Accelerating Digital Innovation Inside and Out

Agile Teams, Ecosystems, and Ethics

by: Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron, and Natasha Buckley
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For the past five years, MIT Sloan Management Review and Deloitte1 have investigated digital maturity, focusing on the organizational aspects of digital disruption rather than the technological ones. We’ve examined companies at the early, developing, and maturing stages of digital transformation and have seen increasing signs of separation between more and less mature organizations. This year’s research finds that the gaps can often be explained by a company’s approach to innovation: Digitally maturing companies are not only innovating more, they’re innovating differently.

This innovation is driven in large part by the collaborations established externally through digital ecosystems and internally through cross-functional teams. Both ecosystems and cross-functional teams increase organizational agility. The risk of this increased agility, however, is that it can lead a company’s innovation efforts to outpace its governance policies. It is particularly important, then, that these organizations have strong policies in place regarding the ethics of digital business.

MIT Sloan Management Review and Deloitte’s fifth annual study of digital business is based on a global survey of more than 4,800 managers, executives, and analysts and 14 interviews with executives and thought leaders. The report presents the following findings:

  1. Digitally maturing companies innovate at far higher rates than their less mature counterparts. Eighty-one percent of respondents from these companies cite innovation as a strength of the organization, compared with only 10% from early-stage companies. Maturing organizations invest more in innovation and constantly drive toward digital improvement in ways that less mature companies do not. Notably, innovation happens throughout digitally maturing enterprises; it isn’t caged in labs or R&D departments. Digitally maturing companies are more likely to participate in digital ecosystems, and their employees are often organized in cross-functional teams.
  2. Employees of digitally maturing organizations have more latitude to innovate in their jobs — regardless of what those jobs may be. Nearly five times as many survey respondents from maturing companies as from early-stage companies report that their organizations provide them sufficient resources to innovate. This year’s research also finds a strong relationship between a company’s rate of digital innovation and its staffers’ confidence that the organization will be stronger in the future, thanks to digital trends.

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References

1. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a U.K. private company limited by guarantee (“DTTL”), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as “Deloitte Global”) does not provide services to clients. In the United States, Deloitte refers to one or more of the U.S. member firms of DTTL, their related entities that operate using the “Deloitte” name in the United States, and their respective affiliates. Certain services may not be available to attest clients under the rules and regulations of public accounting. Please see www.deloitte.com/about to learn more about our global network of member firms.

2. “About Us,” Enroll Hero, accessed May 10, 2019, http://blog.enrollhero.com.

3. Bethlehem, once one of the U.S.’s biggest steelmakers and shipbuilders, went bankrupt and ceased operations in the early 2000s.

4. N. Furr and A. Shipilov, “Building the Right Ecosystem for Innovation,” MIT Sloan Management Review 59, no. 4 (summer 2018): 59-64.

5. G.G. Parker, M.W. Van Alstyne, and S.P. Choudary, Platform Revolution: How Networked Platforms Are Transforming the Economy — and How to Make Them Work for You (New York: W.W. Norton, 2016).

6. M.J. Arena, Adaptive Space: How GM and Other Companies Are Positively Disrupting Themselves and Transforming Into Agile Organizations (New York: McGraw-Hill, 2018).

7. M. Heller, “Why CarMax’s ‘Shock the System’ Digital Strategy Is Working,” April 26, 2017, www.cio.com.

8. “CarMax Brings the Future of Car Buying to Atlanta,” CarMax, Dec. 4, 2018, http://investors.carmax.com.

9. K.E. Weick, “Educational Organizations as Loosely Coupled Systems,” Administrative Science Quarterly 21, no. 1 (March 1976): 1-19.

10. “12 CFR Part 1002: Equal Credit Opportunity Act (Regulation B),” Consumer Financial Protection Bureau, Jan. 1, 2018, www.consumerfinance.gov.

11. T. Berners-Lee, “30 Years On, What’s Next #ForTheWeb?” Web Foundation, March 12, 2019, https://webfoundation.org.

12. J. Guynn, “Meet Tony Prophet, Salesforce’s Chief Equality Officer,” USA Today, Sept. 15, 2016.

13. “Paula Goldman Joins Salesforce as Chief Ethical and Humane Use Officer,” Salesforce, Dec. 10, 2018, www.salesforce.com.

14. “Today at Davos With Salesforce: Thursday, Jan. 24,” Salesforce, Jan. 24, 2019, www.salesforce.com and P. Renjen, “The 4 Types of Leader Who Will Thrive in the Fourth Industrial Revolution,” World Economic Forum, Jan. 23, 2019, www.weforum.org.

15. Berners-Lee, “Thirty Years On.”

16. S.R. Nilsen, “The Enron Code of Ethics Handbook From July 2000 Is a Fascinating Read,” CFA Institute, Oct. 14, 2013, https://blogs.cfainstitute.org.

i. J. Pfeffer, “The Knowing-Doing Gap,” Insights by Stanford Business, Nov. 1, 1999, www.gsb.stanford.edu.

ii. “Farmers Reap Benefits of Automated Tractor Tech,” July 1, 2015, www.cbsnews.com.

iii. C.S. Dweck, Mindset: The New Psychology of Success, updated ed. (New York: Random House, 2016).

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