Overcoming aversion to risk is one of the most important characteristics of digitally native companies, according to a recent study from MIT Sloan Management Review (MIT SMR) and Deloitte Digital.
The sixth annual study found that 71% of digitally maturing organisations accept the risk of failure and actively encourage their organisations to experiment, compared with 29% of early stage companies.
The study, entitled ‘Achieving Digital Maturity: Adapting Your Company to a Changing World’ examines the digital transformation habits of digitally maturing companies and what sets them apart from digitally early stage companies.
A key finding this year is that a significant number of companies struggle to implement a clear digital strategy in order to evolve the way business is done as digital technologies constantly change the market. Nearly 40% of the 3,500 business executives, managers and analysts from organisations around the world say they need to improve digital strategy and innovation in order to progress to digital maturity.
Frank Farrall Lead Partner, Deloitte Digital Asia Pacific said: “The research found that digitally maturing companies are more than four times as likely as non-digitally maturing companies to have a clear and coherent digital strategy in place – 80% of digitally maturing organisations vs. 19% of early stage companies.
“The study also found that successful digitally maturing organisations are becoming talent magnets. Driven by investment from leadership, opportunities to develop in a digital environment, and a culture that rewards collaboration, experimentation and risk taking, these companies are not just keeping pace with digital change, they are more likely to retain talent, including executive-level talent, than early stage entities.”
- 77% of digitally maturing organisations recognise and reward collaboration and cross-functional teams as a cornerstone of how they operate, versus 34% of early stage entities;
- 75% of digitally maturing entities plan to increase the monies and resources they put into digital business initiatives during the next 12-18 months, whereas only 49% of early stage organisations plan to do so;
- 70% of organisations that provide their employees with the opportunity to thrive, and more than 70% whose leaders have sufficient vision to lead digital efforts, say their initiatives are successful, whereas less than 25% of those organisations that do not, can make the same claim; and
- Executives without sufficient digital opportunities are more than 15 times likely to leave within a year than those with satisfying digital challenges.
Further analysis from the study uncovered the following principles for how companies can adapt and change to compete effectively in a digital environment:
- Walk the walk – 34% of respondents from early stage companies say their companies spend more time talking about digital business than acting on it. Digital maturity is more about how to synchronize talent, culture and organisational structures with digital environments than technology. Executives need to reconfigure aspects of their organisations and operations to drive digital success.
- Growth vs scaling – Reaching digital maturity is an ongoing process that requires a flexible mindset and an organisational structure that supports the company’s ability to react to digital trends. Companies are struggling to scale successful experiments and bring them to the core of their business. They can do so with a culture of transformation, which is the cornerstone of increasing the pace of experimentation.
- Figure out the funding model – Options range from capital funds to savings from operational improvements. Adequate funding provides the necessary resources to begin driving small experiments into enterprise-wide change.
“These discoveries tell us that digitally maturing organisations understand that they have to take a short and long view,” said Gerald Kane, guest editor at MIT SMR and professor of information systems at the Carroll School of Management, Boston College, and co-author of the report. “Businesses must craft strategies that allow for execution within the next 12-18 months while also keeping an eye on the horizon since the end points of digital change never completely arrive.”