Many organizations are currently undergoing or planning digital transformation initiatives to enhance efficiency and innovation. Despite the common perception of IT as a predominantly technical function, the question arises: Can it play a crucial, strategic role in driving this transformative process?
In collaboration with McKinsey, we gathered IT executives from diverse sectors to discuss the role of IT in digital transformation. Setting the stage for the discussion, McKinsey presented Rewired, a framework aimed at the C-suite which streamlines the digital transformation workflow (see graphic below). Participants delved into the elements that resonated the most, exploring the involvement of IT in each aspect and evaluating the effectiveness of investments driving transformation success.
From fostering a culture of rapid adaptation to addressing the strategy-execution gap, the discussion highlighted key considerations essential for organizations striving not only to keep pace but also to lead in the ever-evolving digital landscape. What follows are our key takeaways:
Top Management is Key in Driving Transformation
Participants emphasized the substantial gap between executive management strategy and the effective implementation of Objectives and Key Results (OKRs) throughout the organization. Addressing this misalignment is critical to ensure that digital transformation strategies permeate all organizational levels.
Relatedly, organizations are increasingly decentralizing the technology function, placing it in the hands of various business units. Success in this distributed model, according to participants, hinges on strategic alignment and cohesive collaboration between IT and business units. Having the influence of a tech-savvy CEO, according to the leaders, was a positive factor.
Additionally, the discussion underscored that having five or more tech-savvy leaders in the top management team significantly contributes to the transformation's success, emphasizing the importance of leadership alignment with the digital agenda. The organization of one participant is already taking the steps in that direction: They introduced a training program for the top 200 leaders to ensure tech-savvy leadership. Participants recognized the crucial role of leaders with a deep understanding of technology in shaping the value roadmap and differentiating high performers from the rest.
Change Leadership Is Crucial
Participants stressed the importance of deep change leadership abilities for successful digital transformation. This involves navigating the complexities of organizational change, fostering a culture of adaptability, and inspiring teams to embrace new ways of working.
The discussion highlighted a shift towards addressing white-collar processes, leveraging AI, automation, and low-code solutions. Participants recognized the challenge of adopting a 'fail fast and learn fast' mindset but unanimously agreed on the need to celebrate failures as opportunities for valuable learning and improvement.
Rewiring Organizations through the IT Function
While many acknowledged engaging with the six core elements of the Rewired framework, few participants considered themselves frontrunners in significant progress. This underscores the complexity and ongoing nature of digital transformation, necessitating continuous adaptation across leadership, culture, and technology.
Organizations are directing efforts towards both front-end (customer experience) and back-end (operational optimization), recognizing the interconnected nature of digital transformation. Success stories include consolidating Robotic Process Automation (RPE), Artificial Intelligence (AI), and low-code development within a single organizational department. This integration facilitates synergies and holistic advancements in digital capabilities.
The evolving nature of ERP transformations was also discussed, with a shift towards continuous improvements and a focus on operating models and ways of working, moving beyond purely technological considerations.
The insights from this roundtable underscore the multifaceted nature of digital transformation. From fostering resilience to aligning leadership with technology, organizations are navigating uncharted territories. By embracing tech-savviness and the IT organization as a key player, organizations can better advance their digital transformation.
