How Effective Leaders Drive Digital Change

No leader wants his or her team to fail. But, in many digital transformation efforts, creating the conditions in which failure is an acceptable outcome might be key to success. As with Pixar Animation Studios, a subsidiary of The Walt Disney Co., which credits its blockbuster successes to all the storyboards that don’t actually make it onto film, effective digital initiatives often depend on a mix of experimentation, prototyping, and failure.

Creating a culture in which risk-taking is acceptable and giving employees a wide berth to learn from failure (and success) can be difficult challenges for leaders managing change. If the following behaviors aren’t part of your leadership repertoire, you may not be ready to lead a digital transformation.

The importance of these leadership behaviors appeared in a year-long study of a 450-person financial services function within Deloitte Services LP that was implementing a large-scale technology project to streamline reporting, budgeting, and analysis for the entire organization. If successful, many employees in the function would have more time to become trusted advisers to the business, rather than simply focusing on compiling and reporting numbers. The financial services function, however, was risk averse: The entire group was accustomed to complying with fairly stringent regulations and policies but was unaccustomed to voicing their opinions. Becoming advisers by effectively communicating a new way to do business would be a hurdle for much of the staff.

At the end of one year, the research had identified several distinctive characteristics of executives who were most effective at implementing the project: They fostered a culture tolerant of failure and embraced the following four behaviors.

1. Be clear about priorities. Leaders who were clear on shifting priorities and how success would be measured seemed to have much more engaged employees throughout the transition. Goal-setting was an important factor that enabled employees to track their progress and growth. Leaders also frequently reassessed goals and ensured that employees were well aware when priorities and needs shifted. Balancing clear communication of priorities with a willingness to adapt goals when circumstances dictated was important to engaging the workforce during a time of digital transformation.

Before launching the project, executives traveled to local offices to express their vision for the future and set the overarching mission for the finance function. They offered compelling reasons for the technology transformation and gave permission to local site leaders to shift priorities as needed throughout the change. This in-person executive visit was intended to empower local office leaders to tailor the implementation, while also connecting them back to a broader vision of the future.

2. Provide effective two-way feedback. The research findings appear to support the importance of creating psychological safety during check-ins with employees. It may not be enough simply to engage in project report-outs — leaders must also create a culture of psychological safety, giving employees freedom to express concern when things aren’t going right and feel they have the ability to take risks. Doing so allows employees to share new ideas and to believe they are being heard. Leaders in the study who engaged in these types of feedback sessions seemed to be able to get ahead of employee issues before they became a roadblock to the project’s ultimate success.

During the project, frequent pulse surveys were conducted to identify emerging employee pain points. Rather than keep information confidential, pulse survey results were shared broadly across local offices during monthly leadership feedback forums. Leadership teams would also invite team members to participate and provide further feedback on how the project was going. These transparent feedback forums allowed managers and employees to begin collaborating in newfound ways as they focused on overcoming shared challenges, while also identifying shared opportunities for success.

3. Recognize staff and support risk-taking. While extrinsic motivators have their place, we know from behavioral science that intrinsic motivators drive longer-term behavior change. Simply recognizing and acknowledging people for their hard work during times of change can go a long way. However, recognition also typically means sharing the success of a project. Our research found that one way to kill the momentum of a project was for leaders to take all the credit for its success. Leaders who shared responsibility for a project’s success with all levels of staff seemed to achieve much higher levels of employee engagement throughout the project.

One leader brought team members to a high-profile client meeting, allowing employees to see firsthand the impact they were making. Another leader brought their staff to a baseball game and invited the partner of the project to attend as well. As one manager remarked, “I have not only seen changes in my employees’ ability to interact and engage with senior leaders more comfortably, but also in identifying opportunities where they can gain more exposure. And, when they need my help with that exposure, they now ask me for that help.”

4. Engage in frank development conversations. The more effective leaders communicated how change would benefit staff, including how continuous education and training opportunities would help strengthen an employee’s skill set. In addition, these managers did not shy away from transparent conversations on where employees’ efforts were needed in order to move forward. An effective conversation card was developed to help leaders engage in these conversations on a monthly basis with their teams.

Additionally, the more successful project leaders worked with staff to identify development opportunities and engage in conversations beyond the project itself. One manager said, “I used to think if someone made a mistake, it was because they weren’t very strong. I now realize that is part of the learning process and people can change if I am willing to devote the time and attention needed to help their development.” In this manager’s region, employee engagement nearly doubled after leadership instituted monthly development conversations with staff.

Leaders who displayed these four behaviors reaped not only better performance, but greater engagement from their employees throughout the change. Employees were much more likely to report back higher levels of learning and growth, and greater meaning from their work. These four behaviors, which allowed employees to share ideas more freely and embrace taking risks, appeared to lead to higher-performing teams during this digital transformation. This was further evidenced by year-over-year manager effectiveness increases of over 10% once these behaviors became commonplace throughout the regions. Regions that once lagged the organizational average in managerial effectiveness, now led in many of the managerial effectiveness metrics.

Digital transformation may not be easy, but effective leadership can help bolster the chance of success. There is typically so much emphasis on the technology itself, establishing implementation road maps marked with important milestones, that the people part can easily be overlooked. Yet, we know from research that people are the lynchpin to a digital transformation’s success. Leaders who are able to actively engage their people are much more likely to experience not just success — but greater satisfaction throughout the change.


MIT Sloan Management Review

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