Just 12 months ago, digital transformation was at the top of every leader’s agenda. A quick glance at KPMG’s latest CEO Outlook for the UK might suggest that it’s slipped down the pecking order.

Over a third (36 per cent) of UK CEOs say they’ve already taken steps to pause or reduce their digital strategies to prepare for a recession, with the same proportion planning to do so in the next six months.

It’s understandable that CEOs might be pausing for thought given the current economic uncertainty. And it’s worth noting, it’s not just in digital that they’re reviewing their strategy – they’re also looking at recruitment and their ESG programmes.

But is now really the time to be putting digital on hold? I’d argue that it’s quite the opposite.

Time to double down on digital

Digitisation will put firms in a stronger financial position to ride out any recessionary environment. Automating the back and middle office will drive major efficiencies, reducing the cost base. And streamlining opportunities will keep coming, as technologies like IoT, 5G and 6G, the metaverse and quantum computing enter the fray.

And if you’re not taking the lead on digital, if you’re not doing the disrupting, you’ll be disrupted.

There are growing examples of tech giants and start-ups using digital technology to do what incumbents do more effectively and more efficiently. Time and again, we’ve seen traditional operating models quickly become outmoded, in spaces as diverse as taxis, payments and takeaway food. All businesses need to be digitally prepared for when their sector gets turned on its head.

CEOs recognise that and it’s why three in five (61 per cent) of them say they’ve put aggressive digital investment strategies in place, aimed at securing first-mover, or at least fast-follower, status. And it’s why the same proportion say that continuing to drive digital transformation at a rapid pace is critical to their competition for talent and customers.

Keeping up the pace of digital change

It’s all very well saying businesses should retain their focus in digital. But how do you do that when you face so many challenges?

In my view, there are three areas CEOs should focus on to keep up the pace of digital transformation: people, innovation and partnerships.

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  1. Get the right people and be kind to them
    Let’s start with people. Digital technology is nothing without the people who implement and operate it. That doesn’t mean rushing into hiring data scientists, coders or cybersecurity specialists because your competitors are.

    Try to ignore your natural fear of missing out, take a step back and think through exactly what you’re recruiting for. CEOs should ask themselves: what are our digital transformation goals? What are we aiming to be? Where do want to play? It’s by answering those questions that you’ll identify the capabilities that you need in your organisation.

    This isn’t just about identifying the right skills and people though. It’s about how you manage the people you already have too.

    Almost two-thirds (65 per cent) of CEOs say they need to address burnout from accelerated digital transformation over the past two years before continuing on their transformation journey.

    In recent times, businesses have asked their digital teams to push forward massive, complex transformation programmes, and many of their people are exhausted. Organisations must balance the need to continue their digital journeys with the wellbeing of their staff.

    It’s time for a little kindness. That means taking regular pauses, and allowing those facing burnout to step off the digital transformation treadmill for a while. It means stopping to thank people for what they’ve done, and to celebrate their achievements. It means automating the more labour-intensive work wherever possible. 

    And crucially, it means rethinking how you run digital transformation programmes, to see if they can be done in a less gruelling way. Take time to define a supportive culture and set of behaviours for your digital team, which will help them to feel looked after and avoid burnout.

  2. Take a ‘fail-fast’ approach to innovation
    Two-thirds (66 per cent) of CEOs say they must rapidly shift investment to digital opportunities, and divest from areas where they face digital obsolescence. They recognise that digital investment needs to be prioritised in areas that will drive growth.

    To truly drive forward at pace, innovation can’t be reserved for informal side-projects. It pays to invest in teams dedicated to experimenting with technology and incubating promising ideas.

    And those teams should be encouraged to embrace a ‘fail-fast’ approach to digital innovation. Here, failure is seen as a success because it shows you what not to do and enables you to move on fast.

    That can represent quite a cultural change. Team members need to feel that they can share bad news without fear of reprimand.

    You can’t know where problems lie if people aren’t willing to share them and admit that they’ve gone wrong. The pervasive attitude needs to be: “Mistakes won’t count against you. We’ll fix them together, and learn from them, so that we make less of them in the future.”

    This approach will also feed into the culture of kindness that digital teams need to embrace.

  3. Forge new partnerships

    CEOs know that digital transformation is too big to manage alone. Two-thirds (66 per cent) describe new partnerships as critical to keeping up the pace.

    Partnerships are crucial not just to the transformation itself, but also to taking the solutions and business models that come out of it to market.

    To find the right alliances, organisations need to look beyond the big players. There are myriad start-ups out there with leading-edge offerings. But larger companies are missing out on the opportunity to work with them because of rigid procurement processes.   

    A new approach is needed to put them on the radar. A separate procurement team, with more nimble criteria and lighter procedures, can quickly bring innovative start-ups into the fold. Also, think about different ways of integrating them into your value chain – for example, via collaborations rather than conventional supplier agreements.

Difficult times will continue to demand digital transformation. But to make it work, organisations need to approach it in new – and kinder – ways. 

 

Please get in touch if you’d like to discuss your own digital transformation strategy.