August 13, 2020
Digital transformation: 3 takes on changing a business from across the org chart
By Alex Shootman, CEO
The clarion call to transform is sounding in businesses today louder than ever, but how should talent across the org chart respond? What questions are front-of-mind for CEOs compared to SVPs? How does that differ from the transformation agenda when it reaches department directors and managers?
Even before COVID-19 tore up everyone’s business plans, only 8% of CEOs thought their business model was likely to remain viable at the rate of digitization of their industry, according to McKinsey.
The truth is that transformation was never really optional; but it was also never a surefire win. McKinsey also often reminded us that 70% of efforts to implement complex, transformational change were likely to fall short of their intended goals. In an era when $7.4 trillion dollars was forecast to be spent on digital transformation over the next three years—before the pandemic—that would have seen businesses pour $5 trillion down the drain.
What the 30% were getting right was the human dynamics of transformation. Human dynamics are the connective tissue between strategy, outputs, and outcomes. So let’s look at how transformation plays out through the layers of a business and hopefully encourage a little more empathy up, down, and across the org chart.
Part 1: The CEO’s 3 top-of mind questions.
When it comes to connecting strategy to delivery to drive transformation, CEOs ask three questions:
1—How do I get our strategy to the last mile?
CEOs commit their energy to a constant conversation at speed and scale with the whole business about why change is necessary, what impact it will have, and what teams must do differently.
They need work management technology to scale-up that iterative conversation and talented managers to ensure their team’s work reflects strategic priorities. And CEOs need to change the medium in which they communicate.
2—How can I tell if the right work is happening?
In 1975, Steven Kerr of Ohio State University wrote about the folly of rewarding A while hoping for B. Yet 45 years later, businesses are still trying to monitor the work through the lens of performance and pay systems.
CEOs need to establish whether the work going on day-to-day is connected to the strategy. That means extracting discussion of individual pay and performance from the fundamental question of whether the right work is happening.
3—Are there enough resources to deliver the strategy?
When your manufacturing capacity is humans, how do you know you've got the resources to execute your strategy? How hard do you push the organization?
Unfortunately, CEOs have the potential to run over people in discussions about resourcing. When they need to be told the truth about what’s required to get the job done, sometimes people stay silent (because they don’t feel they can talk back to the boss). What’s really required (and it's something CEOs need to encourage) is candid dialogue about productivity, resourcing, strategic requirements, and the tradeoffs that will play out in the decisions you make.
Expecting productivity, outputs, and outcomes to improve when a team is already running flat out is wishful thinking. Here’s the interdependency of the three top-of-mind questions: if everyone in the discussion understands the strategy and how it connects to the day-to-day work that’s getting done, then that candid conversation about resourcing is built on a foundation of certainty and clarity. If there’s low-value work that’s crowding out time for strategically important tasks in people’s schedules, that’s the place to start looking for capacity.
Part 2: Why SVPs can’t flunk the and/or test.
There is no such thing as transformation that can be achieved in isolation: numbers must be met; clients must be served; the business must run—and change. And there is one job in the org chart that can’t hide behind the illusion of choice between keeping operations running and changing the company’s direction: the CEO’s direct reports.
The chiefs of technology, finance, operations, people, sales and marketing, i.e., the senior vice presidents (SVPs)—are paid to do the hard things. They don’t get to rest in the “or” when it comes to the run-or-change equation. Their job is to run and change.
The advocates and translators of strategy for the organization.
Humans are tribal creatures. We find a lot of comfort in discovering the similarities between us and our small group of people and reinforcing those similarities by discussing the differences of other people. That’s the cheap and easy way to lead.
The responsibility falls on SVPs at moments of stress and challenge within an organization to break through that tribal mindset and become translators and advocates for what every team is trying to achieve. SVPs must internalize the organization’s strategic goals and translate them to their teams—painting that broader canvas of what other teams are doing—while keeping everyone focused on work that will hit existing targets.
How objectives and outcomes resolve the and/or.
Collectively, SVPs need to be the champions of seamwork: collaboration across divisional lines. But that doesn’t mean being pulled in every direction and reacting to events rather than driving progress.
I asked Robyn Tombacher, Global Head of Workforce Management at WPP, for her tips on how to win at this level. Robyn was at the sharp end of acquisition consolidation: the combination of one of the world’s great data, digital, and direct marketing brands, Wunderman, with one of the world’s foremost creative ad agencies, J. Walter Thompson. Robyn said:
“As COO, I've learned this: you have to start with an objective. You have to start with what you are trying to accomplish. What's the highest level of outcome that you want to deliver against? It's very easy in the COO role to become reactive to everything that's coming to you or coming at you. And so I try to stay balanced in staying focused day-to-day on those outcomes that I want to deliver—and knowing that I'm going to need time for reactive things that are going to come up.”
Robyn added that the CEO’s direct reports are the connective tissue of the business:
“Sometimes in an COO role you're playing that in-between role: connecting the business and the finances, and sometimes you can get pulled in either direction based on the balance of the need. So I try to remain neutral as best as I can, although knowing there will be times when you need to lean into one direction more than another. For example, given the current crisis, it’s leaning into finance as we try to evaluate what the impact is going to be on all the different industries that we work with and asking how that connects back to our employees.“
What Robyn describes is the power of objectives to be a compass point for action. Focusing on strategic objectives and outcomes gives clarity of purpose and direction; the illusion of an “or” choice resolves into run and change.
In leaning in towards finance at a point of need, Robyn paints a picture of what best-selling business writer and consultant Patrick Lencioni describes as the “First Team” principle: senior players counting their peers as their primary team rather than their direct reports.
Part 3: Why great directors speak truth to power.
One of the best questions a director can ask their boss is also one of the toughest: Do you really want me to tell you the truth?
Director-level is the point in the org chart where C-suite visions of transformational change meet the hard reality of how it will be delivered. By virtue of being close to frontline teams, a director is likely to know better than their boss what is possible and how decisions taken higher up the chain are likely to play out.
If a director hides the truth, they are responsible for the failure. But speaking truth to power is a hard ask of anyone; inevitably, it’s accompanied by a sense of professional jeopardy. A director puts their reputation on the line when they point out that the emperor isn’t wearing any clothes. As my friend Adrian Chang, Senior Director of Customer Engagement at Informatica, explained, it’s not a question of directors saying no or being risk averse. It’s being able to point to a real gap between strategy and execution. Adrian said:
“It’s being able to make an assessment and report back to a senior leadership team and say, we'd love to do this, but here are the things that I need for my people, and here are the things that I need from others within the organization, in order to move this pillar of the strategy. It’s looking at the big transformation shift and saying, I can get you from here to the first rung on the ladder quickly, but the rest will take time and I need the input to get the output.”
A lesson for organizations is that directors need to own the transformation message. While feeding truth back up the org chart, directors need to be able to translate the message to their teams in a way that shows they believe in it, while retaining a vital sense of realism and acknowledging any part of the plan that doesn’t quite ring true at the front line. Teams need to have trust that their director is having those tough conversations behind closed doors.
A lesson about innovation.
Another important organizational lesson is about innovation and how directors should operate. If SVPs champion seamwork, directors drive collaboration across business units—from product engineering to sales and marketing, for example—to deliver the right outcomes for customers.
It’s no secret nor surprise that innovation often happens when practitioners from different disciplines bring their expertise to bear on the same problem at the same time. Directors can be instrumental in making innovation happen at those seams between teams if they have invested in director-level relationships across the business. Adrian said:
“Lock arms with people in your peer group. Get a sense of how they successfully navigate, their tactics and methods for getting work done. There will be co-dependencies and challenges and the great thing is knowing that there's a supportive network with best practices and sharing. I definitely think spending time with the peer group is important.”
You can be the fabled 30%.
The need to transform has made one thing clear: peer-to-peer activity across the seams of departments has become more important than ever if strategy is to connect to execution. Traditional linear relationships up and down the organizational hierarchy are important, for sure, but thought and action needs to break out of departmental silos and function more as a network.
Your organization can be in McKinsey’s fabled 30% that succeed at transformation. It starts with understanding the organizational dynamics as soon as the call to action leaves the C-suite.