Becoming Digitally Mature Requires New Leadership
A new report released by the Massachusetts Institute of Technology’s Sloan Management Review and Deloitte Digital examines the digital maturity of global organizations. Approximately 4,300 business executives from 123 countries across 28 industries were asked questions about becoming digitally mature. The findings highlight the importance of leadership during digital transformation, but not in the way we’re accustomed to thinking about it.
According to the report’s authors, becoming digitally mature may not involve how leadership accomplishes it, but rather rethinking who needs to lead.
Julian Birkinshaw, professor of strategy and entrepreneurship at London Business School, said that for organizations to operate effectively in a digital environment, executives will have to relinquish some control. This practice “shifts power away from those at the top and puts ownership in the hands of those closest to the action. That is a difficult shift for executives at established companies.”
One of the biggest challenges in reaching digital maturity—defined as utilizing digital technologies and capabilities to improve processes, engage talent across the organization, and drive new and value-generating business models—is getting people to take risks and operate in an agile way (20 percent), followed by ambiguity and constant change (13 percent), and buying and implementing the right technology (12 percent).
“If you are truly going to accelerate performance improvement, you have to stop focusing on efficiency,” said John Hagel, co-chairman at Deloitte’s Center for the Edge. “If it’s just efficiency, that’s a diminishing-returns game … . But if you focus on effectiveness, on impact, on value delivered to whatever the arena is—the sky is the limit. That requires a mindset shift, getting out of that efficiency mindset.”
When looking at some of the key differences between early and maturing organizations, researchers found that digitally mature companies are significantly more likely to be in the process of developing leaders they need for the future (64 percent vs. 14 percent, respectively). Most early-adopters (80 percent) report that their organization needs to find new leaders to succeed in the digital age.
According to George Westerman, principal research scientist for the MIT Sloan Initiative on the Digital Economy, one of the greatest obstacles in reaching digital maturity is viewing the transformation as a technology challenge, rather than a strategy challenge or leadership opportunity.
“In digital transformation, the transformation is more important than the digital,” he said. “If you think about an opportunity as a mobile thing or an IoT thing, instead of a personalized customer experience or an agile supply chain, you’re going to really limit what your company can create. You’re going to miss the huge opportunities you can get from reinventing your business.”
The report concludes with specific steps companies can take on the journey to digital maturity. They include assessing your existing digital maturity, allowing for new opportunities and ways of thinking, having employees experiment and learn, using success to drive organizational change and, perhaps most important, repeating all these steps.
The authors write: “Digital experimentation should not be a ‘once and done’ effort … digital disruption is really about many little disruptions that occur over time. Only by developing a culture of continual experimentation—experimenting with new approaches while also supporting the core business—can established organizations keep up with the changes that have happened and are still to come with respect to digital business.”