Article
11 minute read 31 August 2022

How to lead digital transformation from the top

A practical guide for leaders facing the challenge of transforming their organizations through digital technology.

Tim Smith

Tim Smith

United States

Brenna Sniderman

Brenna Sniderman

United States

Diana Kearns-Manolatos

Diana Kearns-Manolatos

United States

Today’s leaders have been bombarded by a lifetime’s worth of advice about digital transformation. If they’re not sold on the merits1 of always-on, continuous digital reinvention, they may never be.2 Most have also heard they need to be personally involved.3 The big question is how? As a leader, how do you figure out your exact role in digital transformation, and where should you be focusing your limited time and energy to best help your company succeed on its digital journey?

Deloitte recently conducted an in-depth study of leaders’ role in digital transformation. In our first article, we discussed how digital transformation comes in all shapes and sizes, and that savvy executives tailor their leadership efforts accordingly. Their role should focus on setting the transformation ambition and assessing the organization’s readiness—pulling levers related to leadership, structure, and culture to create the conditions and capabilities for change. Our additional research—which was based on rigorous interviews with 23 global CEOs spanning a broad range of industries and digital ambitions—revealed the critical and nuanced actions leaders should take depending on their organizations’ digital aspirations, current state of readiness, and required magnitude of change. 

One company’s experience. Three powerful leadership truths.

One consumer product company’s digital journey began with a clear vision: Avoid disruption and displacement by Amazon, which had recently started selling competitive products under its Amazon Basics brand. According to this executive4, “That really pushed our thinking and investment in digital commerce and marketing.” Among other things, the company had to build a new digital platform, which was handled by delegating responsibility to the executive team and then largely stepping away.

However, when the company later entered a new product segment—the CEO needed to play a bigger, more hands-on role.

“For a long time, we played in a consistent set of categories,” they explained. “We could navigate that business by instinct, historical practices, and our gut feel for many decisions. However, when we got into a new business line, we immediately found ourselves in trouble because we tried to apply our core business instincts to the new product line. It made us realize we didn’t have the underlying facts about the new business, weren’t getting data and information fast enough, and can’t fix something when we don’t know it’s wrong. This interrupted our ability to meet consumer needs.”

In response, the CEO came up with a vision to use digital technology and innovation to speed up the transmission of insights and information across the business. While they noted this digitization “wasn’t particularly ambitious or forward-looking,” it was important to helping the company achieve its growth strategy of identifying and entering new markets. They then developed a two- to three-year road map to guide the executive team. Even that wasn’t enough.

“Delegation is important,” the executive said. “But in this case, you can’t relinquish control of the project. I need to delegate to people who will make it happen and have frequent check-ins to ensure they are heading in the right direction. I don’t bring hard skills; I simply bring direction. I would call myself, in this case, a ‘chief irritant officer’ where I’m pushing people to get things done. I should have started this approach earlier.”

This leader’s experience illustrates three powerful truths leaders should consider on their digital journey. 

Truth No. 1: Your role as leader is important for any digital ambition—no matter the scale

The need for leadership involvement is often greatest when digital ambitions relate to a customer-facing business process or high-priority growth strategy, or when it’s a prerequisite for more ambitious future transformation plans. As we discussed in our earlier research, How the CEO’s leadership in digital transformation can tip the scales toward success, digital ambition exists along a spectrum from digitization to full-scale transformation, and any or all of these levels are relevant based on the enterprise’s digital journey. Enterprises can be working on multiple digitization or digital transformation levels at once: One business unit may be focused on initiatives further to the left on the spectrum, while another may simultaneously be focused on strategies further to the right.

But not every company is interested in full transformation.5 Moreover, most digital initiatives aren’t digital transformation, and that’s fine. Many companies need to catch up to the competition, better enable future growth, or have other goals for which disruptive innovation isn’t required. For these and other digital ambitions that are less complex and holistic, less involvement typically is required (figure 1).

However, that doesn’t mean zero involvement. All digital initiatives need at least some amount of engagement from the organization’s leader. The leader needs to maintain leadership of any digital ambition, and when multiple initiatives are occurring at once, the leader’s role in ensuring they map to an overarching strategy becomes even more important. While they might not need to drive day-to-day activities, they do need to influence the route—guiding teams to understand strategic impacts and dependencies. How often the leader intervenes depends very much on the project and its individual nuances, and that is where listening to the delegated leaders can be critical.

According to our interviews and analysis, the leader’s role during digitization has three key elements that apply to most digital journeys, from simple digitization to full transformation:

Break through roadblocks. Typically, your most important role is clearing a path to success and empowering delegates to break through siloes and the status quo—and then keep going in the face of complacency. Digital transformations are never done, and they require continuous energy from company leadership to sustain them.

“My role was to simply not let the organization back up, to continue to pump the vision of where we needed to be,” said J Eric Pike, CEO of Pike Enterprises, a North Carolina-based infrastructure solutions provider for electric, gas, and telecom companies. “And if anyone presented a roadblock, I told them to go under, over, through, around, any way to make it happen.”6

Help others see the bigger picture. Digitization can often be viewed by an organization as encompassing smaller, less ambitious digital initiatives and investments. As such, it doesn’t always get the attention or effort it deserves. But this isn’t always the case. Digitization programs can include ambitious goals that move the enterprise along. One of your jobs is to show how digitization fits into the company’s larger strategic context of value creation, competitiveness, and growth.7

Assign full-time ownership, but keep your hand on the wheel. Marc Huffman, CEO of BlackLine, a global software company offering cloud-based financial close, accounts receivable, and intercompany financial management solutions, emphasizes the importance of assigning people to work on digitization full time: “Digital transformation is a full-time job, so you need people to work on it full time. You can’t just ask someone to do it on the side.”8 Without that dedicated focus, people’s day-to-day jobs tend to take priority and the digitization effort struggles to make progress.

Truth No. 2: As the digital vision gets more ambitious, your involvement should increase—particularly if your organization isn’t ready to change

As the transformation vision becomes bolder and more ambitious, a leader might encounter a large gap between the vision and the organization’s readiness to achieve it. If the organization is stuck and doesn’t see the need for transformation, the leader likely will need to set a more active, hands-on role in developing incremental strategy milestones and driving change.  

Ambitious digital transformation is often a response to a critical need for change. Common challenges to change—including fear of personal failure and a desire to avoid short-term revenue hits—should be considered but should be outweighed by the clear strategic imperative for transformation.

In this situation, when digital ambitions are high, but the organization’s readiness for transformation is low, you have five key elements to consider:

Tell a compelling story. Create an integrated vision beyond just technology, and deliver it with powerful and consistent messaging that brings people along on the journey. Clearly explain the need for change, including the benefits of digital transformation—both for the company and its employees—and the consequences of inaction. Look for creative ways to deliver that message in a way that will resonate with each stakeholder group (one leader described the unusual step of creating a comic book) and make sure to drive the point home through regular communication and updates to bring your stakeholders along in the process.

But remember: You can’t delegate building your narrative to the communications and PR teams. Instead, either personally own the storytelling yourself, or create a role focused specifically on “storytelling” for someone who can translate9 data and strategy into a compelling, clear narrative journey for your stakeholders.

If Scott Sanborn, CEO of LendingClub, had said the next evolution of the California-based fintech’s strategy was to buy a bank, he may have been met with disbelief. The digitally native company’s strategy would allow LendingClub to remove bank intermediaries, unlock new revenue streams, improve funding stability, and gain regulatory clarity, among other advantages. But first, Sanborn had to help others see the opportunity, so he crafted a compelling story, anchored by one of its core values to “evolve with purpose.”

“We made evolving to an entirely new business model one of our key goals for the year,” he said.10 “The transformation was significant because we not only had to rethink how we operate, we had to take over the legacy banking technology and build a more modern, scalable, and flexible system. But we were convinced that the hard work would pay off.” With stakeholders on board, the company acquired Radius Bancorp in 2021.11

Align incentives with digital transformation. If you ask people to embrace and focus on digital transformation but keep measuring and rewarding them in the same old way, you probably won’t see much change in their behavior and priorities.12

“One of the biggest things we did was to establish a long-term incentive plan for our senior executives,” said Stephen Markovich, CEO of Ohio Health. “We tied a third of their money to the success of this work, so they all had an economic incentive. If the project goes well, we all win. If the project goes bad, we all lose.”13

As for individual incentives, traditional financial factors such as stock options, equity ownership, and performance-based rewards can all influence their decision-making. So can personal factors such as a desire to make their mark on the organization or fear of failure. Here is where it can be helpful to flip your perspective. In some instances, embracing supposed deterrents—such as the aforementioned fear of failure—can conversely be liberating, and free you to make harder decisions.

“I was a risk officer in my previous life,” one CEO said. “Most CEOs get fired or destroyed in the press at some stage. When I got this job, I agreed with my spouse that I would get fired. It is a liberating statement. If you start there, you do the stuff you think should be done.”14

Address weaknesses exposed by the digital journey, and be willing to accept a little short-term pain in exchange for long-term gain. Digitization and digital transformation can expose internal weaknesses that leaders should acknowledge and take a hands-on approach to tackling. The key is to listen and think critically.

“Don’t get into too much detail,” said Giny Boer, CEO of C&A, a Dutch retailer. “But when people talk to you and you don’t get a proper answer to the question, ‘How well is it really going?’ stay close to those key strategic areas. If something is unclear, it’s time to dig in.”15

Although it’s impossible to completely eliminate the risk of short-term disruption, investment in digital transformation sends the market a powerful signal about your organization’s potential for long-term gain.

Create optionality for the organization to take digital transformation in multiple directions in the future. Disruptive innovations are constantly emerging and evolving, making it difficult to determine the right strategic direction for all eternity. That’s why it’s essential for a digital strategy to provide multiple options for the future. This strategic flexibility should be accompanied by building an organizational culture and structure that can capitalize on the available options. In this way, you can also better prepare your organization to pursue multiple digital initiatives at once.

The CEO of a British insurance company inherited an ongoing digitization initiative with many moving parts, including technology transformation, business and organizational transformation, and rebuilding internal systems. Her approach featured overlapping stages with multiple simultaneous changes across the organization, including replacing the C-suite. A big key to success was having mechanisms that allow for simultaneous innovation on different threads, versus testing and learning on one thread at a time.16 Another key was creating an agile, cross-functional culture across the organization, which was especially challenging given the sweeping changes at the top.17

The CEO told us she focused on preparing the business for different forms of change and instilling an evolution-oriented mindset—ensuring that the business is able to innovate and transform more quickly.18

Think beyond your tenure, and plan for succession. In addition to maximizing business performance during their tenure, most leaders will want to ensure the changes they institute will endure after they’re gone, and that they have left the organization well placed in terms of its long-term market position, brand, and stature.19 To the extent digital transformation helps enable any of that, it’s important to think beyond the time that you leave the organization.

In today’s world, digital journeys are ongoing and will likely outlast the tenure of any single leader—especially with the competitive bar constantly rising in response to new innovations and competitor actions. With that in mind, whoever takes the reins after you’re gone will need to have a clear view of your rationale and, wherever possible, be brought along on the journey with you so they can continue to build upon your digital strategy once you’ve moved on.

According to Panote Sirivadhanabhakdi, CEO of Frasers Property, a Singapore-based multinational real estate and property management company, “The end game is making sure I create a better organization that is able to evolve even after me.”20 Push the limits for what you can achieve, but also look for champions of your vision to continue the work. This will allow your vision to become lasting.

Truth No. 3: Organizations with high digital savvy and readiness still need leadership to lead on strategy, innovation, and growth

Organizations with high digital readiness might not need the leader to be deeply involved in day-to-day transformation activities, but there’s still a need for leadership—particularly on strategy. Here, the role involves working with the CSO, CIO, and CTO to identify the next opportunities for innovation, growth, and disruption. Always be assessing if your business model should change and how digital technology can help enable your broader strategy, whether it’s to enhance your existing business, respond to a competitive threat, maximize an M&A opportunity, disrupt the existing industry or ecosystem, or achieve some other strategic goal. Creating a strong sensing function can help leaders stay on top of this.

Keep nurturing innovation—even if your company is a digital native. Even digital natives and traditional innovators can quickly become digital followers if they get complacent, forcing leaders to become more active again in driving transformation—especially if structural changes are needed to the company’s business model and culture. An innovative, evergreen culture is something that should be continually nurtured.21

Sony, which has a long and celebrated history as an innovator, is actively working to shape the future of digital music with new digital services for musicians. “Artists and songwriters are important partners in light of our purpose of filling the world with emotions, so we are trying to become the best company for them,” said Sony Group CEO Kenichiro Yoshida. “For example, we are providing a digital platform to inform them how much they’re gaining from their online music in real time.”22 This constant focus on creating new digital tools for creators enables Sony to continue to nurture its ability to pivot and grow.

Continually assess the market for opportunities, and don’t be afraid to look far into the future. CEOs are uniquely positioned to identify and act on potential opportunities before there’s a burning need to do so. However, according to our interviews, leaders of digital natives and startups are more likely to do this than their traditional counterparts.

“One of our values is jumping at 60,” said Hardy TS Kagimoto, CEO of Healios, a regenerative medicine startup in Japan. “If we feel like we know 60% [of the details about an opportunity] and the probability of success is strong enough, I take the risk to jump in. That is how we get to know the cutting-edge tech and what is real or not.”23

It’s important to look at technologies that are five to 10 years away from becoming mainstream while still balancing the need to respond to current disruptive technologies through short-term sprints.24

“Our core works very well, so I spend my time gazing at the periphery,” said Vincent Roche, CEO of Analog Devices, an American semiconductor company. “We hired field marshals who can grasp what customers are struggling with, curious leaders keeping an eye on the periphery and building a nuanced vision for how we are moving ahead, how our customers are evolving, and figuring out the software and ecosystems.”25

Taking the lead on digital transformation

Although digital transformation is an imperative for virtually every business today, there are many ways to do it—and many ways leaders can play a role. However, the one constant is the importance of direct leadership involvement. Leaders should give themselves space to plan and set aside time to drive the transformation itself, which is an extremely difficult task when time and attention are in short supply. Whether a business is pursuing basic digitization and incremental change, full-blown transformation and disruption, or something in between, it’s critical to be personally involved in the effort. In a world increasingly driven by digital technology and innovation, where most business transformations aren’t possible without digital transformation, digital initiatives are simply too important to delegate and then ignore.

  1. Rich Nanda et al., The exponential enterprise, Monitor Deloitte, October 28, 2021.

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  2. Gerald C. Kane et al., The Transformation Myth, Deloitte US + MIT Press, September 28, 2021.

    View in Article
  3. Benjamin Finzi, et al., "How the CEO's leadership in digital transformation can tip the scales toward success," Deloitte Insights, June 28, 2022.

    View in Article
  4. Deloitte interview with a CEO.

    View in Article
  5. Anne Kwan, Cristina Stefanita, and Rohan Gupta, 2022 Chief Transformation Officer Study, Monitor Deloitte, 2022.

    View in Article
  6. Interview with J Eric Pike, CEO, Pike Enterprises.

    View in Article
  7. Tim Smith and Diana Kearns Manolatos, What cloud leaders may be missing when measuring tech value,” Deloitte US, June 28, 2022.

    View in Article
  8. Interview with Marc Huffman, CEO, Blackline.

    View in Article
  9. Rich Nanda et al., A new language for digital transformation, Deloitte Insights, September 23, 2021.

    View in Article
  10. Interview with Scott Sanborn, CEO, LendingClub.

    View in Article
  11. LendingClub, “Lending Club closes acquisition of Radius Bancorp,” press release, February 1, 2021

    View in Article
  12. Elizabeth J. Altman et al., Workforce ecosystems, Deloitte Insights, April 13, 2021. 

    View in Article
  13. Interview with Stephen Markovich, CEO, Ohio Health.

    View in Article
  14. Deloitte interview with a CEO.

    View in Article
  15. Interview with Giny Boer, CEO, C&A.

    View in Article
  16. Interview with the CEO of a British insurance company. 

    View in Article
  17. Cindy Skirvin, Designing an agile technology organization, Deloitte Insights, 2020.

    View in Article
  18. Interview with the CEO of a British insurance company.

    View in Article
  19. Deloitte, “Summer 2022 Fortune/Deloitte CEO Survey,” 2022.

    View in Article
  20. Interview with Panote Sirivadhanabhakdi, CEO, Frasers Property.

    View in Article
  21. Cathleen Domes et al., Closing the cloud strategy, technology, and innovation gap, Deloitte Insights, June 2022.

    View in Article
  22. Interview with Kenichiro Yoshida, CEO, Sony Group.

    View in Article
  23. Interview with Hardy TS Kagimoto, CEO, Healios.

    View in Article
  24. Scott Buchholz, Mike Bechtel, and Bill Briggs, Tech Trends 2022, Deloitte Insights, 2022.

    View in Article
  25. Interview with Vincent Roche, CEO of Analog Devices.

    View in Article

We’d also like to thank the many subject matter experts who were interviewed or provided their valuable perspective for this research, including: Andrew Adams, Andrew Blau, Eamonn Kelly, Joe Fuller, Joe Zale, John Hagel, Katie Dye, Lou DiLorenzo, Mark Lipton, Rubin Mohan, Steve Jennings, Tom Daley, and Vincent Firth.

A special thanks to Deloitte’s Chief Executive Program team, including Benjamin Finzi, Anh Nguyen Phillips, Thomas Schoenwaelder, and Gerald Kane for their leadership, subject matter expertise, and support on the research, interviews, and analysis. Thanks also to Brooke Prouty McNaul, Jackson Loflin, Kathy Lu, Kelyse McKeon, and Migle Armonaite from Deloitte Consulting, who played critical roles in the setup and scoping of the study.

A big thank you to everyone without whose support this research would not have been possible, including Avi Kaiser, Bryan Radich, Emma Kropp, Heather McBride Leef, Jim Sowar, Jolyon Barker, Julie Sonigo, Junko Watanabe, Kozue Yashiro, Matt McGrath, Matthew Bond, Michael Main, Richard E. Levine, Rod Sides, Selina Newstead, Steve Birchard, Subhasakdi Krishnamra, Iram Parveen, and Tom Toppen.

The authors would also like to thank the following individuals for their editorial input: Andy Bayiates, Elizabeth Sullivan, Jeff Pundyk, and Junko Kaji

The Deloitte Center for Integrated Research

The Deloitte Center for Integrated Research focuses on developing fresh perspectives on critical business issues that cut across industries and functions, from the rapid change of emerging technologies to the consistent factor of human behavior. Our research charter covers three core pillars: technology-driven business shifts, cultural shifts, and market shifts. We look at transformative topics in new ways, delivering new thinking in a variety of formats, such as research articles, short videos, in-person workshops, and online courses. Contact the authors for more information or read more about our services on Deloitte.com.

Tim Smith

Tim Smith

Principal | Tech Strategy & Business Transformation Leader
Brenna Sniderman

Brenna Sniderman

Center for Integrated Research Lead

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