Digital transformation (DT or DX) is a term used daily in business today, and more than ever since the arrival of the pandemic.

The definition of digital transformation can be different for every organization because every business is unique, but refers to leveraging technology to create differentiated ways of doing business to drive growth in new and existing markets.

Digital Transformation impacts businesses and the markets they serve in a big way, and will undoubtedly segregate companies that will strive from those who will be left behind.

Why is Digital Transformation Needed?

Digital technology has transformed the landscape of customer service, sales, supply chain, marketing and more, in ways that impact every area of business. Every company has now become a technology company. Managing this transition to a digitally-driven business model will not only critical in winning over competitors but also crucial for survival itself.

Here are 3 Key Reasons Why Digital Transformation is Needed Urgently:

• Acceleration of Change — The new normal or business and work has made it very difficult to maintain a position of industry leadership, and requires an acceleration of new digital solutions brought to market
• Digital Competition — Companies are under ever-increasing pressure to compete digitally, and long-established business models are being disrupted by “born digital” start-ups
• Customer Expectations — Customers expect a good experience across all digital touchpoints and are less dependent on physical service

Why are Digital Leaders Needed?

Global spend on technology and services that enable digital transformation is estimated to reach $1.97 trillion in 2022 (IDC Worldwide Semiannual Digital Transformation Guide).

The reason companies will not only adopt some form of Digital Transformation but also embrace this spend is the estimated 10x return in value.

The World Economic Forum is suggesting that the value of digital transformation for both society and industry could reach $100 trillion by 2025. Yet, according to Mckinsey, about 70% of organizations fail at Digital Transformation.

This is because organizational leaders approach Digital Transformation by thinking first about technology infrastructures, process changes, customer journeys, and cost impact but overlook the most important element of change — leaders themselves.

Developing leaders with digital mindsets can have an enormous impact on the success or failure of an organization’s Digital Transformation. Changing expectations from organizational leaders have necessitated a change in the way leaders are identified and developed as compared to traditional business models.

Digital leaders embrace the 3 key changes identified above by simplifying what these mean to employees.

They encourage employees to harness technology in their current role and subsequently create a competitive advantage.

They innovate and collaborate in new ways and are humble enough to move into the critical role of a facilitator. And they act as agents of change — sparking a multiplying effect across their areas of responsibility.

Building a pipeline for future Digital Leaders is where many companies struggle, and only 35% of organizations say they have the leadership capabilities required for digital transformation.

However, by creating a Digital Leader model, companies can have a measurement framework to identify leaders they will need for successful transformation.

The Digital Leader Model

The Digital Leader model is built on a set of foundational competencies that are not only relevant today but can withstand the test of time. Such foundational competencies are crucial in moving a company forward despite changes in volatility, complexity, and ambiguity.

The following research-backed competency framework can serve as the foundation to help develop a Digital Leader Model.

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These 3 Pillars of a Leadership

• Agile Mindset: An Agile Mindset is about being open-minded and learning-oriented, willing to reflect own strengths and weaknesses, intellectually curious, and displaying a positive attitude towards change and development.
• Leading Change: Leading Change is about showing interest in leadership roles in a volatile work environment, promoting and inspiring collaboration, empowering team members to embrace change and drive their self-development, being self-aware and willing to move into a role of a humble facilitator.
• Driving Business: Driving Business is about global networking, identifying and developing business opportunities, generating solutions and taking calculated risks, and ultimately driving business success. It is also about integrity, reliability, and resilience which are needed to handle pressure and continuous regulatory changes.

How to Identify Digital Leaders

Now that we have presented a model for Digital Leaders, the next challenge is how to identify such leaders.

Fortunately for us, there exists a wide range of tools in the market today that can produce results to quantify the Digital Leader model.

Impact on succession planning

In the above part of this post, we looked at the type of leaders organizations will need to groom for success through the Digital Leader Model.

The model, which consists of 3 pillars; Agile Mindset, Leading Change, and Driving Business, helps companies by providing a framework to measure the leadership potential of their employees in today’s business environment.

Now, we’ll discuss 3 key processes that need to change to make Succession Planning strategy work.

First, to understand why there are processes that require changing, we need to look at key changes that have come in 2021 and will stay beyond the year that will impact Succession Planning model drastically.

3 Changes that Impact Succession Planning

1. Transforming Jobs

Technology had already been impacting jobs rapidly over the last 5 years and the pandemic of COVID-19 became a catalyst to this transformation.

Creating a succession planning strategy around the circumstance that jobs will change is a challenge facing HR.

Moreover, the collective of work technologies such as automation, robotics, AI, and such has brought many organizational gains such as lowered production cost and operational efficiency but has also simultaneously shifted jobs in 3 ways: towards extinction, augmentation, or creation.

Learn More: Part 1: Succession planning in the age of Digital Transformation