By nature, many industrial companies are process-oriented and data-driven. But the level of cross-functional collaboration required to successfully implement a digital strategy is new territory for most industrial companies. Cultural attributes such as agility, flexibility, creativity and innovation will be crucial in this Industry 4.0 world, according to those leading the transformational change. Some of these cultural attributes are not indigenous to the sector, and companies may need to look externally for talent. It then becomes the responsibility of the company to evolve its culture to a point where external talent can succeed in the long term.
Cultural transformation
Survey responses suggest that organizations will find it necessary to shift their cultures to support digital transformation. The best culture for a company is one that enables and accelerates the mission and strategy of the organization, and allows it to respond effectively to external challenges. There are no right or wrong answers when it comes to culture, as long as they meet this criteria. As Lou Gerstner is famously quoted as saying, “Culture is everything” when it comes to implementing successful strategies.
Using the Spencer Stuart culture model, we have found that many traditional industrial company cultures sit in the lower half of this model, as they’re very results- and process-oriented in order to deliver stable, predictable performance. But often, the talent associated with digital innovation is more accustomed to environments that fall within the top half of the model, which are focused on flexible, agile learning with a sense of purpose, speed and collaborative decision- making (e.g., Apple and Tesla). The challenge for industrial companies is to find the right balance between delivering consistent profitable growth and disruptive innovation. This appears to be one of the biggest challenges facing industrial leaders today.
Finding leaders to direct digital transformation
Driving a digital transformation starts at the top of an organization, but finding the right leaders isn’t easy. Indeed, the biggest obstacle many companies will face is finding the leadership that has the right skills to drive the transformation.
When asked “What capabilities do senior leaders need to drive digital transformation?” the most common responses were: cross-functional influence and orchestration (40 percent), a customer-centric mindset (30 percent), comfort dealing with ambiguity, flexibility and adaptability (29 percent), and strong, inspirational leadership (29 percent).
Top five skills needed in an era of digital transformation
- Cross-functional influence
- Customer orientation
- Comfort dealing with ambiguity, flexibility and adaptability
- Inspirational leadership
- Strong communication skills and commitment to transparency
A leader who is going to head a digital effort must be ready to wear many hats, coordinate workstreams across functions and, perhaps, infuse talent into the organization with skills that are not indigenous to the organization.
To address this need, industrial companies often create new digital leadership positions, including global digital transformation leader, social and digital communications director, and director of data analytics. Given that digital branches across many different disciplines and requires a high level of cross-discipline coordination, it can be difficult to determine who should oversee these new positions. In a growing number of organizations today, the chief technology officer oversees digital transformation (37 percent, up from 24 percent in 2016), followed by the chief marketing officer. Interestingly, the number of CEOs owning the effort increased from 8 percent in 2016 to 14 percent in 2017, indicating an increased importance in companies’ strategic agendas.
The majority of respondents (63 percent) said they are hiring externally for key digital roles, and they are more likely to look outside the industry than within the sector for talent. The remaining third are looking to fill these roles or develop individuals internally: “Legacy talent is typically not adaptable to digital tools and mindsets,” one respondent noted. “There is a place for them, but not on the front line of digital marketing.”
Where to find a digital leader
When hiring a leader to drive digital transformation, are you more likely to look inside the industry or outside the industry for talent?