Digital maturity starts at the top

director using tablet in boardroomAccording to a recent survey 71% of businesses except to reach digital maturity by 2019. The research conducted by Coleman Parkes and sponsored by Ricoh Europe also found that digital maturity was a priority for 77% of businesses in Europe and the Middle East and that 73% believe that achieving digital maturity will directly lead to an increase in profits.

For the purposes of the survey an organisation is considered to be digitally mature if it uses sophisticated tools to drive performance and demonstrates an on-going commitment to technology, technology-led initiatives and digitally managed processes. Digital is already having a major impact on many markets and will eventually disrupt every industry and business. Becoming a digital business is, therefore, a must for every business that wants to have a long-term future. So seeing over three-quarters of respondents citing digital maturity as a priority is encouraging.

And these organisations are right to be confident that investing in digital will improve their financial performance. Previous research by MIT Sloan Management Review and Capgemini Consulting found that companies recognised as digital leaders generated 9% more revenue and 26% more profit than their industry average. They also achieve a 12% higher market valuation. Becoming a digital business is not just a defensive move.

Based on my own experience and numerous other studies on digital transformation, I have to say though that I found the headline statistic that over 71% of organisations believe they will have reached digital maturity within five years somewhat surprising. Many businesses are yet to even start their journey to become a digital business whilst others are engaging in isolated digital initiatives – usually around digital marketing or the customer experience – but without defining an overall vision for the organisation in the digital world. These companies have much work to do before they can consider themselves to be digitally mature. And, on their current path, it will take a lot longer than five years to achieve digital maturity if they get there at all.

Indeed, even the Ricoh study hints that this may be an overly optimistic view. Half of the survey respondents identified challenges such as changing the way the organisation works to keep up with new technology already in place and aligning technology, processes and ways of working as obstacles to reaching digital maturity. And 50% also said that they would need the help of an external partner to reach maturity.

But perhaps most worrying is that 41% of respondents say they do not have an engaged, active senior team concerned and interested about keeping their organisation digitally mature. How on earth do these organisations believe they are going to reach digital maturity without the support, involvement and leadership of their senior executives?

The importance of having an engaged and supportive senior team is a recurring theme in research about digital transformation (see Time for change at board level). Strong leadership is a key requirement for any transformation programme to be successful. And when that transformation spans the entire organisation and involves reinventing how the business works then this leadership has to come from the top.

At a recent CIO conference the attendees were asked whether they felt their C-suite colleagues were equipped for the changes that digital would bring to their organisation. I was not surprised by the response to this question: 69% said their peers were not ready for digital. Whilst this was a straw poll taken at an event the response was consistent with other research that has demonstrated low levels of digital understanding and hence engagement from boards and senior executives.

Reaching digital maturity within five years is a realistic and achievable goal for any organisation. But only if its leadership team is fully engaged with, and supports, the changes that will need to be made to get there. Becoming a digital business is not just another change initiative. Digital requires a new perspective on the organisation. It is about looking at the business from the customer’s perspective and creating a business model, products and services based on this perspective. Executives cannot lead this type of transformation unless they are equipped with the right skills and knowledge. An organisation cannot reach digital maturity if its leadership team is digitally immature.

I recently published a white paper that describes the skills, knowledge and capabilities that board members must possess to ensure their organisation becomes a successful digital business. Building this level of expertise is not a quick process, however, so the white paper also provides guidance on how organisations can fill the digital knowledge gap at board-level in the short-term.

With the right leadership a business stands a much better chance of reaching digital maturity. But if the leadership team does not get digital, it is unlikely the organisation will ever reach this state, whether the senior team is engaged with its transformation efforts or not.

However, a word of caution, for any business that is working towards digital maturity over a five year timescale: you may not have that long. Digital has already radically changed some industries and is beginning to have an impact on many others. Established companies that were not prepared for digital and that could not adapt quickly enough have already disappeared as a result. If your organisation is not digitally mature and does not have a plan in place for how to get there as quickly as possible then you may become one of the next victims of digital disruption. But if you have a leadership team that gets digital and understands the urgency with which it must transform then you stand a much better chance of reaching digital maturity before your markets are disrupted by someone else.

If your organisation wants to improve its senior team’s awareness and understanding of digital, or if it is looking for an adviser that can provide assurance, oversight and guidance on technology and digital initiatives then please contact me or visit my website, axin.co.uk.

 

Trackbacks

  1. […] The importance of having an engaged and supportive senior team is a recurring theme in research about digital transformation. Strong leadership is a key requirement for any transformation programme to be successful. And, as in digital, when that transformation spans the entire organisation and involves reinventing how the business works then this leadership has to come from the top. […]

  2. […] Strong leadership is a key requirement for any transformation programme to be successful. And, as in digital, when that transformation spans the entire organisation and involves reinventing how the business works then this leadership has to come from the top. […]

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