Leading transformation from the top-down
Digital transformation is a matter of organizational change that requires attention and commitment. It impacts not only the business structures but all levels of the organization. Most importantly it is about people, not technologies, reminds Robert Wendelin, PhD (Econ.) Head of IoT at TeliaSonera Finland.
“The primary task of leadership, of course, is to point out the direction of the organization and support its business. In the case of IoT and digitalization the focus is on developing services, which is basically about streamlining and improving processes and functions. Essentially, leadership is about managing the change that enables this development,” Wendelin describes.
Development in any area requires a company strategy that is implemented and clearly understood throughout the organization. “Communicating strategy is not about using fancy words in speeches. Instead, strategy needs to be communicated in a manner that makes it easily understandable to everyone. People can’t commit to something they don’t understand.”
Commitment is another prerequisite for a successful leader. And so is setting up the right KPIs.
“Leaders, as well as employees, need to have a bonus scheme connected to long term KPI’s helping them in making correct decisions and investments instead of sub-optimizing decision making for short term gain. Back in the days I’ve come across many KPI schemes that focus purely on quarterly results, while the results of long term IoT investments only started to show results after two to three years. By that time the massive investments companies have made in achieving long term results have eaten up the quarterly KPI bonuses of the employees. In a situation with short-sighted KPI’s it is very hard to make people commit to achieving the company’s strategic goals, or to generate innovation. So, being a successful leader also means gaining employees’ long term commitment and looking beyond quarterly bonus schemes”, Wendelin states.
The fear of the unknown
Fundamentally, change is the very essence of digitalization. In order to manage this transformation, companies usually hire a CDO to take charge of the change. However, when it comes to managing organizational change, a deep understanding of the business in question is of the utmost importance.
“Strategy needs to be communicated in a manner that makes it easily understandable to everyone. People can’t commit to something they don’t understand.”
“Having a background in ICT is not enough. It’s very dangerous to start changing something if you don’t have a clear view on what it is that needs to be altered. A good CDO understands the baseline and the special characteristics of the industry, as well as the business environment a company operates in,” Wendelin underlines.
Nevertheless, when it comes to the business environment, people tend to overestimate the importance of local differences. This is an issue that most globally operating organizations must tackle when managing change.
“People are different. They come from different backgrounds, speak different languages and have different views on life. But the business they operate usually follows the same principles everywhere in the world. People tend to object to change especially when it comes from someone who is not physically there. Because claiming that the required change is something that can’t be applied to the local market is easier than stepping out of their comfort zone and departing from routines. The biggest hindrance to change is in people’s minds,” Wendelin concludes.
Collaboration for the win-win
Organizational change fueled by digitalization also shapes the form of interaction with external parties.
“Partnerships of today are very different from the partnerships of yesterday. Back in the days it used to be about one giant strategic partner using local subcontractors who, quite frankly, didn’t really have much to say to anything,” Wendelin points out.
Nowadays collaborations between business partners resemble an ecosystem that consists of multiple players of all sizes, who all share the same goals. Building and developing the ecosystem together helps everybody win. “Orchestrating this kind of network is based on the idea that a company should choose the right partners for every business situation,” he says.
With more complex technologies shaping entire industries it makes sense for all actors to form strategic alliances and partnerships. However, learning to rely on multiple external partners in research, development and production is one thing – storing data to somewhere else besides the company’s own servers is another.
“Many establishments are somewhat in love with their in-house data warehouses. The problem is that the space is very limited, and that’s why storing data in the cloud is a trend. Still, many fear that the cloud is not a secure option for data storage. That’s another thing where organizations need effective change management, when it comes to digitalization. You need to have courage to trust,” Wendelin sums up.
Robert Wendelin works as PhD (Econ.) Head of IoT at TeliaSonera Finland Oyj.