The MIT Sloan Management Review ‘Strategy, not technology, drives digital transformation’ (Kane et al. 2015) surveyed 5,000 business executives, managers, analysts globally on what it takes to become a digital mature company. It found that digital transformation is not solely about technologies. The power of digital technologies stems from the way how companies integrate technologies to transform the business.
The biggest differentiator between maturing and less maturing companies is not as one could assume in technology but in business aspects. Digital leaders stand out from the rest with a clear digital strategy combined with a culture that is risk embracing as well as collaborative and leadership that is conceptualizing transformation. Only 15% of early stage respondents have a clear and coherent digital strategy whereas this number is 80% for digital mature companies. Digital strategy goes beyond implementing technologies but rather reimages business and transforms how the business works. (Kane et al. 2015).
Maturing digital organizations focus on building employee’s skills. Part of this is fostering cultural change is enabling employees to be more comfortable with taking risks, being agile, bolder as well as driving collaboration and cross-functional teams instead of siloed business units. According to the report, Technology cannot be driven on its own. “Culture leads the adoption of technology” (Dr. John Halamka in Kane et al. 2015). The digital agenda has to be lead from the top. In line with this 75% of digitally maturing companies state that their leadership has enough skills to lead digital strategy.
What is surprising is that according to Kane et al. (2015) not only young digital natives want to work for digital leading companies but employees of all age groups. This might indicate that companies in the early stage of digital maturity are faced with an increased pressure in the war for talents.
The quote “Digital maturity is the product of strategy, culture and leadership” (Kane et al. 2015) summarizes what companies should focus on during their transformation.
The report is strong in the sense that it points out the success factors of digital transformation at companies: clear, coherent digital strategy; cultural change (collaborative, risk-taking, reducing silos) and leadership, anchoring the responsibility at the top management.
However, it deals with the topic digital transformation on a generic level. The survey was conducted with various sizes, from various industries and from different companies. It does not specify on industries, company sizes or countries. Nor does it accurately define the scope of a digital strategy. It could be just a functional digital strategy e.g. digital marketing strategy or on the other hand a corporate strategy in times of digitalization. Other interesting questions that stay unanswered are how a company can put the success factors into practice with specific and aligned initiatives.
In order to get a more comprehensive grasp of how to tackle digital transformation it is worthwhile reading ‘Leading Digital‘ (Westerman et al. 2014). They examine the principles and procedures for succeeding with digital transformation for various industries and how to become a Digital Master. The framework focuses on investing in digital capabilities and in how to lead the digital transformation.
Some takeaways that complement the MIT’s report are:
• Engaging employees, collaborating and connecting are enabling the cultural change.
• Top management team has to be aligned, thus everyone has to be aware of the urgency of transformation and
knows how to articulate it.
• The company needs a shared digital vision that is actively talked about. According to Westermann the focus of the
vision should be to improve the customer experience and streamlining operations – once again the focus is on the
business instead of technology. Digital Masters are distinguished with a “compelling vision of the future”.
• In order to implement change successfully there has to be a person in charge who drives change. New evolving
digital leadership roles are emerging one of them being the Chief Digital Officer. One of the recommendations is that
whether you appoint a new C-level executive, call him CDO or differently or not; the responsibilities of the CDO are
required to manage digital transformation. (Westerman et al. 2014)
Leading Digital as well as the MIT paper point out that digital transformation is very much about digital strategy, cultural change and leadership. Technology can be seen as a strategic enabler to achieve strategic ends – like pointed out in the report. The prerequisite for this is that the company has to evaluate its existing business and state of digital maturity, and map out a strategy with initiatives based on where it sees itself. A digital strategy always has to be adapted to the given company. Digital mature companies can serve as a best practice but there is no blueprint of how to approach digital transformation since businesses vary greatly when it comes to business model and industry.
References:
Kane, G. C., Palmer, D., Phillips, A. N., Kiron, D., & Buckley, N. (2015). Strategy, not technology, drives digital transformation. MIT Sloan Management Review, 14.
Westerman, George; Bonnet, Didier; McAfee, Andrew (2014): Leading digital. Turning technology into business transformation. Boston, Mass.: Harvard Business Review Press.
