looked at new and more agile digitally led activity. Social media was a key component of this new initiative.
For most of the brands represented in the room, this was considered a tough sell - especially for those who were focused on new customer acquisition. "You can't measure ROI," cried the CMO. "We know TV works for us and we can't afford to take the risk of spending money on this social media stuff," said the VP of Marketing.
In this case, instead of trying to push for a large investment up front, against the will of a risk averse senior management, they were able to achieve buy-in by positioning their work as a 'test'.
And no right-minded board can ever say ‘no’ to a test, surely?
One of the tips that was given was to adopt the approach of finding small models of success and to publicize them as widely within the organization as possible. This slowly helped to change minds that had been previously resistant to change.
2. Overcoming inertia
Some of the companies represented reported similar issues with management veterans of very long tenures. Many of these senior, even board-level, executives were at the point in their careers where they were looking ahead to retirement.
When presented with the idea that Digital Transformation could be a five year journey, many of them were of the mindset that; "I'm not going to be around in five years, so why should I bother with it?"
That type of inertia and resistance to change was difficult to overcome. Many people believed that old guard held back the younger talent in their organization. But there needs to be caution about managing succession plans.
Getting rid of old and more experienced middle managers and senior executives who have been with the company for years is not the silver bullet that some may think it is.
This reminded me of a case study in an article by Jake Adelstein and Nathalie-Kyoko Stucky about Sony that discusses what can go wrong with some of these types of changes. In Sony's case, the then new CEO Nobuyuki Idei decided to streamline the company and carry out a massive restructuring.
One of the Sony veterans interviewed for the article recalls:
...When we say, ‘restructure’ in Japanese - we really mean getting rid of people. He put together an early retirement plan and strongly encouraged people to use it. Well, that didn’t generate a lot of good feelings.
When a company starts promoting early retirement, most people take that as a sign to get out while they still can. And many did. Maybe the idea was that by getting rid of the middle aged and older employees they’d encourage innovation and bring in some young blood. The effect was more like shooting yourself in the foot.
According to the Sony veteran, the middle-aged engineers and technicians that left were the same ones that brought Sony to greatness. They left behind a younger generation that was insecure, afraid of failure, and only willing to work with technology already in place, not [to] build from the ground up.
What was even worse is that during this period, Korea and Taiwan immediately welcomed the exiting Sony techies with open arms. It was better than industrial espionage - Samsung could openly ‘buy’ the technology that Sony had developed simply by rehiring their best and brightest.
3. Building cross-functional teams to support change
One of the panelists discussed how creating cross-functional teams from different departments had made a big difference in her organization.
Her company is in the Healthcare sector, more specifically in the Pharma side of the business. She started the process by seeking out a suitable 'digital evangelist' in each department that could influence the adoption of digital. This encompasses a diverse group – legal, compliance, customer service and product marketing.
By changing the way teams were rewarded and introducing shared goals they were able to cut through the inter-departmental bureaucracy and burdensome processes that had crippled earlier efforts at digital.
By rewarding collaboration and cooperation rather than maintaining silos of responsibiity, they were able to get people working towards a common goal and in the best interests of the organization as a whole.
As she explained:
At the end of the day, if your bonus and my bonus are aligned – we’re going to work together.
One of the group wondered whether they should use this model to build teams that were specifically tasked with digital transformation. Another thought that change management in itself should be a core competency within their organization.
4. Mapping digital career paths
The final theme concerned the issues of talent acquisition and retention. A few of the panelists admitted that they had difficulty knowing what the career path of a digital professional should look like.
In some organizations, digital is seen as potentially an organizational dead-end. This is partly due to the fact that in large corporations which are only at the beginning of the Digital Transformation journey, there exists a structure based around a Digital Center of Excellence.
This can serve a very valuable function in the early days, but it was the view of many of the panel that people need to be able to move back in to the overall marketing function in order to progress within their organizations.
Having a structure where there was the ability for high achievers to move in and out of the sales and marketing organization was seen as the best was to bring the right talent into the business and the best way of ensuring that existing talent can be retained.
Thanks to our friends at Rapp for providing a great venue and valuable insights.