Why Companies are Struggling with Their Digital Transformation?
Revisiting MIT and Capgemini’s Research After 6 Years
Capgemini, the global consulting company, published in 2018 a new and updated research “Understanding Digital Mastery Today: Why Companies are Struggling with Their Digital Transformation”. This is an updated version of previous joint research of Capgemini and the MIT Center of Digital Business Initiative, published in 2012 and named “The Digital Advantage: How digital leaders outperform their peers in every industry
.” This research was the foundation of one of the most popular books on digital transformation and written by Dr. George Westerman, Dr. Didier Bonet and Dr. Andrew McAfee titled “Leading Digital: Turning Technology into Business Transformation
” published in 2014.
Prof. Sivan & Raz Heiferman presented the Digital Mastery framework in chapter 10 of their e-book “Doing Digital
” published in Hebrew, the chapter that described the Digital Maturity concept. The Digital Mastery framework is based on two capabilities required to succeed in the digital transformation: digital leadership and digital capability. Based on those two capabilities, the original research mapped about 390 organizations on a two-dimensional matrix and divided the organizations into four categories:
- Digital Masters
The main goal of the new research was to provide an updated view of the state of digital transformation by using the same research methodology. 757 organizations participated in the 2018 research.
The updated report presents a cautious picture – the progress after 6 years was small and slow. In the customer experience area there was real progress but, in other areas like business processes, the progress was slow (if at all). Companies are still struggling with issues like defining a clear vision for the digital age, digital governance and IT-Business alignment.
The conclusion of the updated research is that slow progress has been made in 6 years of digital transformation. The main findings were:
- Companies are facing difficulties in adapting the new digital technologies due to the dizzying pace of the introduction of new digital innovations (e.g. artificial intelligence, IoT, automation).
- Organizations might have been over-optimistic in 2012 and, now they understand better the magnitude and challenges of the digital transformation.
- There are many business models disruptions in many industries, which are challenging the current business models and value chains.
- The expectations of customers, employees, and markets are rising and put significant pressure on the organizations.
So how could companies cope with these difficulties? Here are some tips from our e-book on the required activities to make sure your organization will transform successfully:
- Board of directors and executive management commitment – the top leadership of the organization must be committed and engaged to the digital transformation. This is a significant transformation, and as such should be steered by the top leaders. The vision and strategy should be defined and well understood by all the stakeholders. A digital roadmap should be defined and executed. Chapter 11 in our e-book defines the methodology and the steps an organization should follow.
- A Digital Leader should steer and lead the journey – the organization has to define clear responsibility for leading the journey. It could be a CDO, CIO or somebody else. Chapter 13 in our book explains the different alternatives for such a position.
- Your employees must be full partners of the digital transformation journey – Chapter 10 in our e-book elaborates on the Digital Maturity topic and emphasize the importance of employee engagement. We consider this engagement as the key to a successful journey. The management and the CDO should invest in sharing with the employees the message of the importance of this transformation, opening a two-way channel so they can understand the “why” and the “what.”
- You have to upskill your employees – trained and digitally skilled employees are key to a successful transformation. You have to invest in your human resources to make sure they understand the new technologies and business processes.
- Make sure data and analytics are a top priority in the transformation program – leveraging the data and using advanced analytics to convert the data into insights, is key to digital transformation. Chapter 7 in our e-book is dedicated to the importance of data and analytics in the digital era.
- You have to invest in your organization’s digital culture – digital culture is an important ingredient of the digital transformation. By digital culture, we mean agility and flexibility, innovation, and open culture. Chapter 5 in our e-book is devoted to innovation and how an organization should make innovation as a part of its DNA.
- Using advanced technologies – part of the digital transformation requires the use of technology to improve the customer experience and internal business processes. Chapter 2 in our e-book is devoted to present some of the advanced technologies that are part of what we call the “third digital age.”
To summarize, to follow the digital journey, successfully, organizations should mobilize their leadership, culture, talents, technologies, and processes to make sure they succeed in their transformation.
You can find Capgemini research here
(registration required for the full report download).