5 Tips for Leading a Digital Transformation

Digital transformation is what drives new investments in information technology today and what may finally get the U.S. economy growing at a faster pace. But while we hear a lot about digital transformation today, the term is rarely defined. Instead, we typically get a list of the latest digital technologies to impact enterprises—mobile devices, social networks, cloud computing, big data analytics, etc.—and very little guidance regarding how to go about the desired transformation. An exception that proves the rule is Isaac Sacolick, a CIO who has made sharing (on his blog) practical advice about digital transformation an important dimension of his professional life.

First, let’s define “transformation.” Business transformation is about finding and successfully pursuing a new business model. IT transformation is finding out how to make IT a strategic lever for the business in addition to being a robust business infrastructure. Digital transformation is finding out what data can do for your business  (or non-profit or government agency).

“Transformation is a mindset,” Isaac Sacolick told me last week. He recently joined Greenwich Associates, a leading provider of global market intelligence and advisory services to the financial services industry, as its Global CIO and Managing Director. Before that he was CIO of McGraw Hill Construction, providing data and intelligence to the construction industry, CIO of BusinessWeek Magazine, a founder and COO at TripConnect, a travel industry social network, and CTO at PowerOne Media, providing software as a service to the newspaper industry.

With his unique background as both an entrepreneur and a senior information technology executive for companies who have made data the core of their business, Sacolick offers five tips for leading a digital transformation.

Define what digital transformation means to your business

“Digital transformation is not just about technology and its implementation,” says Sacolick, “it’s about looking at the business strategy through the lens of technical capabilities and how that changes how you are operating and generating revenues.”

He counsels starting at the top and looking at what the business is trying to accomplish, rather than focusing on the technology or how IT operates. This could be “a specific project or business initiative, a revenue growth objective, required costs savings or meeting competitive benchmarks.” Identifying what role the collection, analysis, and “monetization” of data play in these strategic initiatives is a key dimension of a digital transformation.

Establish a digital transformation process

If you don’t have a process, any talk about digital transformation remains just that—talk. For Sacolick, the process is Agile. A set of software development methods in which requirements and code evolve through disciplined and structured collaboration between self-organizing, cross-functional teams, Agile has become an increasingly popular process for efficiently developing high-quality software applications.

But Sacolick practices and views Agile in a larger perspective, as a process for business and IT teams to work on digital transformation, “a collaborative, disciplined practice for executing.” It is particularly useful where there is a lot of uncertainty about what is required and what solution the team will end up developing. “Agile allows everybody to see both the forest and the trees but focus on the trees ,” says Sacolick. “It immediately puts business and IT in a room together and gets the team focused on the things that matter most.”

Initiate technology-based change

To do digital transformation right, IT has to be a source of innovative ideas and new practices driven by technology.  An Agile process allows the IT team to explore and experiment, rather than being “order takers” only following what the business thinks the solution ought to look like.

“It’s not unusual to get in the middle of development a requirement that the IT team doesn’t know how to solve,” says Sacolick. “They then embark on what we call ‘Spikes,’ exploratory projects of short duration used to research a concept or create a simple prototype. It gives them the know-how or the confidence to go do something new. A lot of innovation comes from that mindset—encouraging experimentation.”

IT’s role as an enabler of change and innovation, however, should not be limited to the structured Agile process used to develop a specific application or solution. “There are always inflections when new technologies are going to give a business a transformational capability and that’s where IT leadership has to be smart about looking for opportunities or disruptions to the business,” says Sacolick.

In Sacolick’s book, an IT organization always has to be on the look-out for what’s happening with new technologies, and present to business executives the implications for their company and industry.

In these IT-initiated discussions with the business, says Sacolick, “you have to go through the economics of introducing new technologies, supporting them and transitioning to them.” The upshot of the discussion could be “this is interesting but we can’t afford to do this now,” but Sacolick thinks IT should be ready to present both the implications embracing the new technology or tool but also of not adopting it in a timely fashion. It’s important to discuss the what-if questions, as in what if a competitor, possibly a smaller company which is not even on the competitive radar at that point, chooses to use the new technology to gain efficiencies or market share. “It’s important to have these conversations early before your competitors move and you are too far behind the curve,” says Sacolick.

Find the leads

“Find the leads” is Sacolick’s term for identifying the members of the IT team that will make the time to run with the digital transformation initiatives. It’s a challenge, because the IT organization is typically consumed by the management of the IT infrastructure. How do you channel the energies of the IT staff beyond day-to-day work (without resorting to the solution of the pointy-haired boss in a Dilbert cartoon, telling his staff: “If you come up with a good idea, I’ll let you take on the project in addition to your existing work”)?

Sacolick looks for individuals who are assertive and have leadership qualities. “More often than not,” he says, “once I throw them at these challenges, they start running with them and the things they were supporting tend to either go away or go to others in the group to handle or they bubble up and we start asking how do we solve this better—anything that is supported by a top engineer is not a good use of their time.”

Creating the right work environment for these IT leads is key. “Get them the tools to start,” says Sacolick, “allow them to fail a bit, give them time and cushion to work out the new technologies and challenges they trying to master.”

Establish a data-driven, continuous learning culture

A key to successful digital transformations is an IT organization that understands what data can do to its own successful performance. To become smarter about its operations, says Sacolick, the IT team needs “to collect meaningful data, convert it to metrics, look for trends, and prioritize improvements.” With practice, the IT organization becomes better and better at asking good questions about the data and deriving insights from it.

Learning from data is important, but Sacolick thinks even more important is sharing the learning. He sees it as the essence of collaboration, among members of the IT team and between IT and other functions. “IT teams that horde information, over-complicate things so that business users don’t understand how things work, or make it impossible for their colleagues to enhance their technical implementations, are impeding organizational growth and scalability,” he says.

And it starts at the top: “Leaders need to demonstrate collaborative practices so that they can be emulated by managers, teams, and individuals.”

5 Things to keep in mind if you want to succeed as a leader of a digital transformation while at the same time excelling as the custodian of your company’s digital assets.

Originally published on Forbes.com