May 15, 2024

Digital transformation from the top: How top management steers change management

When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar. – George Westerman

The digital transformation presents executives with a dilemma: how to lead the company through the digital transformation without overburdening the workforce with this disruptive change. Change management plays a key role in this process, challenging top management and the Chief Digital Officer (CDO) in particular. A strategic vision and mastery of change management are required here. Top management is required to find a balance between technological innovation and the adaptability of their employees. This is the only way to bring about change that will lead the company sustainably and resiliently into the digital future.

Change management: the decisive role of top management

Leading and managing the digital transformation is certainly one of the biggest challenges for top management. This task goes far beyond the mere implementation of new technologies (technically speaking, this would be classified under the term digitalisation). Digital transformation, on the other hand, involves reshaping the corporate culture, adapting business models and redefining working methods. And the latter have often not been transformed for decades. Any change will be met with resistance. This transformation therefore requires a clear vision coupled with a strategic approach and a profound understanding of change management. And that means people management par excellence.

The role of the CEO and CDO (Chief Digital Officer) is particularly important here in order to successfully shape the digital transformation. These leaders must not only act as role models for digital transformation, but also clearly set the direction. And, above all, align the entire organisation to this path. As Strathmore University Business School and McKinsey point out in their observations, this is about much more than pure digitalisation (the mere introduction of digital tools). Rather, it is about creating a digital culture. This means a culture that promotes openness to change, continuous learning and a willingness to adapt to new market conditions.

A key aspect of change management in the context of digital transformation is the ability to motivate and inspire employees at all levels of the organisation. Leaders must create an environment in which innovation thrives and where employees are encouraged to contribute new ideas and pursue experimental approaches. And especially to deviate from well-trodden paths. This form of engagement requires open communication and the endeavour to view employees as active participants in the transformation process.

In general, digital transformation is not a task that is limited to individual departments or teams—it is a company-wide initiative that requires a coherent strategy and the support of the entire management team. However, the transformation initially starts in small areas or lighthouse projects. We'll come back to that in a moment. 

Change management is becoming a central instrument that primarily addresses the human components of the transformation. It is about building a bridge between what is technologically possible and what is culturally acceptable. A clear change management strategy is based on a deep understanding of the corporate culture and takes all employees along the path of digital transformation. Nevertheless, any kind of change will be met with resistance, so you need to be strategic despite your idealism. The key to a successful digital transformation therefore lies less in the technology and more in how top management leads the organisation and steers the cultural change. 

Strategies for an effective digital transformation

As a result, digital transformation requires a comprehensive redesign of the organisational structure and a fundamental cultural change. The implementation of different strategies that combine both top-down and bottom-up approaches, the integration of the workforce, the role of the Chief Digital Officer (CDO) and the commitment of top management in terms of change management are crucial for success.

The importance of change management and strategic employee motivation: As Deloitte Germany emphasises, successful transformation requires leadership that goes beyond traditional management styles. In times of digital change, leaders must be able to take on a variety of roles and switch between authoritarian and cooperative leadership styles depending on the situation. Supporting employees through coaching and encouraging their development is crucial to creating the necessary momentum for change.

Integration of top-down and bottom-up approaches: A successful digital transformation does not work top-down. Instead, it incorporates ideas and feedback from employees at all levels and combines these with the strategic vision and leadership from the top. This combination enables a culture in which innovation thrives and employees feel empowered to contribute to change. Such an inclusive approach strengthens employee engagement and encourages wider acceptance of new digital initiatives.

Involvement of employees: Bottom-up also means integrating all employees into the transformation process. The commitment and motivation of the workforce can be increased through user-orientation and the creation of lighthouse projects. Lighthouse projects are implemented with the employees who want change the most. In general, these are projects that generate a high ROI - so the signalling effect is brighter and early critics are kept in check. By turning employees into active participants in the digital journey, a company not only promotes the acceptance of new technologies and processes, but also the culture of openness and innovation.

Collaborative approaches and networking: Digital transformation requires new ways of working that go beyond the boundaries of traditional departmental structures. Digitale Neuordnung shows that the success of digital transformation depends largely on a company's ability to link interdisciplinary teams and promote close collaboration between IT, digital and technical experts. This is the only way to ensure that the digital transformation permeates all areas of the company and has a lasting effect.

Use of technologies and organisational design: Digitalisation is at the heart of every digital transformation. In other words, the sensible use of technologies that have the potential to optimise and automate business processes. At the same time, the organisational design must be adapted to enable agility and flexibility. These aspects are necessary for rapid adjustments in a rapidly changing digital landscape. This often means moving away from rigid hierarchies towards a more networked and team-orientated structure.

The role of the CDO in change management: As mentioned at the beginning, a CDO plays the key role of mediator between the technological vision and its practical implementation. This executive role has only emerged as a result of the digital transformation. By fostering an open culture that embraces change and driving the digital agenda, a CDO plays a key role in strengthening both the strategic direction and the commitment and innovation of employees. The CDO's ability to inspire and lead teams while ensuring operational excellence is critical in the transition period and gap between digital ambition and real business success.

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