Over the last two years I’ve had the opportunity to meet more than 75 senior leaders from some of the most outstanding organizations in the world; CEOs, CFOs, CIOs and other senior leaders from a cross section of industries. Given that we live in a ‘Change Economy’, the discussions invariably hover around how these companies are transforming to new market realities, using digital technologies.
While every leader I met is focused on technology-led transformation, the fact remained that their organizations were in different spots in truly leveraging the power of technology. I was intrigued by why some organizations were getting more from digital than others? Could I find the answer to this question from the nature of discussions we were having and the follow-up actions?
My first instinct was to look for anecdotal evidence. But then, I introduced the data elements, considering I was dealing with a topic which has so many variables, and knowing fully well that despite my best efforts there would be subjectivity. Here’s what I did:
- I listed out 50 CXO interactions & the subsequent discussions / actions and rated them on the quality of the follow-up actions
- Quality of the interaction was taken to be a function of speed of action &/or scale of action.
- These were cases where we had multiple discussions, and hence had the opportunity of building a good understanding of these organizations’ working style.
- Finally, I super-imposed the financial performance of those companies around two metrics – stock price movement & revenue growth in the last two years.
The result of this analysis was revealing. Here are the top four takeaways:
1. How decisively companies act, is not a function of their size- some of the largest companies in the world acted decisively & boldly (& vice versa).
2. ALL the companies that acted decisively were doing very well on the financial metrics. Interestingly, a surprising number of the 50 companies in the sample set did NOT belong to this ‘decisive’ category.
3. 75% of the companies that took longer to make decisions were laggards in terms of financial performance. They showed low, even negative, growth of both revenues and stock price in two years.
4. There were some consistent cultural traits with companies that were succeeding- organizations very empowered (decentralized, but thorough), and hence, quick. There was willingness to take bold decisions, like going with a smaller company or investing in less proven IP. These teams / companies were playing to win and not just playing safe.
5. Finally, there were often new leaders in the mix, they wanted to make a point
The SO WHAT?
Firstly, success in digital transformation seems to be significantly correlated to culture of the organization. The Digital Winners stand out not just because they understand the power of technology better (most organizations understand the power of digital quite well), but also because their culture enables them to leverage technology better, faster. It enables them to get ahead.
Secondly, culture must (& can) be demystified so that it can become easier to reinforce or change. Empowerment, speed of decision making, cushion to fail (making bold decisions), and infusion of fresh talent into the organization are critical dimensions. I am sure there are more, what is critical is to establish a few key ones.