A digital transformation – properly executed – impacts an entire organization. Sure, operations and customer experience divisions may sit at the very heart of digital transformation, but the adoption of digital ways of doing business, new organizational structures and the adoption of new skills is common to every division and every department. So, it’s a pretty big deal.
When we asked 187 senior executives at 93 unique telecoms operators in 64 countries this summer who was leading their digital transformation projects, 40 percent of respondents said it was their CEO. This is extremely positive because the more senior the leader of a transformation project, the greater the chance of overcoming the serious obstacles that it faces (70 percent of all transformation projects fail, according to McKinsey).
With so many CEOs leading transformations, you might have expected it to be a focus not just for the companies themselves but for their investors and shareholders. This does not seem to be the case. True, some operators do reference some of desired outcomes of digital transformation in their quarterly presentations to investors – for example an improved customer experience and a focus on Net Promoter Scores – but rarely does a CEO reference the transformation program as a whole.
There are exceptions of course – AT&T has been extremely vocal about its Workforce 2020 program to retrain 100,000 members of staff. South Africa’s MTN makes strong reference to its IGNITE initiative in corporate presentations. But overall, investors are not given the impression that it is as much of a focus – or indeed, as important – as one might expect.
Why don’t CSPs talk transformation to investors?
There are a number of possible reasons.
One challenge for any CEO discussing details of a digital transformation program with investors is the expectation that it can be articulated in terms of specific (and ideally, financial) goals and targets. Most CSPs are loathe to commit to clearly measurable targets because it is so difficult to find the right KPIs to measure, for example, the adoption of real-time processes or of automation.
Another is that many investors are somewhat sceptical of the digital aspirations of CSPs. They tend to equate “digital” with new services rather than internal transformation and given the mixed success that CSPs have had with diversification into new (digital) markets, many CEOs may be reluctant to talk enthusiastically about digital transformation.
Another possible explanation is that the CEO and CFO do not have as much conviction about the potential for digital transformation to improve their performance as other executives in the organization who run the programs on a day-to-day basis. They will remember previous (bad) experiences with (less far-reaching) IT transformation program and may unsure of a positive outcome.
Or perhaps they just don’t seem transformation as being such a big initiative as to make it worth discussing with – or presenting to – shareholders.
Say it like you mean it
For those CEOs who do believe in the potential of transformation, we think that there is a good case for being more effusive about the benefits, and sharing them with investors. Doing so will demonstrate not just to shareholders – but to the company’s entire workforce – that the CEO is serious about transformation. As such it will make it more difficult for different departments and divisions to compromise on transformation programs as and when they risk short term financial targets.
The first edition of our Digital Transformation Tracker is live now. Every six months we will conduct a new survey, allowing us to track CSP digital transformation across the world. Our next edition will include a detailed analysis on some of the “soft” challenges – culture, skills, organization and leadership. Be part of this program, tell us what you think by completing our survey here if you work for a CSP and here if you’re a supplier. Thank you.