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There are four phases to any digital transformation project; namely, initial, prospecting, integration, and maturity, and each one requires a conscious leadership approach. Here's your full guide.
From just another business buzzword, today, the force of digital is affecting almost every industry. Pierre Nanterme, CEO of Accenture highlighted in World Economic Forum (2016), digital is the main reason just over half of the companies on the Fortune 500 have disappeared since the year 2000. Current businesses are characterised by rapid, dynamic evolvement, powered by technological advancements like the IoT, virtual human-machine interfaces, and AI (Dixon et al., 2020). Businesses today, are at crossroads; whereby, in order to survive, or thrive, they are facing restructuring and transformational decisions; in view of rapidly advancing technology.
Digital transformation (DT) in Malaysia is supported by the government through the Shared Prosperity Vision 2030, which postulated the digital economy’s role in driving economic growth as indicated by MEA (2019). The launch of the Malaysia Digital Economic Blueprint, or MyDigital, on 19 February 2021 provides a road map to the digital economy's role in pushing forward its economic recovery.
By 2025, Malaysia expects the digital economy to contribute 22.6% to its GDP by creating 500,000 new jobs, Internet access for every household, and complete access to an online learning environment.
Malaysia is also keen to invest around RM70bn for the national digitalisation agenda, which is expected to foster e-commerce adoption by 1.2mn micro, small, and medium-sized enterprises in the next five years. The MyDigital agenda aims to integrate with the global value chain through a sustainable digital ecosystem that facilitates high-value jobs, innovative and productive firms, and narrowing the digital divide phenomenon. This is yet another milestone in Malaysia's digital transformation evolution.
Preparing to lead in a digital first future
While the need for change is digitally driven, it needs to be delivered through people. The role of leaders is therefore pivotal. Successful DTs happen when capabilities are present at every stage to steer and supplement each other, making this a holistic process, rather than a specifically targeted one. DT encompasses both, the adoption of technology, as well as leadership capabilities (Karr, 2019).
Leadership has evolved with the industrial revolutions (Clawson, 2003); with the spotlight being thrust towards digital leadership, in the current Industry 4.0 era. DT based leadership is related to traits associated with: dynamic cultures; change agents; recruitment and retention of digital-savvy talents; breaking departmental barriers; as well as digital disruptions and digital congruence.
DTLBB model implementation for Malaysia
The research on the Digital Transformation Leadership Black Box (DTLBB) also validated the previously asserted presuppositions of the different types of digital transformations initially proposed by Annacone (2019) namely:
- Process transformation,
- Domain transformation,
- Business model transformation, and
- Organisational transformation.
Merging the empirical findings for digital leadership thus provides an opportunity for businesses to put the prerequisite conditions into perspective to better prepare for the digital transformation journeys for the leadership to see through the beginning and sustainable journey towards digital transformation (DT).
Responding to the specific requests for establishing the reasons for digital transformation projects failure, this research was carried out on a sample of 645 Malaysian corporations, profiled as 314 private limited and 331 enterprises of micro (21%), small (30%), medium (24%) and large-sized corporations (25%). This was subsequent to the first exploratory qualitative study based on interviews done on C-suite executives for leading corporates in Malaysia.
There are several digital transformation phases, which are significant for a specific digital leadership capability and capacity. They are identified as initial, prospecting, integration, and maturity.
1. Initial: During this phase, the process thought and decision towards re-assessing the objectives, resources allocation, benchmarking against best practices and readiness to towards digital transformation occurs. This is called the strategic digital transformation in line with the organisational direction and requirement.
2. Prospecting: During this phase, to achieve top management’s sustained commitment, there is critical point of continuous revision of decisions including establishing the relevant roles and functions required for digital transformation. This is here the pinnacle of high intellect process thoughts are better for aspired outcome.
3. Integration: During this phase, the crossroad of data analytics and decision based on data meets. Critical business decisions are made based on data analytics provided by digital talents using digital platforms by unearthing customer centric data where top management’s significant involvement will greatly shape the decision.
4. Maturity: During this last phase will see the outcome from the previous phases, whereby traditional norm is being transformed into digital functionality. Every process and data management ecosystem is migrated into full digital mode which enables stakeholder collaboration even faster and efficient.
In every phase, a unique sense of leadership quality is pertinent and key toward the journey of digital transformation. Thus, highlighting those key leadership capabilities would see critical success towards these aspirations.
Leadership capabilities in the initial phase
For the initial phase, there are three leadership capabilities required:
- Diversified resource management: A leader is required to approach diversified ways and means to extract and analyse data for better decision making. Otherwise, one-sided data may not provide desired results and may incur losses due to poor decision-making.
- Holistic talent chain: A leader may need to balance the digital transformation journey between talent supply as well as the delays and complications in achieving this.
- Digital maturity: Digital maturity is critical in helping the leader to maintain optimum business functionalities and also in understanding the enabling technologies towards this direction.
Leadership capabilities in the prospecting phase
For prospecting phase in digital transformation, aerial view is critical for digital leadership. Thus, the pivotal two leadership capabilities required in this phase are:
- First being the ability to identify digital threat and opportunities, and
- The second is the digital entrepreneurship that empowers others. This is the phase where the structures and processes required for transformation are built based on threats and opportunities and further strengthened by empowerment of a digital leader.
Design thinking is the phase of a digital leader leading the aspired digital transformation.
In this process a digital leader will exhibit digital entrepreneurship attributes, exclusively in terms of delegating responsibility and some level of authority across functionalities for entrepreneurship growth.
In this context, digital entrepreneurship doesn’t happen overnight as it requires skills and involves practices in order to identify relevant technology driven business opportunities while eliminating threats. As the younger group of talent comprises today’s leaders, it is then imminent that digital leadership is pursued in a worthwhile way in today’s scenario. Further to this, this same age group of talent displays a better transparent and empowering attitude for digital growth and transformation through their leadership focus.
Leadership capabilities in the integration phase
For integration phase in digital transformation, digital leaders would be required to be digitally savvy on business know-how, hybrid people-centric skills, as well as have the appetite to understand the talent required to sustain the digital transformation journey. This phase is critical, whereby digital leaders are required to be effective in observing and identifying the results and the gaps as the implementation of the transformation is being done.
The digital leadership will have to be complemented with digital business-centric process/tools to assist in sustaining the transformation. For example, a digital leader may be assisted with digital platforms that provide documents and reports in real time to assist her/him in efficient information processing.
Further to this, for effective and fast communication by the digital leader with their employees and other relevant stakeholders, effective technology in the form of digital tools, systems and/or applications are a must to promote balanced work and personal sphered which take into account the welfare of the employees. Thus, the business is required to be supported by leaders who would have an aerial view of business functionalities which could be sourced internally or externally. In any case, it is important to map out the digital skills matrix to identify the right developmental needs and talent resourcing.
Leadership capabilities in the maturity phase
For the maturity phase of digital transformation, a digital leader’s role is to protect and create value. Towards the maturing phase of the organisation in its endeavour towards digital transformation, a digital leader is required to create an efficient ecosystem to protect the business value through data-driven decisions. For an instance, a holistic monitoring system supported by data would maintain service offering with better quality for the target market/segment. This could be further strengthened by hybrid talent pool to process and manage the system.
The final pointer for digital leaders in this phase would be to create value through digital platforms as these platforms would have to bring in value and not remain as a mere tool or application to an end result. Thus, the digital platforms should be able to connect employees with the management, the organisation with its target market, and any digital leaders to their focus groups. The connectedness between the two segments will create value to sustain the digital transformation; otherwise the digital platforms will not hold water.
In a nutshell, the digital leader is left with no choice but to create and sustain the value for digital connectedness to remain relevant in digital business.
The digital transformation leadership black box (DTLBB) is developed and conceptualised as below, with the y-axis indicating the transformation type, and time on the x-axis indicating transformation lifecycle. This is critical to understanding and mapping the strategic fit between the leadership capabilities and transformation lifecycle. After all, transformation failure is not an option!
This article is co-authored by (pictured below, L-R):
Professor Ir. Ts. Dr. Vinesh Thiruchelvam (dr.vinesh@staffemail.apu.edu.my),
Deputy Vice Chancellor & Chief Innovation Officer
Asia Pacific University of Technology & Innovation (APU)
Dr. Murugappan (muru@mcmc.gov.my)
Head, Human Capital Division
Malaysian Communication Multimedia Commission (MCMC)
Author photos and DTLBB graphic / Provided by the authors
Lead photo / 123RF
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