Despite enthusiasm for digital manufacturing, few companies have realized its potential at scale, according to our new survey. Six success factors can help, McKinsey argues.
As businesses mature digitally, they stand apart from rivals. A survey by MIT SMR and Deloitte found digitally mature companies are better at developing digital leaders, pushing decision-making deeper, and responding faster to the marketplace, and are more likely to experiment.
As the digital age unfolds, executives face new strategic choices about how to take advantage of fast-moving technology innovations. Prior research showed that value comes not simply from adopting digital technology, but from using technology to transform the way a company does business. But while the term digital transformation is much in vogue, relatively less attention is paid to the design of the organization that must fulfill the chosen digital strategies. New digitally-enabled possibilities for designing, organizing, and managing productive work challenge leaders to make choices about how to operate (organizational design choices) as well as what to produce (strategic choices). This paper builds on interview and survey data from over 150 organizations to develop a model of digital organizational design. We identify a core set of organizational characteristics (including mindsets, practices and resources) that underpin enterprise development of Digital Capability to improve customer experience, internal operations or employee engagement. We introduce the concept of Digital Dexterity, the sustained organizational ability to rapidly adapt and self-organize to take advantage of emerging digital possibilities, and show that these same organizational characteristics are associated with digital dexterity. We argue that in a digital economy where technologies continue to improve exponentially, digital dexterity is the hallmark of a true Digital Organization. In order to build an enterprise for long term digital advantage, executives need to cultivate the unique set of characteristics of a Digital Organization that collectively enable both Digital Capability and Digital Dexterity.
In today’s economy, digital capability is critical for growth and competitiveness. A decade ago, only one tech company was among the top ten global firms by market capitalization. Today, seven are on that list. The tech sector is even more dominant in forward-looking metrics: it accounts for only 15% of the top US firms but 24% of the fastest-growing companies. And in the Fortune Future 50, our ranking of the firms best positioned for future growth, tech companies account for 52% of the top 25 Leaders and 76% of the top 25 Challengers.
Risk aversion, weak customer focus, and siloed mind-sets have long bedeviled organizations. In a digital world, solving these cultural problems is no longer optional. Shortcomings in organizational culture are one of the main barriers to company success in the digital age. That is a central finding from McKinsey’s recent survey of global executives (Exhibit 1), which highlighted three digital-culture deficiencies: functional and departmental silos, a fear of taking risks, and difficulty forming and acting on a single view of the customer.
Information technology is revolutionizing products. Once composed solely of mechanical and electrical parts, products have become complex systems that combine hardware, sensors, data storage, microprocessors, software, and connectivity in myriad ways. These smart, connected products - made possible by vast improvements in processing power and device miniaturization and by the network benefits of ubiquitous wireless connectivity - have unleashed a new era of competition. Smart, connected products offer exponentially expanding opportunities for new functionality, far greater reliability, much higher product utilization, and capabilities that cut across and transcend traditional product boundaries. The changing nature of products is also disrupting value chains, forcing companies to rethink and retool nearly everything they do internally. Smart, connected products raise a broad set of new strategic choices for companies about how value is created and captured, how to work with traditional partners and what new partnerships will be required, and how to secure competitive advantage as the new capabilities reshape industry boundaries. For many firms, smart, connected products will force the fundamental question: What business am I in? This article provides a framework for developing strategy and achieving competitive advantage in a smart, connected world.
Many financial services organisations understand they must modernise their digital strategy to remain (or become) market leaders.
CIO Strategies: Digital transformation projects and the need to spread the use of technology throughout organisations is good news for tech chiefs.
In the digital age, many firms find the pace of change in their industry is increasing. New competitors emerge from previously unrelated industries and innovative digital business models can quickly disrupt well-established market dynamics. Such jolts in the competitive landscape require existing players to be continually innovating while also “keeping the lights on” to maintain existing revenue streams. This paper reviews the IS literature on ambidexterity – the ability to simultaneously pursue strategies of resource exploration and exploitation – and advances a theoretical model for embedding innovative business models into existing organizational routines. It contributes to the literature by reconciling the structural and contextual views of ambidexterity through introducing a dynamic ambidexterity framework. This approach proposes ambidexterity as a dynamic capability which requires differing mechanisms in the initiation and implementation phases of innovation.
A new generation of IT leader has been arriving on the scene, more in-tune with the business, more collaborative, and with better soft skills, but a legacy tangle of tech stands in the way of moving towards the future.
Companies may be able to get digital transformations off the ground by separating digital from conventional IT, but that approach is not sustainable. Here’s a better way. Technology organizations are now expected to play a central role in helping companies capitalize on new digital capabilities - connectivity, advanced analytics, and automation, for instance. These capabilities can help them build deeper relationships with customers, launch new business models, make processes more efficient, and make better decisions.
Digitization involves standardizing business processes and is associated with cost cutting and operational excellence. In essence, it imposes discipline on business processes that, over the years, were executed by individual heroes in a variety of creative (but not always optimal) ways. SAP, PeopleSoft, and other integrated software packages that burst onto the scene in the 1990s helped lead the way into more digitizing, but it remains a painful process. Today, companies are confronting something new and different: digital. Digital, of course, is an adjective. It refers to a host of powerful, accessible, and potentially game-changing technologies like social, mobile, cloud, analytics, internet of things, cognitive computing, and biometrics. It also refers to the transformation that companies must undergo to take advantage of the opportunities these technologies create. A digital transformation involves rethinking the company’s value proposition, not just its operations. A digital company innovates to deliver enhanced products, services, and customer engagement. Digital is exciting, thrilling — and a bit unnerving!
Technology has long been used to improve how we learn, but today's digital advances, particularly with social media, have taken learning in powerful new -- and for some -- entirely unexpected directions.
Digitization is causing a radical reordering of traditional industry boundaries. What will it take to play offense and defense in tomorrow's ecosystems? Rakuten Ichiba is Japan's single largest online retail marketplace. It also provides loyalty points and e-money usable at hundreds of thousands of stores, virtual and real. It issues credit cards to tens of millions of members. It offers financial products and services that range from mortgages to securities brokerage. And the company runs one of Japan's largest online travel portals—plus an instant-messaging app, Viber, which has some 800 million users worldwide. Retailer? Financial company? Rakuten Ichiba is all that and more—just as Amazon and China’s Tencent are tough to categorize as the former engages in e-commerce, cloud-computing, logistics, and consumer electronics, while the latter provides services ranging from social media to gaming to finance and beyond.
Containers and cloud infrastructure have become the primary focus for CIOs and CTOs. A Gartner article revealed that containers and infrastructure are two of the top three strategic initiatives for IT organizations (the third is a connective fabric, which I will discuss momentarily). Enterprises are sinking massive amounts of resources into “containerization” and migration programs, but to what end? Modern architectures and infrastructure are just the tools in achieving your digital transformation; however, many organizations are adopting technology for technology’s sake. An article on the Chef blog by Julian Dunn brilliantly articulates this problem, pointing out the haphazardness in the early days of virtualization and providing guidance for those seeking to adopt containers today. Instead of checking all the boxes for containers or clouds, enterprises need to strategize on how to use those tools and, more importantly, focus on what they are building with those tools. Only then can enterprises complete their digital transformation.
Those who design and steer the development of the technology landscape can mitigate risk by setting operating standards and promoting cross-functional collaboration. Most CEOs understand the potential upside of a digital transformation. If they can get it right, their companies can be more efficient, more agile, and better able to deliver innovative products and services to customers and partners through multiple channels. About 70 percent of executives say that over the next three years, they expect digital trends and initiatives to create greater top-line revenues for their businesses, as well as increased profitability.
Incumbents should go on the attack with their own online exchanges. Digital attackers in most industries can severely drain the profits and revenues of incumbent players, as we have shown in recent research. Companies under pressure, though, can limit the damage if they adopt an offensive corporate strategy, one that involves willingly cannibalizing existing businesses and reallocating resources aggressively to new digital models.
Companies that commit to continually updating their enterprise architectures can deliver goods and services as fast as Internet-born competitors do. Internet retailers can make crucial changes to their e-commerce websites within hours, while it takes brick-and-mortar retailers three months or more to do the same. Cloud-based enterprise software suppliers can update their products in days or weeks. By contrast, traditional enterprise software companies need months. Why can’t established companies move as quickly as their Internet-born competitors? In part, because they are limited by their enterprise architecture, which is the underlying design and management of the technology platforms and capabilities that support a company’s business strategies.
While the concept of a digital twin has been around since 2002, it’s only thanks to the Internet of Things (IoT) that it has become cost-effective to implement. And, it is so imperative to business today, it was named one of Gartner’s Top 10 Strategic Technology Trends for 2017. Quite simply, a digital twin is a virtual model of a process, product or service. This pairing of the virtual and physical worlds allows analysis of data and monitoring of systems to head off problems before they even occur, prevent downtime, develop new opportunities and even plan for the future by using simulations.
Digitization demands a focus on cooperation and collaboration that is unprecedented for most enterprises.What distinguishes companies that have built advanced digital capabilities? The ability to collaborate. MIT Sloan Management Review’s research finds that a focus on collaboration — both within organizations and with external partners and stakeholders — is central to how digitally advanced companies create business value and establish competitive advantage. These companies recognize that digital transformation blurs — and sometimes obliterates — traditional organizational boundaries and demands a focus on cooperation and collaboration that is unprecedented for most enterprises. Based on a global survey of more than 3,500 managers and executives, MIT Sloan Management Review and Deloitte’s third annual report on digital business found that the most digitally advanced companies - those successfully deploying digital technologies and capabilities to improve processes, engage talent across the organization, and drive new value-generating business models - are far more likely to perform cross-functional collaboration. More than 70% of these businesses use cross-functional teams to organize work and charge them with implementing digital business priorities. This compares to less than 30% for organizations in an early stage of digitization.
Digital Transformation with Business Process Management: BPM Transformation and Real-World Execution
BPM is essential to a company's survival in today's hyper-speed business environment. The goal of Digital Transformation is to help empower enterprises to compete at the highest level in any marketplace. This book provides compelling award-winning case studies contributed by those who have been through the full BPM experience. The case studies describe the processes involved to generate successful ROIs and competitive advantages. Digital transformation describes the changes associated with the application of digital technology in all aspects of human society. These world-renowned authors and leading edge case studies will help you understand the meaning and impact of Digital Transformation and how you can leverage that transformation using BPM you already have. Learn how to extend that into core processes that run the business and thus engage more meaningfully with your customers. The authors discuss the impact of emerging technologies, the mandate for greater transparency and how the ongoing aftershocks of globalization have collectively impacted predictability within the business enterprise.
Over 600 respondents to the Harvey Nash / KPMG CIO Survey provided additional information, including company name, to take part in further analysis by Massachusetts Institute of Technology Center for Information Systems Research. MIT CISR is one of the world’s leading IT research organisations.
In addition to the potential impact on businesses, these trends provide a significant opportunity for enterprise architecture leaders to help senior business and IT leaders respond to the digital business opportunities and threats by creating signature-ready actionable and diagnostic deliverables that guide investment decisions.
There are several ways of thinking about platforms. Economists tend to view platforms as essentially containers for transactions. Canonical examples: Amazon, Airbnb, iTunes, Netflix, Uber. One of the economic advantages of these transaction platforms is that they also act as container for content. When it launched in 1995, the Amazon website boasted a million books - far more than you could find in any bookshop. (This is related to the concept of the Long Tail.) So it becomes a place you can browse books and check reviews, independently of any intention to buy.
Most companies want their businesses to keep pace with digital startups, but end up bogged down by the need to fix the daily challenges that their decades-old IT systems create. How do you redesign and rebuild major infrastructure while keeping the day-to-day work going? This kind of challenge is often referred to as “repairing the airplane while you’re flying it.” But a more instructive analogy might be the redesign of a major city’s infrastructure.