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What`s the core of a Digital Transformation?

In this post we will be following the research-survey made by Gerald C. Kane, Doug Palmer, Anh Nguyen Phillips, David Kiron and Natasha Buckley, recently published by MIT and Deloitte, (1).

Their first contribution denies technology itself as a strong digital transformation tool; what really transforms businesses is the way firms integrate technologies, (social, mobile, analytics and cloud). And digital leaders, apart from having a clear digital strategy, have the leadership and culture to invest in organizational change, talent gathering and build-up.

Mit and Deloitte classify firms in Early, Developing and Maturing stage in their path to be a digital firm, that is one ”transformed by digital technologies and capabilities that improve processes, engage talent across the organization and drive new value generating business models.”

There are certain barriers to digital maturing: lacking a digital strategy strongly affects Early and Developing firms while cybersecurity slows down Maturing firms, (see chart below).

Barriers to Digital Transformation

Digital strategies. IT has already been said not to be a key factor to reach a competitive advantage, as it soon turns available to many, (2). A common feature by Early firms is that they focus on particular technologies with an operational end, while maturing firms consider technologies a means to obtain strategic ends, such as improving decision-making or innovation. The authors argue that generating a digital strategy should entail rethinking the business through a lens to the future, and then create the needed solutions and required capabilities. Filling in the skill gaps seems critical, and Maturing firms are rather successful at that. Companies use content platforms, (video, Ted-like platforms, and other), to spread knowledge and know-how, and fight to retain talent.

A culture of digital transformation. Maturing companies encourage risk-taking, innovation and collaborative work, as a means to transform their businesses. Reducing risk-aversion requires a new mindset by executives; they need to see failure as a tool for success, but they also need to be able to make employees follow the same path and adopt change more easily, (somehow this needs to be introduced in their “utility function”, as some companies do through gamification). Collaborative work also helps companies generate ideas and spread them, thus increasing innovation. Companies surveyed think differently as to whether technology or culture leads digital transformation.

How to lead the digital transformation. Managers need to lead by example; they can`t simply tell the story about the need for a digital transformation. They need to have the skills, understand the trends and know the business; they also need to create a strategy and influence the organization, learning from the environment.

What`s ahead? As companies are at most “Still Maturing”, having the view of future digitalization remains important, and the survey extracted several tips:

  • Online and offline experiences will further integrate,
  • Data will be introduced in decision-making and operations.
  • Business models will evolve faster, so that leaders will need to assure companies:
    • Have a digital transformation strategy going beyond technologies
    • Have a cultural footprint that fosters innovation and change.
    • Have leaders that understand business and have the necessary skills to recognize trends and needs, and engage employees to follow the correct path.

Please, see the article cited below (3) on the General Electric digital transformation: (i) Mr Immelt being a leader with the vision and necessary skills, but probably lacking tech savvy; (ii) leading GE to be a software company, with its own app store and eco-system; (iii) adapting its talent base and organization; (iv) fastly adapting to regulatory or environmental change (export-import finance, finance business exit, etc).

  1. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Strategy, Not Technology, Drives Digital Transformation” MIT Sloan Management Review and Deloitte University Press, July 2015. Download at http://marketing.mitsmr.com/DL2015/57181-MIT-Deloitte-Digital2015.pdf?cid=1
  2. G. Carr, “IT Doesn’t Matter,” Harvard Business Review 5 (May 2003). Download at https://hbr.org/2003/05/it-doesnt-matter/ar/1
  3. “The visionary rebuilding GE from scratch to become a digital powerhouse”, published by The Telegraph, see it here: http://www.telegraph.co.uk/finance/newsbysector/industry/11909721/The-visionary-rebuilding-GE-from-scratch-to-become-a-digital-powerhouse.html

 

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