Report: Leadership buy-in and financial investment are key to successful digital transformations
Along with C-suite support and investment, another driver of success is CTrO, which devotes time and energy to driving transformation forward, according to new research from Deloitte.
According to a recently published study by Deloitte, C-suite buy-in, financial investment, and a dedicated chief transformation officer (CTrO) are key indicators of successful transformation programs.
That of the firm 2022 Chief Transformation Officer Study also found that nearly 50% of executives surveyed said that setting clear expectations with sufficient timeframe to show ROI is a critical success factor.
C Suite Commitment
According to the study, C-suite adherence is one of the most accurate predictors of transformation success. This includes the ability to set clear expectations regarding timing and achievement of impact and dedicate meaningful time to leadership.
Additionally, executives who successfully achieved their transformation ambition spent 18% of their time guiding and shaping the program. Thirty-eight percent of executives indicated that a simple and compelling “north star” narrative is critical to success.
TO SEE: Guide to becoming a digital transformation champion (TechRepublic Premium)
Sufficient and properly allocated investments are also a critical success factor for transformation initiatives. Half of survey respondents indicated that their organizations invest between 1% and 5% of their annual revenue in transformation programs, and 22% of respondents indicated an investment of 6% to 10% of their annual revenue, although many thought their organizations were underinvesting.
Organizations invested the largest portion of the transformation budget in technology (26%), followed by business changes (19%) and process changes (18%).
However, 52% of respondents said they underinvested in talent and 31% believe they underinvested in change management and communication initiatives, which can lead to issues with adoption, behavior change, confidence in the program or clarity of vision, according to the report.
Dedication of the CTrO
An empowered CTrO, who devotes time and energy to driving the transformation forward, is one of the main predictors of transformation success. When a CTrO contributed an additional 15% of their time, the probability of success improved by about 16%, according to the report.
On average, CTrOs devote about half of their week to a transformation; however, most believe that to see positive results, they need to increase their engagement to at least 60% to 65%.
SEE: Digital Transformation: A CXO Guide (Free PDF) (TechRepublic)
When and why organizations transform
The increased frequency, uncertainty and potential impact of disruptions – such as the COVID-19 pandemic, the “Great Resignation” and supply chain challenges – have forced organizations to reimagine the nature of transformation in order to adapt to the constantly changing business environment.
Deloitte said survey respondents fell into one of three key transformation ambitions:
- To optimise business, including streamlining operations, improving performance, and building cash reserves to fund investments (37% of respondents)
- To expand business, including increasing existing revenue streams and entering adjacent markets (42% of respondents)
- Re-imagine business, including entering new markets and driving disruptive change (21% of respondents)
A wide range of external and internal forces trigger the need for transformation. The survey identified three most frequently cited enablers by transformation leaders. More than half of respondents noted the opportunities of digital technology and inefficiencies in business processes as the top two drivers, while 48% of respondents cited restructuring for growth as the third trigger for transformation.
The changing role of the Chief Transformation Officer
Many successful organizations recognize the need for ongoing transformation capability, and today dedicated transformation leaders, such as the Chief Transformation Officer or VP of Transformation with a Transformation Management Office persistent (TMO), have become increasingly common, according to Deloitte.
To be successful, the CTO must embody a range of skills and play multiple roles as strategist (overall architect), operator (competent CEO), technologist (impacts of platform and technology architecture ), controller (guardian financier) and champion of change (people-oriented, storyteller).
CTrOs often switch between these roles, according to the report, with respondents spending most of their time in the strategist persona (31%), followed by change champion (23%). The majority of CTrO respondents indicated a desire to spend even more time in the strategist and champion changing roles. The survey results also indicate that big thinkers who are also storytellers are more likely to succeed in the role of CtrO.
“Transformation is not a quiet response to individual events. It’s a business capability that should be ingrained in every organization’s DNA to help enable continuous and effective change,” said Deloitte’s Anne Kwan, Principal and Lead Transformation and Strategy Offering. market design, in a press release.
Deloitte said its study included insights from more than 300 transformation executives from various industries who discuss what it takes to design transformation programs effectively.