The 2018 Digital Business Report undertaken by MIT SMR and Deloitte says that companies are more digitally mature than ever and that their way of doing business is markedly different from traditional businesses. The report is a comprehensive and authoritative resource to understand the digital transformation that is currently underway.
What is the report?
The fourth annual study of digital business by MIT Sloan Management Review and Deloitte surveyed over 4,300 managers, executives, and analysts. It furthered interviewed 17 executives and thought leaders to “understand the challenges and opportunities associated with the use of social and digital business.” The respondents were from 123 countries and 28 industries and belonged to companies of varied sizes.
What did the report find?
- Organizations are making digital progress
For the first time, many respondents viewed their digital maturity positively and are beginning to respond to digital disruption seriously. “The percentage of respondents who report their company as being in the early stage of digital disruption has dropped nearly 9 points from last year, and the percentage of those reporting their company is either in the developing or maturing stage has gone up approximately 3 and 5 points, respectively.”
- Developing digital leaders is critical
Hiring the right digital talent is not the most important sign of digital maturity, but developing them is. Digitally mature organizations are four times more likely to develop digital leaders than least digitally mature ones. “Avoiding competency traps is necessary for achieving the kind of digital transformation that leads to long-term success... New business models, not just new competencies, had to become part of the solution.” The key traits of digital leadership are: providing vision and purpose, creating conditions to experiment, empowering people to think differently, and getting people to collaborate across boundaries.
- Decision-making is decentralized in digitally mature companies
“...Digitally maturing companies are more likely to be pushing decision-making authority down into lower levels of the organization in order to better execute in a digital environment.” However, despite 59% of the CEOs believing that they are pushing decision-making further down, only 33% of the vice presidents and directors agree that the same is actually happening. The report attributed this disconnect to the reluctance of leaders in actually decentralizing decision making and also on the lack of initiative by employees to step up.
- Digital businesses come with a different culture
“Digital business is faster, more flexible and distributed, and has a different culture and mindset than traditional business.” The respondents agree that the pace of business, culture, and mindset, and a flexible, distributed workplace are among the biggest differentiators between digital and traditional businesses.
- Digitally mature organizations are more likely to think outside of the box
Experimentation and iteration are more common in digitally mature companies and they are using the successes and failures of these experiments to drive change across the organization. “Organizations can learn to adapt to an unexpected, ambiguous, and rapidly changing the environment by investing in experimentation and figuring out what works... Yet, digitally maturing companies do more than just run experiments.”
- Organizational support to develop skills is inadequate
Nearly 90% of the respondents are of the view that they need to update their skills at least yearly, and almost half of them prefer doing the same on a regular basis. However, only 34% are satisfied with the support they get from their employer in the domain. Over 90% indicated that they want to use data analytics from their organization to help improve their performance. “These results demonstrate considerable variation across organizational maturity, with digitally maturing companies doing considerably more to help their employees develop the skills they need to compete.” Furthermore, the report also stated that companies that rely on studying and teaching methodologies and do not pay enough emphasis on experience and practice could face higher levels of dissatisfaction.
What Do the Results Indicate?
The results of the report show that organizations are undeniably waking up and responding to digital disruptions and are on their way to becoming digitally mature. Yet, challenges like continuous employee learning empowered decision-making, the scope of experimentation remain. Nonetheless, the fact that organizations are making a concerted effort to be prepared for the future is welcome news. The report suggests that organizations have actually started implementing foundational changes to their processes and framework in order to be future-ready. This is by no means an easy process, for it requires venturing into uncharted territories. However, the report also concisely explains why it must be undertaken, “Figuring out how to reshape the organization in order to operate in a competitive environment increasingly defined by digital technologies is essential for extending your organization’s legacy into the coming years.”