Companies lagging in their digital transformation or not even trying to become digital, face the risk of losing substantial portions of their sales, IT leadership, and senior management. About 30% of senior vice presidents, vice presidents, and director-level executives who don’t have adequate access to resources and opportunities to develop and thrive in a digital environment are planning to leave their company in less than one year.
This is one of the key finding of a new research report, Aligning the Organization for its Digital Future. It is based on a worldwide survey of 3,700 business executives, managers, and analysts, conducted for the fifth year in a row by MIT Sloan Management Review, in collaboration with Deloitte.
There is remarkable across the board agreement about digital disruption which 87% of those surveyed believe will impact their industry. This is considerably up from last year’s survey, where only 26% said that digital technologies present a threat of any kind. Regardless of the much-increased anticipation of digital disruption, only 44% think their organizations are adequately preparing for it. Similarly, a recent Gartner survey of IT professionals found that 59% said that their IT organization is unprepared for the digital business of the next two years.
“Digital” has a strong external orientation, according to the reported objectives of the digital strategy of the organizations surveyed. 64% “strongly agree” with improving customer experience and engagement as a key objective. Only 41% cite “fundamentally transform business processes and/or business model.”
While the orientation of companies’ digital strategy is primarily external, the perceived obstacles to digital success are primarily internal. The biggest barrier impending the organization from taking advantage of digital trends is too many competing priorities, followed by lack of organizational agility. “Disruption,” to these respondents, begins at home, not with the startups promising to disrupt their industry.
Understanding technology is a required but not the most important skill for success in a digital workplace. Says the report: “In an open-ended question, respondents said that the ability to steer a company through business model change is the most important skill, cited by 22%.” They also think that there are not enough people with the right skills. Only 11% say that their company’s current talent base can compete effectively in the digital economy.
The report goes beyond the raw data to assess “companies’ sophistication in their use of digital technologies.” Explaining the methodology for this assessment, it says:
For the past two years, we have conducted surveys in which we asked respondents to “imagine an ideal organization transformed by digital technologies and capabilities that improve processes, engage talent across the organization, and drive new value-generating business models.” We then asked them to rate their company against that ideal on a scale of 1 to 10. Respondents fall into three groups: companies at the early stages of digital development (rating of 1-3 on a 10-point scale, 32% of respondents), digitally developing companies (rating of 4-6, 42% of respondents), and businesses that are digitally maturing (rating of 7-10, 26% of respondents).
The assessment of whether a company is digitally mature or not is a subjective assessment by the respondents, not by outside observers applying objective criteria. It may well be that the respondents who rated their companies low on the digital maturity scale simply are not happy with their current employer—not enough opportunities to develop, generally incompetent leaders, too much hierarchy and not enough collaboration.
Notwithstanding the issue of how digitally mature companies were identified, the report’s conclusion—and prescription—is that to succeed in a digital world you must adopt a digital culture. It says:
A key finding in this year’s study is that digitally maturing organizations have organizational cultures that share common features…The main characteristics of digital cultures include: an expanded appetite for risk, rapid experimentation, heavy investment in talent, and recruiting and developing leaders who excel at “soft” skills.
Sounds to me very much like the prescriptions for business success emanating from business schools for at least half a century, way before “digital” has become a set of new technologies, processes, and attitudes companies must invest in and take advantage of to stay competitive.
The importance of becoming digital today is a good enough reason to read the report carefully and take note of how business executives in 131 countries and 27 industries answered the questions posed to them. The Sloan Management Review and Deloitte should be commended for conducting a large annual survey probing the state-of-the-art of digital transformation.
But for a more convincing assessment of what constitutes “digital maturity” we will have to wait until Sloan and Deloitte (or someone else) conduct research that compares objectively companies that have invested heavily in “digital” with companies that have invested only lightly in this new new thing. A difficult research challenge, no doubt, as very few companies willingly admit to falling behind the times.
The findings will be even more meaningful if the research will compare objectively successful companies (e.g., profitable) not investing in digital with not-so-successful companies (e.g., losing money, market share) that have totally embraced digital. Aren’t there out there today companies that are hierarchical, risk-averse, and do not invest in talent and digital but still that make a ton of money ? Can we be absolutely confident that these will not be the characteristics of (at least some) successful companies in the future?
This article was written by Gil Press from Forbes and was legally licensed through the NewsCred publisher network.
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