Every single industry sector worldwide is “going digital.” No matter the nature of the business, embracing technology and its benefits is critical to success. Developing a digital mindset and building a company’s digital capabilities starts from the top. That is why digital leadership is the change driver behind the construction industry’s transformation.
What is Digital Leadership?
Digital leadership is a relatively simple concept. At its most basic level, digital leadership describes a strategy that uses a company’s digital assets to achieve the organization’s business objectives.
Experts distinguish between two different approaches to the concept of digital leadership – organizational and individual leadership. At an organizational level, a digital leader would be already leveraging its digital resources to gain a competitive advantage in terms of growth and competitiveness.
In the construction industry, organizational digital leaders are those businesses that utilize digital technologies and capabilities to improve processes, engage talent across the organization, and drive new value-generating operating models. They are using technology to transform into a smart connected, modern company.
On an individual level, a digital leader could be a company’s Chief Transformation Officer (CTO), overseeing all digital assets. On the other hand, a digital leader could also be an employee at a much lower level leading a digital cross-functional team. In any case, an organization’s digital leader should be the person who best understands how the company’s digital assets and their use relate to its overall business objectives. Plus, he needs to have a set of skills, practices and behaviors that will help the organization succeed in a digitally-driven business environment.
Source: S. Denning; Digital must learn from Agile, leadership everywhere
This article will elaborate on what digital leadership brings to an organization, how to find the right people for a digital leadership team, and how to build this team.
What Digital Leadership Brings to an Organization
All organizations look for leaders that think strategically, lead culture change, and drive the execution of agreed change. Digital leaders are no exception to this.
Digital leaders are individuals who understand how important digital technology is for the business and how it will impact every single aspect of what the company does. Strong leaders also have the skills and growth mindset to drive a digital business transformation.
These leaders provide vision and purpose, create conditions to experiment, empower people to think differently and get people to collaborate across boundaries. Their strategic approach to the company’s digital transformation allows digital leaders to keep the overarching goal in sight. Digital leadership is not just about using digital technologies; It’s about leveraging technology to advance the company mission and create a more connected, productive, and empowered workforce that delivers higher customer value and enables business expansion.
Building a Digital Transformation Team
When it comes to managing their digital transformation successfully, construction businesses have two things in common with most other industries:
- The need for a strong digital transformation team.
- A solid digital transformation plan.
Hiring a digital leader alone is often not enough. Construction businesses need transformation teams that influence every business area to undergo a successful digital transformation.
Organizations need to understand their digital maturity level and the talent they have in their current structure. Human resources should be assessed at every level to ensure the organization has the right talent to execute its digital strategy. For example, traditional engineers must become digital engineers, while digital talent must be identified and developed at different levels. Digital talent encompasses a range of abilities, from people with a basic understanding to specialized experts.
However, it is hard to overstate the importance of a clear drive and leadership from the CEO through middle management for a successful digital transformation. Without empowerment and support from the company’s management, digital transformation teams simply cannot achieve their goals.
“A common failure mode, or an insufficient success mode, is a chief executive saying, “We’re going to go digital,” and then making public statements about digital strategy. Then every person on their leadership team creates their own digital road map. What you end up with, six months or a year later, are many digital pilot projects across the organization. Instead, the chief executive needs to focus on getting the full leadership team to be able to talk from the same page and have the same set of priorities, and then focus on having a talent and capability road map that is as detailed as their technology road map—and getting that team to move as one against a clear set of technology priorities and people priorities”.
McKinsey; Digital transformation on the CEO agenda, 2022
Hiring Key People for Your Digital Transformation
The construction industry faces a skills shortage in the United States and worldwide. According to Associated Builders and Contractors (ABC), the industry needs to hire nearly 650,000 additional workers in 2022. But businesses are struggling to attract new staff of this magnitude.
In addition, the industry’s recruitment problem stretches further than the workforce. Construction also suffers from a growing mismatch between demands for vacancies and the skills of applicants looking to fill those vacancies. Parts of the industry are starting to see the effects of that mismatch through wage increases and drops in productivity. In addition, there is currently a limited digital talent pipeline due to the competitive marketplace and rapid pace of change.
What does this mean for the digital transformation of the construction industry? First, it presents both a challenge and an opportunity. In the short term, companies must fill vacancies for construction jobs that need to be done traditionally.
In the medium long term, problems filling vacancies create opportunities to rethink the entire organization’s strategy. By embracing the digital transformation of the industry now and facilitating industrialization and automation where possible, companies can leap forward. They can essentially deal with workforce challenges and drive digital transformation simultaneously.
The key to combining those two developments is building a solid digital workforce. This is where companies have a choice in having leadership drive the change by either building an internal transformational digital team, accessing external expertise, or using a combination.
01. Building an Internal Transformation Team
Building internal transformation teams requires stepping away from the traditional idea of a team as one cohesive unit. Instead, an effective transformation team needs to be agile and placed across all business functions. This is true for construction businesses and all industries undergoing significant digital changes.
Source: Mckinsey; Linking talent to value - drive value across an organization
A simple way to think about this agile, cross-functional transformation team is to have a digital champion/ expert in each functional area. By having different industry skill sets and being close to their departments, the digital transformation champions clearly understand the pain points of that part of the business. They see the barriers to adoption and can address them before they can derail the entire transformation process.
Digital transformation leaders have the bigger picture as a team. They understand which technological innovations can drive the business furthest in a short period and how to implement them. At the same time, they also have the right sensibility to consider existing processes and systems and prevent disruption to those without a solid solution already in place.
When hiring for digital transformation, it’s a good idea to look for specific skill sets. On the surface, some may think that digital transformation is simply about using new technology, but it’s much more than that. It’s about embracing a culture change, and that means changing the way teams collaborate and interact with each other. To drive that cultural change, you’ll want to hire people who are open to change, comfortable with collaboration, eager to learn, and able to adapt to new situations quickly.
Over the past few years, hiring digital transformation talents has grown more complicated. Even before the coronavirus pandemic, businesses in various sectors sought to implement business models and processes based on technology. As the pandemic forced enterprises across all industries to speed up their transformation, digital talents were in high demand. When attracting the right in-house talent becomes difficult, looking at hiring remote talents would be a viable option.
02. Accessing External Expertise
Accessing external expertise can be an alternative to building an internal digital transformation team. However, in many cases, successful transformations are best managed by combining both.
Think of it as getting the best of both worlds: your internal team understands the nuts and bolts of your business. A digital business transformation advisor supported by external specialists with construction industry experience knows how transformational the right technologies, modern construction methods and digital processes can be if implemented efficiently. They can demonstrate just how transformational digitalization can be.
How does a digital construction transformation advisor fit into your digital transformation process? The answer is simple. He will act as an internal advisor to lead and orchestrate the digital transformation journey and inspires the digital transformation team. In addition, he ensures that your digital transformation goes as smoothly as possible.
The most successful digital transformations are those in which every team feels benefited from the changes. On the other hand, forcing a transformation without securing buy-in from all departments becomes an uphill journey.
The result of that uphill journey is inevitably detrimental to the business. Where individuals or entire departments feel they cannot embrace the transformation, roadblocks are the consequence. As a result, rather than benefitting from smoother transformation, teams encounter delays that have a knock-on effect on the entire transformation process. This is where bringing a construction transformation advisor can help; he can act as an internal transformation specialist to ensure that all of these aspects are covered so that internal teams can apply their knowledge to drive tangible change in the organization.
03. Combining Internal and External Forces
Combining internal and external skills and expertise works best for many construction businesses.
Together, they are best placed to ensure that the company’s vision, challenges, and requirements are firmly incorporated into a practical digital transformation activation plan. In doing so, teams are empowered to own the changes and drive them forward.
How to Deliver a Digital Transformation Plan
At the beginning of this article, we defined digital leadership. A core aspect of digital leadership is taking a strategic approach to the digital transformation of a business. A digital transformation plan is a critical component of that strategy.
Recently, Joint Industry Working Group MHCLG published a framework for transformational construction in England. Their Modern Methods of Construction (MMC) document, featured in one of my recent blogs, details how buildings can be future-proofed.
In essence, a digital transformation plan outlines the steps your business will use to leverage digital technologies and use them to drive business growth. Complete digital transformation plans take a holistic 360 approach to the organization. It starts with evaluating all aspects of the business - digital maturity, managed information, existing technologies, peoples, processes, and data - and considers how digital transformation can improve them.
During this process, internal and external experts assess the individual departments and consider how those units work together. Then, they deliver a digital transformation activation plan based on their findings and technologies that benefit the company most.
While developing a digital transformation plan, it’s essential to consider the company’s culture and the involved people’s attitudes. An overly aggressive approach with the wrong people often ends badly, and a company’s culture often determines how aggressively a company approaches digital transformation. Understanding a company’s culture is crucial because it often reflects the values of the people in the organization.
Executing a Digital Transformation Plan
Source: Construct360; System brief (click on the image to download)
Even if you’ve put together an excellent transformation plan, the end result won’t be successful if people aren’t following through with it. As a digital leader, you must be able to coach and mentor your digital team to make sure they’re implementing the plan effectively. That means spending time in the trenches with your team members, helping them implement the plan, enabling collaboration, facilitating communications and knowledge sharing, identifying potential roadblocks, and finding ways to remove them. That also means tracking metrics, measuring progress, and updating company leadership regularly. Digital transformation is a long-term, complex process. It requires significant investment, and there’s no guarantee of success. But the potential for increased revenue and customer satisfaction is tremendous with the exemplary leadership, strategy, and digital team.
Construct360, a smart connected system developed by industry expert Bashar Jabban, exemplifies this approach. Based on decades of real-world construction business experience, the system takes a practical and holistic approach to construction as an industry. Rather than being based solely on business concepts, Construct360 is firmly rooted in the construction industry. The system helps connect every facet of the entire construction process. From concept to design, planning, pre-manufacturing, procurement to construction and facility management, Construct360 streamlines the project execution. In addition, system seven change catalysts/enablers help facilitate the transformation program implementation.
It is important to remember that the goal of digital transformation in the construction industry is not to replace traditional skills but to enhance them and allow companies to grow. Successful implementation of digital transformation achieves this by empowering the transformation teams and everyone else in the company.
Providing a Solid Platform for Digital Change
Digital change and transformation require a solid technological platform to be successful.
Why is this platform so important? Let us start by going back to the internal digital transformation team. To be successful, this team will be spread across different business functions. In medium or large construction businesses, that means being spread across other locations, sometimes internationally.
The right technology platform makes this easy and facilitates more than sharing information. This platform is where the digital leadership team plans the organization’s transformation. It is also where different stakeholders coordinate their activities, forming the basis from which the transformation is delivered.
Therefore, one of the best ways to show that digital transformation is here to stay is to select technology that is built for the future. Unfortunately, we have seen many businesses select technology that doesn’t last when the going gets tough. Therefore, when selecting technology for your business, it’s essential that you choose services that are built to last. This means finding solutions that are built on a solid platform and have the ability to scale. In addition, it would be best to consider how your technology will scale as your business grows. This is particularly important if your business is growing rapidly or is engaged in a transformation that will see a new technology implemented company-wide. Moreover, transformation isn’t a one-time event, so you will want to ensure that the selected technology can be updated regularly over time. This will help to keep your company secure and ensure that your technology solution is always relevant.
Approaching Digital Transformation in Construction
Successful digital transformation in the construction industry requires strong, effective digital leadership. The industry needs to challenge traditional leadership ideas to identify those digital leaders.
However, Deloitte research shows that while organizations expect new leadership capabilities, they still largely promote traditional models and mindsets to leadership recruitment, appointing senior figures within the organization as digital leaders. In some cases, those appointments have been productive, but often, selecting a leader with different qualifications would have been more beneficial.
Naturally, the leadership team of a successful construction business needs to have solid experience in the sector. However, an effective digital leader needs various soft skills to achieve the company’s goals. For many organizations, this requires a new approach to talent management. An emphasis on diversity and inclusivity is part of this new approach, but there is more to it. To attract a talent pool of digital natives, organizations need to rethink their offer and align it closely with the motivation factors of this new talent pool.
Construction businesses must develop strategies to blend different leadership team skills and perhaps take a more comprehensive view of leadership.
Digital leaders need to be able to encourage collaboration across parts of the business that are disconnected. In addition, these leaders might also need to employ multicultural awareness, depending on the company’s setup and its client and supplier base.
Digital leaders also need to convince others to embrace and drive change. This can be highly challenging in a well-established industry like construction, with a tendency to do things the way they were always done. For that reason alone, construction companies are well advised to look outside the box when appointing a digital leader.
Overcoming Obstacles to Digital Transformation in Construction
“Connecting Technology and Human Capabilities To become bionic, it is not enough to just implement the right technology and then train people to use it. There is an additional, pivotal step: establishing a culture (through leadership engagement and incentives) in which employees are expected to continually look for ways to integrate technology and data into their routine day-to-day responsibilities and tasks. When this integration becomes a natural reflex, a company has a capability that we call human-tech augmentation (HTA)”.
BCG; The Leaders’ Path to Digital Value, 2021
Construction is a highly traditional industry built mainly on analog technologies and siloed by nature. In particular, the integration of new technologies and approaches can cause resistance. Moreover, employees can feel threatened by change, mainly if it means they have to adapt their consolidated way of work. Therefore, senior executives need to back the transformation to implement successful digital transformation in the sector. Plus, developing an effective reward system also supports the effective implementation of change plans.
01. Executive Support
Successful delivery of a digital transformation plan for the construction industry relies on support from the C-suite of a company. Change drivers often start with executive leadership commitment that is fed across all organizational levels and departments.
In reality, that means placing a digital leader among C-suite executives. While this preferably is someone with experience in the construction sector, first and foremost, that person needs to be able to liaise between digital transformers and traditionalists. By doing this, they will ensure support throughout the company.
Without executive management involvement and commitment to a new way of working, it is almost impossible to implement a digital transformation strategy.
02. Offering a Reward
A construction business’s successful digital transformation hinges on people. That may sound too simplistic, but it is an essential aspect to consider at each stage of the process. Without convincing teams to embrace the change, there can be no transformation.
Offering a reward system that is linked to digital transformation is highly beneficial. Naturally, teams will see their workflow change over time once the transformation takes hold. However, they may also experience some disruption during the transition. Offering a reward can help mitigate disruption or other problems and keep the overall digital transformation process on track.
How Important is Digital Transformation in Construction?
It is impossible to overstate the importance of embracing digital technology in the construction sector. The success of your construction company’s digital transformation will determine its future.
That may sound harsh and one-sided but put yourself in your client’s and business partners’ positions for a moment. As every single industry is transitioning toward digital business models, construction companies cannot afford to stay behind.
No construction business exists in a vacuum. Instead, leading organizations constantly interact with suppliers, clients, subcontractors, and countless others. As those contacts are growing their use of digital technologies, construction businesses must do the same if they want to stay relevant.
Digital transformation in construction can be incredibly challenging. However, it can be a hugely successful process with the right digital leader at the helm and a team that is prepared to embrace change and work together towards a common goal.
If your company wishes to thrive, it is crucial to make digital transformation a strategic priority now. Digital engagement and digital capacities are necessary if your company expects to sustain its business.
Transformational leadership is one of the change catalysts and enablers in the Construct360 practical approach to digital transformation in construction and real estate development companies.
