Spencer Stuart recently met with several consumer
goods and retail CEOs in Mexico, and we discussed the
challenges of leadership in a world that’s undergoing
a sweeping digital transformation. As a result of this
discussion, the Spencer Stuart team has suggested
four key takeaways for consumer company leaders:
- Rethink consumer relationship building
using digital channels,
- Commit to innovation and be prepared to try new ideas,
- Stay curious and continually learn about technological
change and consumer behavior, and
- Be aware of the challenges that come with guiding
an organizational culture toward innovation and
digital cooperation.
Bridging the cultural and talent gap
Participants shared some of the challenges they face in their own digital
transformation, including:
- Identifying and recruiting the right talent to lead the decision-making
process, given the large amount of data available. It’s difficult to
find executives who can process this data using advanced mathematical
tools, while at the same time developing forward-thinking
business recommendations.
- Bridging the generational gap within boards, where some members may
not have much digital experience. As a result, they may not understand
or support innovation initiatives, even on a small-scale basis.
- Convincing work teams — which may have built up considerable experience
and performance on the traditional side of the business — that
innovative digital solutions can further leverage their results. It is common
for such teams to have already developed strong work processes, as
well as their own culture, and they may feel threatened by changes they
can’t control.
- Remembering that the pressure to provide prompt responses to clients,
consumers, retail partners and other stakeholders could lead to sacrificing
“exact” for “immediate.” Consequently, executives must learn to
tolerate a level of uncertainty or ambiguity in the decision-making
process, which makes many leaders uncomfortable.
Clearly, it’s difficult to find professionals who are prepared to tackle the
most advanced issues of digital transformation. But based on our
discussion, we learned the cultural disruption may be a bigger problem
for many organizations.
Bringing the innovation core closer to
company leadership
To promote a climate of innovation, some companies have begun to build
teams that are responsible for challenging the status quo and creating new
ways of doing business:
- One major retailer hired a team of new executives, with a variety of backgrounds
and ages, and put them in charge of developing innovative
solutions. The CEO set one rule for the team: they were free to generate
ideas and experiments, but they had to set up businesses that provided a
return on the team’s total expense. In less than a year, the team had
begun a mobile customer loyalty program, bypassing loyalty cards and
other more traditional methods.
- A leading international beverage firm has brought together a group of
millennials who work throughout the organization and report to the CEO
every month with innovative digital ideas. These workers are responsible
for concept or pilot testing of new initiatives, as well as presenting results
to help decide whether to proceed with an investment.
- A retailer with various divisions hired a few mathematical analysts
(sometimes called “quants”) to review their databases using Big Data
concepts. One of the business unit directors, who has a background in
engineering and business, works directly with this team, pinpointing
questions through analysis and interpreting the responses from the
quant team. This led to quicker and more relevant conclusions for the
business as a whole. It took up time he could have spent on his division’s
operation, but in the bigger picture, it extracted maximum value
from the company’s available Big Data.
From these examples, we can conclude that digital transformation initiatives
need to be brought close to company leadership in order to succeed. We also
learned that teams in charge of innovating need the freedom to truly modernize,
with little commitment to the company’s existing legacy. Lastly, goals,
timeframes, follow-up routines and clear success criteria must be established
to make sure there is a real return on investment.
Defining the CEO’s role
As if the CEO’s job was not complicated enough, it now includes aligning
the organization’s entire culture to seek out more opportunities for learning
and experimentation. And it has to be done while maintaining the ongoing
effort to generate value in the company’s core business, as well as supporting
and motivating the leaders who drive the day-to-day results.
Spencer Stuart and culture
At Spencer Stuart, we believe an organization’s culture can help or inhibit
the results of the most brilliant strategies. This is a lever that many leaders
find difficult to manage, but boards and executives can build on their
company’s value if they understand the existing cultural aspects and actively
strengthen the traits that support its strategies — particularly when the
company is need of profound transformation.
Spencer Stuart’s proprietary culture model and diagnostic tools help business
leaders define how to support their strategic imperatives and
strengthen them within the organization. Spencer Stuart’s clients have
successfully applied these elements in turnaround situations to boost
growth, bring about a radical change in leadership and integrate cultures
following a merger or acquisition.