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Adapting to increasingly digital market environments and taking advantage of digital technologies to improve operations are important goals for nearly every contemporary business. Yet, few companies appear to be making the fundamental changes their leaders believe are necessary to achieve these goals.
Based on a global survey of more than 3,500 managers and executives and 15 interviews with executives and thought leaders, MIT Sloan Management Review and Deloitte’s1 third annual study of digital business reveals five key practices of companies that are developing into more mature digital organizations. Their approaches, which may offer valuable lessons for companies that want to improve their own digital efforts, include:
- Implementing systemic changes in how they organize and develop workforces, spur workplace innovation, and cultivate digitally minded cultures and experiences. For example, more than 70% of respondents from digitally maturing companies say their organizations are increasingly organized around cross-functional teams versus only 28% of companies at early stages of digital development. We discuss how this fundamental shift in the way work gets done has significant implications for organizational behavior, corporate culture, talent recruitment, and leadership tactics.
- Playing the long game. Their strategic planning horizons are consistently longer than those of less digitally mature organizations, with nearly 30% looking out five years or more versus only 13% for the least digitally mature organizations. Their digital strategies focus on both technology and core business capabilities. We discuss how linking digital strategies to the company’s core business and focusing on organizational change and flexibility enables companies to adjust to rapidly changing digital environments.
- Scaling small digital experiments into enterprise-wide initiatives that have business impact. At digitally maturing entities, small “i” innovations or experiments typically lead to more big “I” innovations than at other organizations. Digitally maturing organizations are more than twice as likely as companies at the early stages of digital development to drive both small, iterative experiments and enterprise-wide initiatives rather than mainly experiments. Digitally maturing organizations also can be shrewd and disciplined in figuring out how to fund these endeavors and keep them from languishing in the face of more immediate investment needs.
- Becoming talent magnets.
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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. This definition of digital maturity was initially discussed in G.C. Kane, “Digital Maturity, Not Digital Transformation,” MIT Sloan Management Review, April 4, 2017, https://sloanreview.mit.edu. The general background of this concept of maturity is based on L. Hyatt, B. Hyatt, & J. Hyatt, “Effective Leadership Through Emotional Maturity,” Academic Leadership Journal 5, no. 2 (summer 2007): article 4. Available at: http://scholars.fhsu.edu/alj/vol5/iss2/4.
3. G.C. Kane, D. Palmer, A.N. Phillips, D. Kiron, and N. Buckley, “Aligning the Organization for Its Digital Future,” MIT Sloan Management Review and Deloitte University Press, July 26, 2016. www.sloanreview.mit.edu.
4. F. Svahn, L. Mathiassen, R. Lindgren, and G.C. Kane, “Mastering the Digital Innovation Challenge,” MIT Sloan Management Review 58, no. 3 (spring 2017), 14-16.
5. Kane, “Aligning the Organization for Its Digital Future.”
7. “The Future of Jobs: Employment, Skills and Workforce Strategy for the Fourth Industrial Revolution,” World Economic Forum, January 2016.