Companies lack leadership capabilities for digital transformation projects

20 August 2018 6 min. read

Despite considerable investments in digital technology, organisations continue to struggle to carry out transformation projects. According to a new report, 60% of companies still lack the digital capacities they need to successfully change their business structures.

Efforts to integrate new, innovative technology with business operations have become essential to the survival of modern businesses. The need of even the largest market incumbents to out-fox digital disruption has seen the demand for digital transformation services boom to an indsutry worth billions.

Yet, even after years of exponential growth in the digital and digital consulting arenas, new Capgemini research shows that the implementation of digital transformation projects is still lagging in its nascent stages. According to the responses of more than 1,300 business leaders from some 750 organisations, only a relatively small number of companies have the digital (39%) and managerial (35%) capacities needed to make their digital transformation successful.

While the fact that these figures remain less than 50% is surprising, what is even more shocking is that, compared to exactly the same measurement six years ago, there has actually been a decline in the firms’ general readiness for digital transformation. Capgemini found that organisations today feel less equipped with the right leadership skills, at 45% in 2012 compared to 35% in 2018.

According to Vincent Fokke, Chief Technology Officer at Capgemini in the Benelux, this is an important point to note. He explained, "In order to succeed in digital transformations, there is a need for a leader who understands what is important and can enthuse people. If a leader does not have these capacities, he or she will not receive employees. And the latter is just essential." 

Percentage of organizations believing they have the required capabilities

The report also shows that organisations are not able to create the right digital culture to make transformations a success. Only 38% indicated that they have a formal programme for the digital retraining of current employees – a crucial element now that new technologies such as artificial intelligence, machine learning, automation and Internet-of-Things (IoT) are changing the digital landscape at a rapid pace, and mean new opportunities and threats.

This correlates with the experiences noted in a recent Sopra Steria survey of UK civil servants, which found the majority felt they had been let down by attempts of their bosses to offer digital training. A third subsequently took the matter into their own hands, but in order to up-skill an entire workforce, it is simply not good enough to rely on such laissez faire attitudes.

Furthermore, Capgemini’s survey shows that only 36% of organisations believe that managers have a shared vision of transformations. For transformations that are naturally complex and that require bottom-up support, certainly with emerging new ways of working as agile, such a shared vision is a precondition for success.

Percentage of organizations believing they have the required leadership capabilities

Digital maturity per sector

The researchers also compared the maturity of digital skills per sector. From the industries under scrutiny, it turned out that the consumer goods sector is one of the leading digital arenas. This segment has been focusing on customer experience for many years and makes extensive use of data, mobile and social to analyse consumer trends. That, in combination with strong leadership capabilities, has probably made this sector number one in digital mastery.

According to the analysis, L'Oréal is one organisation that does well when it comes to delivering an excellent customer experience. The authors note that the cosmetics giant collects extensive customer data from direct-to-consumer websites in order to anticipate new trends. L'Oréal also prioritises the improvement of employees' skills and global partnerships with start-ups and integrating new technology into customer experiences.

Digital mastery breakdown by industry

In the second and third place, the retail and telecom segments follow, with both sectors embracing digital at a rapid pace. Retailers are compelled to provide a top customer experience, where an omni-channel approach is the best way forward. Telecom players, who similarly face a shifting market in terms of competition and customer expectations, are faced with major threats due to digitisation. WhatsApp and VOIP exemplify emerging services that have turned the traditional business models of the telecom sector on its head. 

Parties within the industry do well to invest heavily in digital propositions, with research showing that telecom players who invest record better financial performance. In addition to the aforementioned developments, consumer behaviour has also changed considerably today and it is impossible to ignore its interaction via smartphones, mobile channels and apps among consumers, with the result that virtually every organisation has to respond to digital.

In order to assist business leaders with the planning of their future transformations, Capgemini also drew up various points of attention with which organisations can develop into digital leaders in their specific market. The first step, according to the study, is to actively involve employees in the planning and execution of digital transformation programmes. 

Further to this, the paper points to the importance of using data analytics to gain valuable insights in, for example, customer requirements. The training of employees in the use of digital tools is a third important area of attention, in which a digital culture has to be set up more broadly within the organisation. Finally, the researchers advise organisations using digital technologies to integrate different customer channels for an even better customer experience and to use digitisation to drive innovation.