For the first time, established companies are becoming more digitally mature, according to a new study released by MIT Sloan Management Review (Cambridge, MA) and Deloitte Digital (New York City). The seventh annual study, in its fourth year focusing on digital business, found a significant uptick in how survey respondents evaluated their companies’ digital maturity.
The percentage of respondents who report their company is in the early stage of digital disruption dropped nearly nine percentage points from last year, while those reporting their company is in the developing and maturing stages increased three and five percentage points, respectively.
“This year’s study shows that executives across industries and around the world are investing in the digital maturity of their organizations,” said Deloitte Digital’s Doug Palmer, co-author of the report and principal, Deloitte Consulting LLP. “Digitally maturing companies, in particular, are developing their digital talent at both leadership and employee levels and creating conditions that will enable the organization to experiment, learn, and collaborate in the marketplace.”
Based on a global survey of more than 4300 business executives, managers and analysts from organizations around the world, including those from the manufacturing sector, the study, titled “Coming of Age Digitally: Learning, Leadership, and Legacy,” found that digitally maturing companies are beginning to make the necessary changes to adapt their organizations from a traditional environment to a digital environment. However, there is still progress to be made, particularly in leadership development:
- Companies across the digital maturity spectrum need new leaders. More than half (55%) of digitally maturing companies report a need for new leaders to succeed in a digital environment, versus nearly 80% of early-stage companies.
- Digitally maturing organizations are far more likely to be developing the types of leaders they need for the future. More than 6 in 10 (64%) respondents from maturing companies say their companies are effectively developing leaders, compared to only 14% of respondents from early-stage companies.
Additional analysis of this year’s study found a need for companies to revisit and modernize learning models and equip employees with the skills they need to compete in a digital environment:
- Continuous learning is required in a digital environment. Nearly all (90%) respondents indicate that they need to update their skills at least yearly to work effectively in a digital world, and 44% indicating that they need to update their skills “continually” to do their job effectively.
- Yet, employees get little support from organizations to do so. Nearly 30% of respondents from early-stage companies explicitly indicate that their company provides little-to-no support for developing digital skills. In addition, about a third (34%) of all respondents are satisfied with how their organization is helping them prepare for working in a digital environment.
- Digital disruption starts with experimentation, iteration, and relinquishing command. More than half (54%) of digitally maturing organizations are pushing decision-making further into their organizations, versus only 22% of early-stage companies. Additionally, survey respondents report the biggest challenge impacting a company’s ability to compete in a digital environment is experimentation and taking risks (20%).
The survey also found digitally maturing companies are beginning to make the necessary changes to adapt their organizations from a traditional environment to a digital environment but there is still progress to be made, particularly in leadership development and upskilling employees.
“Education can no longer be viewed through the traditional lens that implies learning only happens in a formal classroom or training setting,” Palmer said. “Companies across the board—even those that are showing significant digital progress—should better orchestrate new ways of learning on and off the job that encourages continuous education and allows individuals’ skills to keep pace with the rapid rate of technological change.”
Gerald (Jerry) Kane, guest editor for Digital Leadership at MIT SMR, professor of information systems at the Carroll School of Management, Boston College, and co-author of the report, said: “Traditional companies often struggle with experimentation because fear of failure is part of their organization’s culture but experimentation and iteration are necessary when responding to digital disruption. Established companies must find ways to experiment to compete in the future while also maintaining the core business to remain competitive in the present.”
Additionally, the survey found digitally maturing companies acknowledge that decision-making cannot only happen at the executive level. Employees will increasingly be expected to take on greater leadership roles as decision-making is pushed further into the organization. However, there is a disconnect on this topic between executive and middle managers. While 59% of CEOs believe they are pushing decision-making down, only around 33% of vice-president and director level respondents report that it is happening.
“Organizations are recognizing they need empowered, collaborative leaders to improve their digital capabilities,” said David Kiron, executive editor of MIT SMR. “That typically requires a new mindset around leadership and learning for all employees.”
The MIT Sloan Management Review and Deloitte Digital business study is based on findings from the seventh annual global survey of more than 4300 business executives, managers, and analysts from organizations around the world. The survey, conducted in the fall of 2017, captured insights from individuals in 123 countries and 28 industries from organizations of various sizes. Digital maturity was measured by asking respondents to “imagine an ideal organization utilizing digital technologies and capabilities to improve processes, engage talent across the organization, and drive new value-generating business models.” Respondents then rated their company against that ideal on a scale of 1 to 10. Three maturity groups were observed: “early” (1-3), “developing” (4-6), and “maturing” (7-10).
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