New study explains why it pays to climb the digital maturity curve
ALTHOUGH organizations are still talking about digital transformation, most large and mid-sized enterprises and some small businesses and startups have moved along on their digital journey to climb the digital maturity curve.
This curve is essentially a measure of progress made in terms of digital initiatives in areas such as customer engagement and experience, organizational strategy, business operations, culture, and of course, technology adoption — among other things — depending upon which consulting agency advising on the subject.
A new study conducted by MIT Sloan Management Review and Deloitte found that it really pays to climb the digital maturity curve.
Headline findings include the observation that digitally maturing organizations innovate at far higher rates than their less mature counterparts, they are more agile and innovative — but require more governance as a result, and that their employees tend to have more latitude to innovate regardless of their job function.
In fact, 81 percent of digitally maturing organizations cite innovation as a strength of the organization, compared to only 10 percent of respondents from early-stage companies.
Further, respondents from digitally maturing organizations not only said that they invest more in innovation and constantly strive to improve their digital functions and capabilities, but also claimed that innovation tends to happen throughout the organization — rather than remain confined within labs and R&D facilities.
The research involved speaking to 4,800 business executives, managers, and analysts from organizations around the world and captured insights from professionals in 125 countries and 28 industries.
It’s also important to note that more than two-thirds of the survey’s respondents were from outside the US — which helps ensure that other regions were adequately represented in the findings of the study.
Collaborations help innovate and accelerate the journey to digital maturity
Eighty percent of digitally maturing organizations told MIT Sloan Management Review and Deloitte that they believe partnerships with external organizations are a key source of digital innovation — and are acting on this.
In comparison, just 59 percent of developing organizations and 33 percent of early-stage organizations are actively collaborating with external organizations, despite understanding their value.
The study cites the example of global insurance firm MetLife with operations in more than 40 countries and annual revenues in excess of US$60 billion where collaboration is viewed positively by the leadership.
In fact, MetLife’s Chief Digital Officer Greg Baxter swears by the company’s collaborations with startups.
“It helps ensure that MetLife can succeed in what Baxter calls the critical phases of innovation: ideation, incubation, and implementation.”
Baxter, of course, isn’t the only leader in the organization championing collaborations with external organizations.
“There’s a lot of effort, energy, and capital flowing into people and companies that are interested in forming new business models, new experiences, and new products around insurance,” MetLife’s AVP for Innovation John Bungert explained to the report’s creators.
“We can go the way of Bethlehem Steel and ignore it, or we can find ways to work together and be the incumbent that delivers all of those new values to our customers,” Bungert added.
The report highlighted that collaborations lead to faster innovations. This, in turn, of course, helps the organization accelerate its journey up the digital maturity curve.
Four steps to help organizations climb the digital maturity curve
Having spoken to thousands of professionals across the world, the study found that although innovation is directly linked to digital maturity, it involves stakeholders within the organization just as much as it involves those within the business.
Employees bring a lot of energy to the innovation process, and their support and efforts should never be shortchanged. The report emphasized that leaders must share their thoughts and ideas about the future of the company and encourage more collaboration and innovation from within, as part of the organization’s culture.
For businesses still dabbling with their digital transformation agenda, here are four steps that MIT Sloan Management Review and Deloitte have provided to help organizations (understand and) climb the digital maturity curve:
# 1 | Look beyond your organization to drive innovation
“Digitally maturing companies identify opportunities to foster and participate in innovative ecosystems, which are less formal and more flexible than traditional partnerships.”
This is often seen in industries such as financial services and retail, where large, traditional organizations tend to rely on new-age startups for support with intelligent applications that use cutting-edge technologies such as artificial intelligence (AI) and the internet of things (IoT).
# 2 | Reassess how your company cultivates and supports cross-functional teams
“Cross-functional teams are an integral part of the innovation efforts of digitally maturing organizations.”
According to advice provided by the report, these teams tend to function best when managers pair team autonomy with clear team objectives that are understood both by the members and by the stakeholders working with them.
Obviously, in such an environment, each member tends to bring in value and help accelerate the overall organization towards the team’s digital goals — ensuring faster innovation.
# 3 | Loosen formal hierarchies, let teams explore, fail, and learn fast
Today, everyone understands the value of innovation and the need to reach for bigger and more audacious goals even if they seem difficult at first.
To ensure teams in organizations can do their best work, the report advises that teams be given a greater degree of freedom to explore their options, build solutions, experiment, fail — and learn from it all — quickly.
Experts often refer to this as pivoting, learning — unlearning — and relearning, or even innovating by failing fast — but no matter what name is given to it, teams that ultimately perform the best are the ones that are given the most freedom.
# 4 | Establish (global) ethical guardrails as you drive innovation in your company
“Start talking about the importance of ethics as an enabler of growth rather than as a constraint. Incorporating ethical considerations into product design can enable an organization to get ahead of potential problems before they materialize.”
When an organization’s leaders talk ethics, it helps build employee enthusiasm for such a culture, ensuring that the business builds trust as a result — and is able to operate in an environment that facilitates civic engagement.
According to the report, the creation of such a culture not only benefits brands but also helps attract new talent and external partners — all of which help foster better, faster innovation.