Having a Digital Edge Is Not Just About Technology
Image credit: Shutterstock.com
Are you scrambling to make your company more digital? If so, you're not alone. Yet, many companies make the mistake of equating digital with technology, when in fact technology is just a catalyst for business changes that run much deeper.
Related: 4 Ways Entrepreneurs Can Embrace the Next Phase of Digital Maturity, 'Cognitive Transformation'
For each of the past six years, MIT Sloan School of Management and Deloitte Digital have surveyed thousands of global executives and managers to understand what their companies are doing to become more digitally mature. This year's survey revealed five key practices that differentiate the most digitally mature companies from their less advanced counterparts. No matter your size, focusing on these areas can help your company successfully adapt and compete in a digitally driven market.
1. Look at business strategy through a digital lens.
A digital strategy seems like an obvious first step to maturity, but not all companies have them in place. According to our survey, companies at the high end of the digital maturity scale are over four times more likely than less advanced organizations to have a clear digital strategy (80 percent vs. 19 percent), making it the single biggest differentiator.
Small businesses are giving up a potentially significant competitive advantage if they don't make digital core to their strategy. By virtue of their size, small businesses can be more nimble and agile than large competitors in responding to trends. That agility supporting an effective digital strategy can enable small businesses to compete more effectively against larger players.
The digital restaurant ordering small business, Olo, is an analytics-based platform that enables restaurants to shift delivery areas based on traffic patterns and prepare meals at optimum times to ensure freshness. Digital is not only core to Olo's product strategy, but by optimizing delivery logistics, the company also has the potential to reshape food delivery by helping restaurants consider new real estate possibilities in less expensive areas or changing to kitchen-only service providers. Amazon Restaurant's delivery service recently signed a partnership with the company, for the use of Olo's digital ordering platform.
2. Think ahead. Way ahead.
One way that small companies become big ones is by identifying the important digital trends in advance and capitalizing on them. Yet, according to our study, only 13 percent of early stage companies look out at least five or more years when setting their strategy. Furthermore, only 11 percent of businesses with 100 or fewer employees look out five years or more.
Given how quickly the world is changing, it generally doesn't make sense to create a detailed plan five or more years out. But, to create a high-level strategy, it's essential to at least try and imagine what the world will look like even a decade from now, how technologies could unfold in light of the latest innovations and how customer expectations are likely to evolve.
John Hagel, co-chairman of Deloitte's Center for the Edge, advocates what he calls a "zoom-out, zoom-in" method of long-term planning, when leaders simultaneously consider both a 6- to 12-month and 10- to 20-year horizon -- a method originating from tech startups in Silicon Valley. Companies identify two or three initiatives that can begin today and reach a significant milestone in the next 6-12 months to help the company drive toward the longer-term future.
3. Weave digital into your DNA.
Whether small or large, digitally maturing companies use digital technology to do business in dramatically new ways -- not just to improve efficiency. They have a culture that embraces risk, rapid action, agility and collaboration. And they are organized differently, with a much greater emphasis on cross-functional teams.
For many companies like financial services firm MetLife, digital became more of a mindset, than a focus on technology. Martin Lippert, executive vice president and head of global technology and operations at MetLife, notes that the company weaves digital throughout the four pillars of its overall enterprise strategy. "We want our employees to be executing those four pillars with a digital mindset, to make MetLife as efficient and effective as it can be for our customers," he told us in an interview. To develop that digital mindset and enable the shift in the company's culture, Lippert tries to drive the organization to be oriented externally and exposed to innovation via the venture-capital community, startups, tech firms and academia.
4. Aggressively build on success.
What sets the most digitally mature organizations apart from other companies is that they are willing to fail fast and often, but aggressively scale up when they succeed.
Cardinal Health, for example, regularly cuts initiatives and reports on what was learned. In interviewing them for our study, we heard from Brent Stutz, senior vice president of commercial technologies and chief technology officer of Fuse at Cardinal Health: "I'm not afraid to create a slide that describes 42 failures and four successes. The sooner we stop working on an idea that isn't panning out, the faster we can move on to the next, better solution."
According to our survey, digitally maturing businesses are 2.5 times more likely than less digitally advanced companies to conduct both small experiments and large, enterprise-wide initiatives.
Related: New Technology Doesn't Kill Companies. Oblivious Leadership That Won't Adapt Kills Companies.
5. Become a talent magnet.
Today's top talent understands the importance of digital, not only for the company but for their own personal career development. Companies at the high end of the digital maturity scale have a huge advantage in attracting and retaining the best talent -- in fact, VP-level talent is 15 times more likely to stay in a company if it has strong digital capabilities.
Many are also very deliberate and creative in talent development. Cigna, for example, provides formal education initiatives inside the organization and reimburses employees for outside coursework. The company calculates this investment has ROIs ranging from 129 percent to 144 percent. Plus, it incentivizes employees to stay.
Small businesses that don't necessarily have the budget to implement formal training programs can still create supportive employee learning environments. For example, Prasanna Tambe, associate professor of information, operations and management sciences at New York University, told us in an interview that some companies encourage their employees to work on open-source platforms like GitHub, where they can collaboratively develop cutting-edge technologies with experts in other organizations, developing skills that simultaneously benefit their employers and build their professional career.
Moving up the maturity curve
Digital maturation is a continuous and ongoing process of adapting to an ever-changing business landscape. Ultimately, it's about adapting an organization of any size to compete and win in an increasingly digital world. As such, it's a process with no end date. However, for companies that are not as digital as they need to be to compete, there is a clear start date for moving up the maturity curve. And that date is today.
Comments
Post a Comment