Digital Transformation Tips for Early-Stage Organizations
In partnership with Deloitte, MIT Sloan Management Review has investigated digital maturity among organizations for the past five years, focusing on what separates companies at the different digital transformation phases. The survey typically examines organizations at the early, developing, and maturing stages of digital transformation and attempts to identify what might be holding back the less mature ones.
In 2019, the research concluded that the gaps are primarily the result of a company’s innovation approach. It revealed that digitally maturing companies are not only innovating more, but they are also innovating differently.
In particular, it’s now evident that maturing companies invest more in collaborations established internally through cross-functional teams and externally through digital ecosystems. Combining these two approaches significantly boosts organizational agility, allowing for accelerated digital transformation.
A Recap of the Findings
As we’ve mentioned, the most evident trend among digitally-maturing companies is the greater innovation rate. At least 81% of respondents cited innovation as a strength of their organization, compared to only 10% of early-stage companies. Aside from that, digitally-maturing organizations also report the following;
- Greater latitude for employees to innovate: Regardless of their positions, employees at digitally maturing organizations have a more generous backing to innovate. About 5x as many respondents from maturing companies say their organizations provide them with the resources necessary to innovate.
- Greater likelihood of external collaboration: Among digitally maturing companies, 80% of respondents say their organizations cultivate partnerships with other organizations. This figure is only about 30% among early-stage companies. It’s also notable that the digitally maturing companies rely more on relational governance and less on detailed contracts. For early-stage companies, it’s the other way round.
- More use of cross-functional collaboration: Not only are digitally maturing companies more likely to use cross-functional teams, but the way they utilize these teams is also different. They give the teams a greater autonomy, and their numbers are evaluated as a unit. Better still, a large proportion of members of these teams also feel that they have the management’s backing, compared to early-stage companies.
- Digitally maturing organizations are more agile: They are more responsive to change, and more prepared for eventualities. This agility often comes with an increased risk of outpacing the company’s governance policies. And that’s another area where maturing companies are ahead. The companies are more likely to have ethics and procedures in place to serve as sturdy guardrails around their increased autonomy.
The study involved a global survey of more than 4,800 managers, executives, and analysts, and 14 interviews with executives and thought leaders.
Steps Early-Stage Companies Can Take to Fast-Track Digital Maturity
Early-stage companies may feel left behind. But, there’s no need to panic. We all have to start somewhere.
However, that said, considering the increasing role of technology in everyday life, it’s important to accelerate your digital transformation efforts.
The following are simple steps to consider;
Look beyond your organization to drive innovation
An excellent template here is how Enroll Hero partnered with MetLife to benefit both companies. Enroll Hero is an online tool that compares Medicare health insurance plans and offers customized recommendations to its users. MetLife, meanwhile, offers health insurance plans.
Although, in the end, the partnership didn’t recommend any of MetLife’s plans, both companies benefited immensely. Enroll Hero was able to expand its reach, develop its product, and grow its business. Meanwhile, MetLife was able to better understand the interests and needs of its customers by analyzing the response rates.
Early-stage companies need to think in this line. Moving away from traditional partnerships to competitive partnerships provides a way to tap into new innovations or market opportunities.
Reevaluate your support for cross-functional teams
A key benefit of cross-functional teams is enhanced access to resources such as diverse perspectives, broader skill sets, and new ideas.
But, these teams work best when there’s full management backing. More importantly, it’s essential to pair that autonomy with clear team objectives understood by both team members and external stakeholders. It’s also imperative that these cross-functional teams are continuously evaluated against performance metrics and individual plus team level.
Keep in mind that a cross-functional team starts with people from multiple departments. They don’t necessarily need to answer to managers from whichever lines they’re officially assigned. Instead, consider directing that accountability to a project manager or a corporate innovation executive.
Learn cheap, learn fast
Learn cheap, learn fast is all about learning from mistakes along the road. The way CarMax operates its cross-functional teams provides useful insight into how this approach works.
CarMax has virtually done away with traditional planning. Instead, the company expects innovations to bubble up through product teams. What’s unique about the entire approach, however, is that CarMax doesn’t give the teams elaborate instructions. “We tell them what to do, but not how to do it,” says Shamim Mohamed, the company’s chief information and technology officer (CITO) and senior VP. This strategy is used alongside another incredibly productive approach – the 2-week sprint.
The result is that each team conducts at least 25 experiments per year. For just ten teams, that would be 250 experiments. Not all experiments need to be successful. But, amongst the 250, they usually identify dozens of highly successful solutions.
Establish ethical guidelines and policies
This is another critical area if you’re going to take the next step in your digital transformation. As Greg Bexter, Chief Digital Officer at MetLife puts it, ethical guidelines and policies are like car brakes. Most people think that the brakes are to make cars slow down. But it’s the opposite – brakes allow cars to go fast.
If you choose to accelerate your digital transformation, you need similar brakes to keep you from crushing if you run into something unexpected. You need strong ethical guidelines and policies to guide your operations.
The reason you do need these breaks is that companies that encourage autonomy and experimentation are faced with a greater likelihood of mistakes. A strong culture of integrity, honesty, and transparency allows you to make mistakes with minimal risks, legal or otherwise.
About United Perfectum
United Perfectum is a reliable source of digital solutions and innovations. We strive to provide small and medium-sized enterprises with cutting edge technologies to reduce costs, boost profitability, and accelerate growth. Contact us today to learn more about digital transformation.