Key Characteristics of Digitally Mature Organizations
This is what a successful digital transformation looks like, based on research into the characteristics of enterprises that have succeeded with transformations in real life.
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“Digital transformation” has become the watchword of today’s enterprises. No matter what industry you are in, you are likely working to alter your business model and practices so that you can more fully participate in the digital economy.
In fact, the Fujitsu Global Digital Transformation Survey Report 2018, which surveyed more than 1,500 C-level executives and business decision makers, found that 97% of online businesses and 67% of traditional businesses had a digital transformation underway.
But, of course, not everyone agrees on what “digital transformation” means. Gartner defines digitalization as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.” But that still leaves a lot of room for interpretation. For some companies, becoming a digital business might just mean adding an ecommerce site. For others, it might mean radically changing all their business process to incorporate cutting-edge technologies, and still others might be somewhere in between.
However, the definition that an enterprise choosing to adopt can have significant consequences, because some digital transformations are undeniably more successful than others.
To find out which approaches and characteristics lead to greater success, West Monroe Partners conducted a survey of more than 400 executives in the healthcare, financial services, energy and utilities, and consumer and industrial products industries. The company also conducted follow-up interviews with 10 of the executives to learn more about their companies.
Based on that research, West Monroe identified a number of characteristics that companies with more successful digital transformation shared and that less successful organizations did not have. It detailed these findings in a report titled “Digital Leaders: Learn from Digitally Mature Companies to Grow Revenue and Profits.”
Some of those findings are highlighted in the following slides, which focus on eight key characteristics of digitally mature organizations.
The West Monroe survey asked executives whether they agreed or disagreed with the statement “My organization’s digital vision is clear and comprehensive, widely understood, and used to guide strategic decisions.” It found a high correlation between those who strongly agreed with the statement and companies that were experiencing very rapid growth. In fact, 45% of companies with “extreme” growth rates (40% per year or greater) strongly agreed with the statement, while only 16% of those with low growth rates (less than 5%) did so. Overall, only 24% of those surveyed strongly agreed.
The takeaways are obvious: Your company probably doesn’t have a well-defined digital vision today. But if your leaders craft a meaningful vision and share it with the company, it could unlock greater growth potential.
In order to create a clear digital vision, the report asserts that organizations need a strong digital leader. Among companies with extreme growth rates, 51% strongly agreed that they had a definitive leader charged with executing on digital efforts. By contrast, only 28% of high-growth (10-39% growth), 25% of moderate-growth (5-9% growth) and 21% of low-growth companies strongly agreed with the same statement.
Executive interviews also bore witness to the importance of a digital vision. For example, a utility company vice president explained that because the company’s CEO was a strong digital leader, they had no trouble getting board approval and funding for digital transformation projects.
It isn’t only the leader who is important for digital transformation. Staff members have critical roles as well. In the Fujitsu survey, executives said their biggest challenge at most stages in the digital transformation journey was a lack of skilled staff.
In the West Monroe survey, among those organizations growing at more than 40% per year, more than half agreed with the following statement: “Our employees are engaged and intrinsically motivated, thanks to their understanding and commitment to the company’s strategy and customer needs.” By contrast, only 17% of executives at companies with less than 5% growth said the same.
Of course, having engaged employees also reflects back on the quality of the leadership. While quality staff members will naturally be willing to work hard, it requires inspiring leaders to nurture those tendencies across the organization.
These days, every company is engaged in big data analytics, but not all companies are able to derive valuable insights from that data. Looking again at that “extreme growth” category of companies, 49% agreed with the statement, “My organization is highly adept at leveraging data for insights, predictive outcomes, and to grow the business.” By contrast, just 18% of respondents at low-growth companies said the same thing.
The key here is that companies are getting actionable insights, not just going through the motions of running reports. The report stated, “Speaking with executives, we found again and again that a customer-focused mindset ensures digital transformation isn’t simply ‘technology for technology’s sake’ — but one that, instead, makes digital tangible, actionable, and, most importantly, profitable.”
The other group of humans that play a critical role in digital transformation is the customers. In this case, it’s not the quality of the individuals that matters but the quality of their digital interactions with the company.
Among companies with extreme growth, 49% strongly agreed that “our customer service division ensures that customers’ digital interactions with our organization are convenient, effortless and enjoyable.” That dropped down to 18% among companies with low growth rates.
Clearly, organizations are experiencing some of the greatest success with digital transformation by focusing their digital efforts on their customers, not just on making business processes more efficient.
Focusing on the customer can lead companies to create innovate new products and services. The West Monroe report noted that healthcare firms are doing particularly well in this regard, with 74% of them strongly agreeing that “my organization places a priority on innovation based on evolving customer needs and pain points to define the future of our market.”
Along the same lines, healthcare companies that reported investing in customer-focused initiatives reported 2% higher revenue growth than those that reported investing in supplier-focused initiatives.
Doing more business online naturally means that organizations are at greater risk for cyberattacks, and cybersecurity also showed up in the West Monroe report. It noted that the energy and utilities industry has shown leadership in this area. Nearly three-quarters (74%) of energy and utilities respondents strongly agreed with the statement: “Our cybersecurity team ensures we have best-in-class security defenses, proactively monitors for threats and implements improvements to the system as needed.”
However, while excellent cybersecurity may be a mark of digital maturity, the report didn't find that it correlated strongly with fast growth in the same way that some of the other characteristics mentioned in the report did.
The survey measured organizations on 16 characteristics associated with digital maturity. Those with the highest overall scores also reported the highest revenue growth. West Monroe Partners stated, “There is a distinct relationship between digital maturity and revenue growth. There is a relationship to net profit margin too, albeit less pronounced than the growth rate.”
While most enterprise leaders likely didn’t need any more convincing about the importance of digital transformation, this is clear evidence that going digital isn’t just a good theory — it is also very good for business.
The survey measured organizations on 16 characteristics associated with digital maturity. Those with the highest overall scores also reported the highest revenue growth. West Monroe Partners stated, “There is a distinct relationship between digital maturity and revenue growth. There is a relationship to net profit margin too, albeit less pronounced than the growth rate.”
While most enterprise leaders likely didn’t need any more convincing about the importance of digital transformation, this is clear evidence that going digital isn’t just a good theory — it is also very good for business.
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