Embracing Digital Technology

A New Strategic Imperative

by: Michael Fitzgerald, Nina Kruschwitz, Didier Bonnet, and Michael Welch


Companies routinely invest in technology, and too often feel they get routine results. Technology’s promise is not simply to automate processes, but to open routes to new ways of doing business.

To better understand how businesses succeed or fail in using digital technology to improve business performance, MIT Sloan Management Review and Capgemini Consulting conducted a survey in 2013 that garnered responses from 1,559 executives and managers in a wide range of industries. Their responses clearly show that managers believe in the ability of technology to bring transformative change to business. But they also feel frustrated with how hard it is to get great results from new technology.

This report (as well as the survey) focuses on digital transformation, which we define as the use of new digital technologies (social media, mobile, analytics or embedded devices) to enable major business improvements (such as enhancing customer experience, streamlining operations or creating new business models).

The key findings from the survey are:

  • According to 78% of respondents, achieving digital transformation will become critical to their organizations within the next two years.
  • However, 63% said the pace of technology change in their organization is too slow.
  • The most frequently cited obstacle to digital transformation was “lack of urgency.”
  • Only 38% of respondents said that digital transformation was a permanent fixture on their CEO’s agenda.
  • Where CEOs have shared their vision for digital transformation, 93% of employees feel that it is the right thing for the organization. But, a mere 36% of CEOs have shared such a vision.

Previous research with executives by the MIT Center for Digital Business and Capgemini Consulting showed that many companies struggle to gain transformational effects from new digital technologies, but also that a significant minority of companies have developed the management and technology skills to realize the potential of new technologies.

About the Authors

Michael Fitzgerald is the Digital Transformation contributing editor at MIT Sloan Management Review, covering the challenges that traditional companies face as they adopt emerging technologies. He can be reached at michael@mffitzgerald.com.

Nina Kruschwitz is managing editor and special projects manager of MIT Sloan Management Review which brings ideas from the world of thinkers to the executives and managers who use them. She can be reached at smrfeedback@mit.edu.

MIT Sloan Management Review leads the discourse among academic researchers, business executives and other influential thought leaders about advances in management practice that are transforming how people lead and innovate. MIT SMR disseminates new management research and innovative ideas so that thoughtful executives can capitalize on the opportunities generated by rapid organizational, technological and societal change.

Didier Bonnet is a Senior Vice President and Global Practice Leader at Capgemini Consulting. He can be reached at didier.bonnet@capgemini.com.

Michael Welch is a Managing Consultant at Capgemini Consulting and Visiting Scientist at MIT’s Center for Digital Business. He can be reached at michael.welch@capgemini.com.

Capgemini Consulting is a global strategy and transformation consulting organization of the Capgemini Group, specializing in advising and supporting enterprises in significant transformation, from innovative strategy to execution and with an unstinting focus on results. With the new digital economy creating significant disruptions and opportunities, our global team of over 3,600 talented individuals work with leading companies and governments to master Digital Transformation, drawing on our understanding of the digital economy and our leadership in business transformation and organization change.

Acknowledgments

Lori Beer, WellPoint; Jon Bidwell, Chubb Insurance; Adam Brotman, Starbucks; Curt Garner, Starbucks; David Kiron, MIT Sloan Management Review ; Martha E. Mangelsdorf, MIT Sloan Management Review ; Andrew McAfee, MIT Center for Digital Business; Mark Norman, Zipcar; William Ruh, General Electric; Kimberly Stevenson, Intel; George Westerman, MIT Center for Digital Business.

Photo Credits

Chapter One: Earth image courtesy of NASA/JPL-Caltech; Chapter Two: abacus image courtesy of Flickr user Sami; Chapter Three: components image courtesy of Flickr user Sami; Chapter Four: transistor image courtesy of Flickr user Marcin Wichary; Chapter Five: CCD image courtesy of Flickr user Matt Laskowski; Chapter Six: computer chip image courtesy of Flickr user Andres Rodriguez; About the Research ALMA correlator supercomputer image courtesy of European Southern Observatorty (ESO).

The ALMA correlator, one of the most powerful supercomputers in the world, has now been fully installed and tested at its remote, high altitude site in the Andes of northern Chile. This wide-angle view shows some of the racks of the correlator in the ALMA Array Operations Site Technical Building. This photograph shows one of four quadrants of the correlator. The full system has four identical quadrants, with over 134 million processors, performing up to 17 quadrillion operations per second.

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Comments (7)
Derren Parker
One of the elements that I think is misunderstood about a digital transformation is that it’s typically a Trojan horse for a much broader business transformation, a time to review many aspects of a business’s operations from top to bottom—the talent, the organizational structure, the operating model, products, services, etcetera. Some of those are hard changes that need to be made, and some are softer, like language or culture.

In my experience, culture is the hardest part of the organization to change. Shifting technology, finding the right talent, finding the right product set and strategy—that’s all doable, not easy, but doable. Hardest is the cultural transformation in businesses that have very deep legacy and cultural roots.
John Phanchalad
Business and the digital technology are inseparable. A good leader must have the ability to incorporate the technology and business. I believe, someone who can use the digital technology can be more successful than those not using the technology. For example, a restaurant owner expand their business through the digital media, but the other one does not use digital media, so what about you? who will be more successful?.
Manjunath Gangadhar
Found this study pretty useful and relevant.
Digital Transformation presents new and sometimes disruptive business models, across every industry vertical. I find it useful to map the digital initiatives into a maturity model framework, which in turn helps create a sound digital strategy. You can find my thoughts around this maturity model at http://www.gmanju.com/2013/10/digital-strategy-and-digital-maturity.html

Would love to hear your thoughts and experiences around formulating and implementaing digital strategy.
ian
Here, in Southeast Asia, I am seeing too much resistance to technology transformation. This resistance is in the lack of urgency to motivate actual change and not in ability. Statistics that show purchase or use of some technologies, such as smart devices, has only a slight relationship to technology transformation in business processes. The majority of people only buy smart devices as status symbols and to entertain themselves or socialize. Leveraging of advanced technologies such as the cloud computing in SME's is pretty low.
Jean-Marc Gerber
Regarding the new look and feel, the font size and style increase clarity and facilitate the reading. I really like the "jump to" idea although response time is a little bit slow to access the section. On the things that could be improved from my point of view, the picture are definitely too big. They take too much space with respect to the text which constitutes the actual value of the page. The main picture of the article is quite interesting in this respect. In the current look and feel the earth emerges clearly from the mosaïc of pictures whereas in the new look and feel it is very hard to determine what this set of small pictures tend to represent.  Related to this, when we jump to a section via the "jump to", the picture takes almost of the space of the screen and very few is left of the text which imposes to scroll down immediately before to start reading.

jm
donald.giglio
Interesting and thought provoking article. I, as one of the “older” generation, marvel at the speed of digital adaptation of millenials and youngsters like my grandchildren. My process of adaptation is a bit slower–still trying to make my car talk and respond to me. The unused capabilities and those to come are astounding. However, there is a caution–to be wary of the digitalized addiction that overshadows the human experience.

As a suggestion, for those of us who may have underperforming audio or hearing problems in loud, fast-paced cubes, please consider adding Closed Captioning–even in multiple languages to extend your base. Just one idea. Thank you
K. L. Newcombe
You ask whether we like the new format. I appreciate the large font size and easy to read serif style font, but I personally dislike the light gray font on a white background. Everyone uses it and it is hard on the eyes.  Gray simply cannot match crisp contrast of black on white that makes reading much easier and faster. As usual, the content is excellent and thought provoking.