Adapting to increasingly digital market environments and taking advantage of digital technologies to improve operations and drive new customer value are important goals for nearly every contemporary business. The good news is that many companies are beginning to make the necessary changes to adapt their organization to a digital environment.
Based on a global survey of more than 4,300 managers, executives, and analysts and 17 interviews with executives and thought leaders, MIT Sloan Management Review and Deloitte’s1 fourth annual study of digital business shows that the digital business environment is fundamentally different from the traditional one. Digitally maturing companies recognize the differences and are evolving how they learn and lead in order to adapt and succeed in a rapidly changing market. This year’s research provides some important insights into how companies are adapting to a digital business environment:
- Organizations are beginning to make progress digitally. For the first time in four years, we’ve seen an uptick in how survey respondents evaluate their company’s digital maturity. Many established companies are beginning to take digital disruption more seriously and respond. If companies were waiting for competitors to act before responding, this shift suggests the time to act is now.
- Developing — not just having — digital leaders sets digitally maturing companies apart. Simply having the right digital leaders is not the most important indicator of digital maturity ― more than 50% of digitally maturing companies still report needing new leaders. Yet, these maturing companies were far more likely to report taking steps to develop the right leaders. The most digitally mature organizations are more than four times more likely to be developing needed digital leaders than the least digitally mature ones. Key traits of effective digital leadership are about enabling the organization: providing vision and purpose, creating conditions to experiment, empowering people to think differently, and getting people to collaborate across boundaries.
- Digitally maturing companies push decision-making further down into the organization. At the same time, there appears to be a disconnect between the C-suite and middle managers regarding this. While 59% of CEOs believe they are pushing decision-making down, only around 33% of vice president and director-level respondents report that it is happening. While one may be tempted to conclude that leaders are unwilling to surrender their authority to others, some of our evidence suggests that employees may be reluctant to step up and assume their roles as digital leaders.
- Digital business is faster, more flexible and distributed, and has a different culture and mindset than traditional business. Survey respondents say the pace of business; culture and mindset; and a flexible, distributed workplace are among the biggest differences between digital and traditional business. Such findings mean many companies should change how they operate in order to compete. Respondents also report that the biggest challenges are the need to experiment and take risks, dealing with ambiguity and constant change, buying and implementing the right technology, and distributed decision-making.
- Digitally maturing organizations are more likely to experiment and iterate. Experimentation and iteration are key ways companies respond to digital disruption. They alone, however, are not enough. Companies should use the results of those experiments ― successes and failures ― to drive change across the organization. Companies with abundant resources may be tempted to just “throw money at the problem” of digital disruption, but that doesn’t generally lead to continuous and actionable learning in the way that experimentation does. Instead, established companies should figure out how to experiment to compete in the future while also maintaining the core business so that it can perform in the present.
- Individuals report needing to continually develop their skills but say they get little to no support from their organization to do so. Some 90% of respondents indicate that they need to update their skills at least yearly, with nearly half of them reporting the need to update skills continuously on an ongoing basis. Yet, only 34% of respondents say they are satisfied with the degree to which their organization supports ongoing skill development. Many organizations continue to rely on formal training for developing these skills, but cultivating an environment that allows on-the-job learning may be more effective. Many employees are also willing to do it themselves, given the right support. Of those surveyed, 90% indicate they want to use data analytics from their organization to help them improve their own performance.