ABeam DX Insight  No.8

DX Leadership
- Five Elements for Successful Functioning of Digital Leadership Team -

September 8, 2021

Kazuki Sugata

Executive Officer, Principal
Strategy Business Unit


The key to advancing the DX strategy is organizing and enabling the function of a digital leadership team that actually makes decisions. Here, a group that consists of management committee members and is tasked with making DX-related decisions is called a leadership team.
Naturally, digital knowledge within the team is a crucial factor in determining the performance of the entire company. On the other hand, ABeam Consulting's survey results highlight the reality that more than 40% of people who do not have digital knowledge are decision makers, and there are many cases in which the digital background at the leadership level is inadequate.

Although efforts are made to invite CDOs (Chief Digital Officers) from outside and launch a DX promotion organization, active support by the leadership team is essential.

In addition, in order to promote DX in the future, which demands further initiatives toward business model transformation, it is necessary to exert a strong driving force while overcoming internal and external pressures. This makes it important to not only make leaders of individual digital experts, but also work as a team in a monolithic manner.

In this regard, ABeam Consulting believes that it is important to properly design the elements below in order to ensure that the members function as a team.

Figure 1 Five Design Elements of Digital Leadership Team

Figure 1 Five Design Elements of Digital Leadership Team

1. Set goals with joint responsibility

It is important to organize not only DX measures in each field of responsibility, but also the priorities and dependencies of each measure based on a company-wide DX strategy, and clearly define the items for which all members are jointly responsible.
The key point is whether or not it is possible to set items unified as a team beyond the scope of responsibility of each individual leadership member. Items having joint responsibility cannot be resolved individually and require cooperation, making it necessary to set a theme relatable by all members.
Asking the question, "What are the DX measures for which the team is jointly responsible?" in individual member interviews conducted in the process of team building makes it possible to confirm the variation in recognition and identify the current situation.

2. Establish a digital skills matrix

For CEO (Chief Executive Officer), CFO (Chief Financial Officer), CHRO (Chief Human Resources Officer), and other members having an elevated level of responsibility, confirmation that the skills necessary to achieve management goals are properly mixed has traditionally been considered an important factor in personnel selection. It is also necessary to design how digital skills are to be met.
The CIO (Chief Information Officer) and CDO (Chief Digital Officer) play a central role in supplying digital skills to management committee members, but it is desirable that other members also have a certain level of background. In particular, the understanding of the digital by CEOs and CFOs is extremely important for making appropriate investment decisions.
Regarding this point, creating a matrix of members and necessary digital skills makes it possible to grasp the current degree of sufficiency.

3. Implement data-driven decision-making

For leadership teams that direct data utilization, it is important to clearly design and operate the decision-making process based on data, even in the sense of setting an example.
Even if so-called data-driven business management mechanisms are introduced, it is important to deal with operational aspects as well.
First, the data itself needs to be available. Data availability, while also an issue related to IT infrastructure, needs to be addressed as a prerequisite for data utilization.
In addition, attention should be paid to the analysis of the data. Analysis by experts such as data analysts is important and yet, at the same time, reading the analysis results by members who understand the business of the company is also important. While it is difficult to upgrade the quality of analysis, it is important to specifically share the required level and the way analysis works, such as sharing expected analysis examples and successful case examples as knowledge.
Regarding this point as well, the current situation can be recognized by asking "Is the decision-making process in the team digitalized?" and "Have the required data skills been acquired?" in individual interviews or the like.

4. Establish a leadership style/culture

In the digital field where trial and error through rapid hypothesis testing and learning is important, it is important to establish a vision-based coaching type leadership style.
In general, leadership styles are defined as relationship-oriented/democratic, coercive, etc., in addition to the vision-based coaching type, but the relationship-oriented/democratic style may delay decision-making and lead to an unclear division of responsibilities, making such a style inappropriate. In addition, the coercive style is also likely to hinder onsite ingenuity and unlikely to lead to results, making such a style non-functional in the digital field.
With the adoption of a vision-based coaching style, it is important to encourage onsite ingenuity while ensuring psychological safety.
Regarding this point, by having the subordinates of the leadership team members evaluate the leadership style, it is possible to understand the current situation and understand the characteristics of the organizational culture of the company.

5. Operate on an appropriate member scale

The mission of the leadership team is to make decisions, but in some cases, it is important to narrow down the members, as a large number of members often hinders quick decision-making. In general, it is thought that decision-making is affected when the number of people exceeds ten, and ideally a single-digit number of people is desirable.

The formation of a digital leadership team, which is the core of the DX strategy, has become a major issue for many companies, and its design is the job of top management. It may be time to check the current digital leadership team from the above perspectives and embark on full-scale reform.

ABeam DX Insight

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