Digital acumen is a current buzz-phrase for business leaders.
Sadly, it’s not all that well understood.
Research published in Harvard Business Review*, reveals that less than 20% of companies have the necessary combination of digital leadership and management skills needed to navigate in today’s hyper-competitive, technology enabled world.
Even more telling, is that more than a third of the 432 organisations surveyed were in the digital laggard category, lacking in both digital leadership and management skills. 75% of these organisations weren’t confident they could overcome the deficiencies.
For business leaders, digital acumen boils down to
- staying abreast of digital trends,
- understanding their implication for their business,
- knowing how to leverage new technologies, and a core skill
- taking effective action, quickly.
Many organisations have capabilities in each of these areas – but distributed across their marketing, product development, finance, HR and technology specialists – rather than linked with a coherent focus.
A critical gap was revealed.
Even for the laggards, almost half of the CEOs “get digital”, but translating understanding into strategy and action drops to under 15% for this group.
The CEO’s critical role in digital transformation? Ensuring a clear vision for the next stage of the organisation’s future is in place and effectively communicated, and taking action that results in the organisation’s skill, will and confidence being aligned to achieve that future.
The entire executive team needs to bring their collective to translating vision into strategy and action. While digital transformation has a significant technology component, overcoming the traditional barriers to change is still critical to success:
- outdated organisational structures
- legacy processes, and
- fear, uncertainty and doubt (FUD)
On top of these, there are often added risks of rapid and radical change. So why would we do this if the future of the organisation wasn’t at risk? Exactly!
Before functional heads can collaborate for successful transformation, they need to understand the problem and master the tools of its resolution. HBR reminds us that functional leaders do not need to become IT experts. They simply need to be great consumers of technology—curious, aware, engaged, and willing to experiment in their own arenas, so they come armed with great ideas.
Fortunately, many of the necessary skills are already in place in competent functional areas. Organisational change and process reform are well-understood in the evolution of organisational capability.
CEOs would be well advised, suggests HBR, to identify strengths and weaknesses in digital acumen across their functional heads, as it may not be evenly distributed. What’s often missing is the experience in rapidly transforming capability, and an understanding of the specific dimensions of the current digital disruption.
Building Digital Acumen
The CIO is the CEO’s natural partner in understanding the digital opportunity and how it might be addressed, if two basic conditions are met:
- the IT leadership has effective communication skills and strong partnerships with functional business leaders.
- the IT team understands the digital-world and is reforming its internal practices to be able to harness new technology opportunities quickly and effectively.
Without them, the IT team may be bypassed as irrelevant or be an impediment to digital business change. It is likely that a deficiency in one of these two key competencies is at the heart of the recent rash of appointments of Chief Digital Officers.
HBR offers three places to start.
Business Leader Forums
IT and other functional leaders should work together to help the middle management layers in their organisations understand how to harness digital technologies. Once the approach and language of these dialogues between IT and functional managers have been mastered, they can migrate upwards.
This leaves functional heads less exposed than a purely top-down approach and, once a strategy is devised, the middle managers who will need to take action, are already on board.
The most value can be extracted from these forums if they
- include both inside and outside experts,
- are focused on relevance to this business, and
- aim to produce actionable insights.
All too often we ask people to use new technologies before they understand and feel competent with them. Creating technology sandpits, where business people can play with technologies, builds skill, understanding of potential application and reduces FUD.
Sandpits shouldn’t remain sandpits for too long – they will either become de facto business applications or a graveyard of failed experiments.
HBR suggests that analytics is a great place to start. Simply bring any data that may be relevant onto a new analytics platform and allow business managers and leaders to start to use it to better understand the business and its customers. Of course, corporate reporting and decision making remains on more robust platforms until the new environment matures – even if they’re Excel spreadsheets!
Performance Partnerships with IT Supersede Requirements Gathering
Trust isn’t built at arm’s length. It’s built by having skin in the game and striving for mutual success.
IT leaders need to shift their team’s interface with functional leaders from gathering requirements to engaging in dialogue and partnering for success. HBR offers two useful starting points.
Just as the CIO needs to have partnerships with his or her peers, the CIO’s direct reports need to form partnerships with managers at their level in other functions. “It’s good for IT leaders to feel accountable for other executives’ success,” noted one CIO who had gone down this path.
Embed client-facing IT people in the business. Then discussions about leveraging IT become part of the daily business dialogues, keeping them relevant. “The best results are gained working side by side,” said one marketing leader.
Putting it all together
There is now a solid base of CEOs that understand the threats and opportunities offered by potentially disruptive technologies. The next challenge is to form effective, actionable insights and carry them through.
Building digital acumen across the business leadership team and a closer working relationship between IT providers and the business units that leverage technology, are two key places to start. Once these partnerships has been strengthened, the organisation is in a substantially better position leverage new technologies.
The Digital Leadership Institute builds the confidence and capability of business and government leaders to lead and govern the change demanded by the evolving digital economy.
* Driving Digital Transformation: New Skills for Leaders, New Role for the CIO, Harvard Business Review. https://hbr.org/resources/pdfs/comm/RedHat/RedHatReportMay2015.pdf