To a great extent, digital strategy drives digital maturity. Only 15% of respondents from companies at the early stages say that their organizations have a clear and coherent digital strategy. Among the more digitally mature, the number leaps to 81%. Effectively communicating strategy is equally important, and maturing companies excel at it. Among respondents from companies at early stages, 63% agree or strongly agree that they know what their companies are doing in the digital domain. In maturing organizations, 90% do.
Our research found that early-stage companies are falling into the trap of focusing on technology over strategy. Digital strategies at early-stage entities have a decidedly operational focus. Approximately 80% of respondents from these companies say improving efficiency and customer experiences are objectives of their digital strategies. Only 52% say that transforming the business is on the digital docket.
In maturing companies, on the other hand, digital technologies are more clearly being used to achieve strategic ends. Nearly 90% of respondents say that business transformation is a directive of their digital strategies. The importance that these organizations place on using digital technology to improve innovation and decision making also reflects a broad scope beyond the technologies themselves. In companies with low digital maturity, approximately 60% of respondents say that improving innovation and decision making are digital strategy objectives. In digitally maturing organizations, nearly 90% of strategies focus on improving decisions and innovation.
“Senior leadership must really understand the power of digital technologies,” says Carlos Dominguez, president and COO of Sprinklr, an enterprise social technology provider. “This is as much a transformation story as it is a technology one.”
Creating a Strategy That Transforms
When developing a more advanced digital strategy, the best approach may be to turn the traditional strategy development process on its head. Benn Konsynski, the George S. Craft Distinguished University Professor of Information Systems & Operations Management at Emory University’s Goizueta Business School, proposes that rather than analyzing current capabilities and then plotting an organization’s next steps, organizations should work backwards from a future vision.
“The future is best seen with a running start,” Konsynski comments. “Ten years ago, we would not have predicted some of the revolutions in social or analytics by looking at these technologies as they existed at the time. I would rather start by rethinking business and commerce and then work backwards. New capabilities make new solutions possible, and needed solutions stimulate demand for new capabilities.”
As an example, Konsynski points to the spice and flavor manufacturer McCormick & Company. Given the importance of personalization and digital technology’s ability to provide it, McCormick developed FlavorPrint, an algorithm representing the company’s flavors as a vector of 50 data points. Currently, McCormick uses FlavorPrint to recommend recipes to its consumers. But the vision is much bolder. McCormick thinks of FlavorPrint as the Pandora of flavorings, which has prompted the organization to see itself as a food experience company rather than a purveyor of spices.
Eventually, all McCormick flavors will be digitized, and the company will be able to tailor them to regional, cultural and even individual personal tastes. Although all the needed technologies are not yet available, they likely will be in the coming years, and the strategy to take advantage of them is already in place. The FlavorPrint product has shown such promise that McCormick recently spun it off into its own technology company, Vivanda, with former McCormick CIO Jerry Wolfe as its founder and CEO.
The Talent Challenge
The ability to adapt quickly to change also stands out as an important capability. Perry Hewitt, chief digital officer at Harvard University, says agility is more important than technology skills. Emory professor Konsynski concurs: “The 21st century is about agility, adjustment, adaptation and creating new opportunities.”
Training to fill skill gaps is increasingly offered online and on a just-in-time basis. As part of its new approach to learning, The Walt Disney Co., for example, has implemented a platform that offers video, mobile and digital content to employees as needed. “Three or four years ago, learning at Disney happened in classrooms,” says Steve Milovich, senior vice president of global human resources and talent diversity, Disney/ABC Television Group and also senior vice president of employee digital media, The Walt Disney Company. “Now we offer content such as TED-like talks featuring Disney executives that allow employees to seek knowledge when and how they need it.”
Just as important as developing talent is reducing the risk of losing it. On average, nearly 80% of respondents say they want to work for a digitally enabled company or digital leader. The sentiment crosses all age groups, from 22 to 60, nearly equally. “The myth is that digital technology is a young person’s game,” says Scott Monty, the former executive vice president of strategy at Shift Communications, now principal at Scott Monty Strategies. “At one point, women over 55 represented the fastest-growing Facebook demographic. This is about how humans interact, not just about how Millennials do.”
Employees of all ages are on the lookout for the best digital companies and opportunities. Many respondents from our research are not merely indifferent to their company’s current reaction to digital trends, they are dissatisfied. (See Figure 6.) Businesses need to make sure they are engaging employees in service of the organization’s digital aims. That engagement is the function of two critical components of strategy execution: culture and leadership.