The digital imperative

hand_digital_printThe 2013 Digital Transformation report by MIT Sloan Management Review and Capgemini Consulting contains some sobering reading for CEOs and boards. Not least because of the headline findings that 78% of companies believe that achieving digital transformation within the next two years is critical but with 63% also saying that the pace of technology change within their organisation is too slow.

This doesn’t bode well for many companies. Digital will impact every industry and every company. And it is happening now. Any company that does not have a plan for digital or that cannot implement its plan successfully and quickly probably won’t survive the digital age.

It is surprising therefore that the MIT Sloan report also found that the reason most cited for lack of progress on digital initiatives is “no burning platform/no sense of urgency”. So it seems that whilst the vast majority of companies appreciate the importance of digital to their business and are aware that they only have two years in which to transform their organisations, almost 40% of them are not giving it a high enough priority.

But why is this? The return from digital is proven; in an earlier report called “The digital advantage: how digital leaders outperform their peers in every industry” MIT and Capgemini found that companies that were best at managing digital technology generated 9% more revenue and 26% more profit than their industry average. They also achieve a 12% higher market valuation. Those figures alone should be enough to generate a sense of urgency in most boardrooms. And if they are not, which is clearly the case in many companies given that almost two-thirds are unhappy with the pace of change, the fear of being disrupted by an organisation that has changed should make digital transformation an imperative for any business.

It is likely that many companies are operating on a shorter horizon, focused on today’s problems and issues. Two years probably seems a long way off in such companies so digital transformation is always given a lower priority, something that will get attention and investment when more pressing issues are under control. But that day will probably never come. And so the burning platform scenario will become a reality. Organisations that take this approach will find themselves playing catch-up when their markets get disrupted by someone who did give digital the time and investment it requires.

But digital transformation takes time. It is not something that can be done overnight or in response to a competitor going digital. And there is a lot more to it than just implementing new technology. Vision, culture, leadership, investment, legacy IT systems, and roles and responsibilities are all cited as being obstacles to digital transformation in addition to the organisation not having a sense of urgency. These issues are not specific to digital either. They can delay or derail any change initiative. In this respect digital is not a special case; organisations with a track-record of successfully implementing change are also likely to be successful at achieving their digital transformation.

The good news for companies that are struggling with their digital transformation is they’re not alone. However, time is of the essence. Digital is not an option or an add-on to the core business. It encompasses your entire business model. Transformation of any kind takes time to implement and digital is no different. If you want to survive and grow in the digital age you have to become a digital business. You have to act now to start your transformation and you need to give it a high priority across your entire organisation.

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