Successful digital transformation goes beyond applying technology. It requires:
How can your organization thrive in these fast-moving, digital and technology-driven times? That is the crucial question every CEO and executive team member needs to ask.
Digital transformation is part of the answer. However, transforming your organization to become — and remain — truly digital requires more than technology.
For several years now, Deloitte and the MIT Sloan Management Review have conducted a global research project to find out what sets digitally mature executives and organizations apart. For digitally maturing organizations, technology is not simply an add-on to existing processes and practices. Instead, it prompts these companies to rethink how they do business. In this article, we outline the key findings from our research, highlighting the factors that separate the successful digital transformers from the laggards.
A clear strategy determines your organization’s ability to reimagine and transform your business for the digital world. The power of digital technologies lies not in their individual use, but how they are being integrated to transform your business and the way you work and operate. As such, your strategy should focus on integrating digital technologies to transform, innovate and achieve strategic goals, instead of using standalone solutions to solve a particular challenge.
Digital technologies should not be limited to separate digital divisions, channels, or functions; instead, they should be applied across the organization to support corporate strategies that address specific industry opportunities. Therefore, your digital strategy’s scope and objectives should include processes, talent engagement and business models. And, it should provide clear priorities and tell the story of how your organization will develop digital capabilities to align its activities, people, culture, and structure with a set of strategic and organizational goals.
The typical objectives of organizations with a high digital maturity level include:
Digitally mature organizations take a “zoom out/zoom in” approach to developing a digital strategy. First, they zoom out to consider how their industries and markets will change in 10 years and beyond, and what they need to do to be prepared. Then, they zoom into the next six to 12 months and identify two or three business initiatives that have the most potential to accelerate movement toward their longer-term destination.
Digital strategies should also tackle how the company needs to change its leaders’ mindsets and evolve its workforce while supporting its core business.
Employees in digitally maturing organizations are confident in their leaders’ ability to play the digital game and are motivated to work for digital leaders. The digital agenda must be led from the top, requiring leaders to possess digital fluency. This does not mean they need to be technology experts; however, they need to be able to:
To become talent magnets, digitally maturing organizations do not only invest in strengthening the digital thinking of their senior management. They also commit to bringing digital skills to the entire organization, including a customer-first mindset, collaboration, and design thinking. And they do this increasingly online and on a just-in-time, on-the-job basis, rather than through formal classroom training.
Therefore, the ability to communicate the company’s strategy by telling a compelling story is an essential leadership capability. Leaders need to create narratives about digital and have a clear agenda to equip the company, its people, structure and culture with the capabilities and strategies necessary to traverse the digital age.
Leaders can set the stage for their employees to excel, creating conditions that foster agility, collaboration, and innovation through new ways of working.
Despite the importance of leaders showing the way, digital transformation cannot just be a top-down mandate for change. Instead, it involves creating conditions where existing employees can start thinking and working differently, driving change from the bottom up as well. Digital cultures, ways of working and behaving — which lead to the adoption of new technologies — are characterized by innovation through experimentation and learning, risk-taking, agility, and cross-functional collaboration.
Creating such a digital culture and building the capabilities for new ways of working is an intentional effort: 80% of respondents from digitally maturing companies say they are actively engaged in bolstering risk-taking, agility and collaboration.
Rate your company culture on the following elements:
A vital part of transforming your culture and ways of working is focusing on peak-performance teams. Digital organizations recognize and reward collaboration, regard cross-functional teams as a cornerstone of how they operate, and are less likely to rely on hierarchical management structures to make decisions.
Digitally maturing companies innovate at far higher rates than their less mature counterparts, and they innovate differently.
These companies invest more in innovation and continuously drive digital improvement, spreading the responsibility for innovation throughout the entire organization instead of confining it to labs. This means that the cross-functional teams described earlier have more freedom to innovate in their daily jobs and are provided with the necessary resources. This greater autonomy requires higher governance, which is achieved by giving clear priorities as outlined in the strategy.
Moreover, digital organizations do not only rely on their internal innovation capacities but are also more likely to collaborate and partner with external partners. And, as with many things outlined in this article, they take a different approach to these collaborations; relying less on formal contracts and more on building trusting relationships.
The five critical success factors outlined in this article offer CEOs and their executive teams a framework to deliver a successful digital transformation strategy for their organizations. To navigate the complexity of this transformation, the organization’s culture, people, structure, and ways of working must be in sync and aligned to its overall strategic objectives. Following these guidelines will enable your company to become — and remain — a truly digital organization that can thrive both now and in the future.
This article was originally published at Deloitte InsideNOW.