Published on the 18/07/2017 | Written by Newsdesk
MIT SMR and Deloitte backs obvious conclusions with research…
Since digital transformation is all about change, and because change means doing things differently, some of the findings of a recent study from MIT Sloan Management Review (MIT SMR) and Deloitte Digital seem intuitively obvious. Particularly, this one: Risk averse companies struggle with digital transformation.
And given the chat around the traps about how fast the world is changing, this one, too: companies struggle to implement a clear digital strategy to evolve the way business is done as digital technologies constantly change the market.
The study, ‘Achieving Digital Maturity: Adapting Your Company to a Changing World’, examined the digital transformation habits of digitally maturing companies and what sets them apart from digital early stage companies.
It found that 71 percent of digitally maturing organisations accept the risk of failure and actively encourage their organisations to experiment, compared with 29 percent of early stage companies.
Nearly 40 percent of the 3,500 business executives, managers and analysts polled from organisations around the world said they need to improve digital strategy and innovation to progress to digital maturity.
In a statement, Deloitte APAC’s Frank Farrall said: “The research found that digitally maturing companies are more than four times as likely as non-digitally maturing companies to have a clear and coherent digital strategy in place – 80 percent of digitally maturing organisations vs. 19%of early stage companies.
Being digital pulls employees, too, as the study also found that successful digitally maturing organisations are becoming talent magnets. “Driven by investment from leadership, opportunities to develop in a digital environment, and a culture that rewards collaboration, experimentation and risk taking, these companies are not just keeping pace with digital change, they are more likely to retain talent, including executive-level talent, than early stage entities,” Farrall confirmed.
Other findings include:
- 77 percent of digitally maturing organisations recognise and reward collaboration and cross-functional teams as a cornerstone of how they operate, versus slightly more than 34 percent of early stage entities.
- Approximately 75 percent of digitally maturing entities plan to increase the monies and resources they put into digital business initiatives during the next 12-18 months – versus 49 percent of early stage organisations.
- Vice President level executives without sufficient digital opportunities are more than 15 times likely to leave within a year than those with satisfying digital challenges.
“Cross-functional working is key, yet many organisations still have their structures divided between ‘digital’ and ‘traditional’, which is a problem,” said Deloitte Digital Australia’s Steve Hallam.
He added that becoming a digital business takes more than simply digitising your front office. “It requires moving digital into the core of your business, having a defined and coherent digital strategy and committing to that strategy. Then re-designing the way that your organisation works – including business processes, culture, talent, experimentation and technology.”
Deloitte said its additional analysis of the study uncovered ‘principles for how companies can adapt and change to compete effectively in a digital environment’. These include ‘walking the talk’ (34 percent of early stage companies spend more time talking digital than acting on it); growth vs. scaling (reaching digital maturity is an ongoing process that requires a flexible mindset and an organisational structure that supports the company’s ability to react to digital trends); and optimising the funding model (with options ranging from capital funds to savings from operational improvements).
“These discoveries tell us that digitally maturing organisations understand that they have to take a short and long view,” said Gerald Kane, MIT SMR guest editor and a professor of information systems.
“Businesses must craft strategies that allow for execution within the next 12-18 months while also keeping an eye on the horizon since the end points of digital change never completely arrive.”
Access the MIT SMR study.