home Digital, Features Why are Australian business leaders so ill prepared for digital transformation?

Why are Australian business leaders so ill prepared for digital transformation?

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The leadership of most Australian business and government organisations lack the competencies to lead their organisations through digital transformation, according to Mark Toomey Executive Chair at Australia’s Digital Leadership Institute. This lack of skills may greatly affect the future competitiveness of the Australian economy.

Digital transformation is touted as one of the most important issues that businesses need to factor into their strategy. Yet few senior roles are tasked with making it happen. Toomey comments, “The first barrier in transforming a large established organisation such as a bank or insurance company is the high end managers and executives of the organisation. Their KPIs, the measures they are assessed and renumerated on, rarely include digital transformation.”

He adds, “To make digital transformation happen you need everyone heading towards the same goal. The person who sets the KPIs for the senior executives and managers within an organisation is the CEO. The people who set the CEO’s KPIs is the board. Until everyone’s KPIs are aligned and everything is driven from the senior executives and the board, it’s pretty much impossible to turn the organisation around”, says Toomey.

Toomey compares being a leader of a large and established Australian corporation as being like the Captain of the Titanic: in charge of a large ship where it’s almost impossible to change direction and avoid the oncoming catastrophe.

Inertia is wired into the DNA of many organisations which inhibits their ability to adapt and grow in the new digital economy. “A large enterprise established 50 or 100 years ago comes with significant history and baggage. This baggage can be a mill stone around the neck of a CEO looking to drive change and modernise the organisation”.

“Digital” means different things to different people

Another barrier is defining what is meant by digital transformation. It can mean very different things to different people. For some it’s more about leveraging the latest technology. For others it’s about better engagement with customers, employees and other stakeholders. For some it’s about altering the fundamental business model of an organisation and how it operates.

All off these perspectives are correct yet only form part of the picture. Karel Dorner and David Edelman from the Mckinsey, advise, “Business leaders must have a clear and common understanding of exactly what digital means to them and, as a result, what it means to their business”.

“Diverse perspectives often trip up leadership teams because it reflects a lack of alignment and common vision about where the business needs to go. This often results in piecemeal initiatives or misguided efforts that lead to missed opportunities, sluggish performance, or false starts.”

Fundamental to successful digital transformation, according to Toomey, is having a leadership team in place who can see the opportunities digital technologies offer in terms of growing the business and adding value. They need to have a clear vision for the company’s future and how digital technology will help them get there. And the must have the ability to clearly articulate this vision to all stakeholders within the organisation.

Impact on the Australian economy

McKinsey predicts that digital innovation could boost the Australia economy by as much as $250 billion over the next eight years. At present Australia is far from reaching its full potential and the rate of progress is extremely uneven between industries and different organisations.

If Australia is to realise the opportunities offered by the digital era, then the executives and senior managers of Australian companies need to be able to reshape and lead their organisations to compete in the digital economy.
Toomey comments, “The leadership of Australia corporations need to develop a range of competencies to effectively lead their organisations in the digital era. I believe Australia has the potential to be at the forefront of digital innovation and transformation, but it will require our political and economic leaders to upskill and get us there.”

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Mark Atterby

Mark Atterby has 18 years media, publishing and content marketing experience. His key ability is to translate the business needs of organisations into an online presence that raises brand awareness, generates leads and most importantly, increases sales.