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Copyright © 2018 Deloitte Development LLC. All rights reserved. 12018 MIT Sloan Management Review and Deloitte Digital global research study

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Gerald C. Kane is information systems professor at Boston College’s Carroll School of Management and guest editor for MIT SMR’s digital leadership content initiative.

Anh Nguyen Phillips is a senior manager at Deloitte Services LP where she leads research on digital transformation and other strategic initiatives.

Ally MacDonald is senior associate digital editor at MIT SMR.


Coming of Age DigitallyMIT Sloan Management Review Deloitte Digital 2018 Global Study

Gerald C. Kane, Boston College & Anh Phillips, Deloitte


‘When last we left our heroes’ in the digital journey

2015 2016 2017 2018

Strategy, not technology

drives digital transformation.

‘Doing digital’ is not enough. Organizations

need to align their strategy, talent, and culture to become digital businesses.

Digitally maturing organizations put digital

at the core of the business, cultivating an environment to support digital and becoming

talent magnets.

Learning and leadership models are evolving as

companies digitally mature.

https://www2.deloitte.com/cn/en/pages/technology-media-and-telecommunications/articles/strategy-not-technology-drives-digital-transformation.html

https://www2.deloitte.com/insights/us/en/topics/emerging-technologies/mit-smr-deloitte-digital-transformation-strategy.html

https://www2.deloitte.com/insights/us/en/focus/digital-maturity/digital-mindset-mit-smr-report.html

https://www2.deloitte.com/insights/us/en/focus/digital-maturity/coming-of-age-digitally-learning-leadership-legacy.html


Forthcoming, Spring 2019

• From MIT Press

• Pre-order your copy today!


Digitally maturing companies adapting their strategy, culture and talent to a digital environment are also changing how they learn and how they lead

Shifting the lens on digital maturity

1. As top-down hierarchical corporate mandates give way to distributed decision-making, new ways of learning and leading are often required

Role of Learning and Leadership in the Digitally Maturing Organization

3. Legacy or older, established companies, often limited by incremental aspirations and relying on previous success, can accelerate their digital transformation by adopting new learning and leadership models.

2. These evolving models can impact not only the institution, but individuals as well:

- Individual employees should be capable of making decisions in a fast-paced environment

- Corporate leaders should learn how to lead by influence rather than dictate

L E A R N I N G

T A L E N TS T R A T E G Y

C U L T U R E

L E A D E R S H I P


Undertaken by Deloitte Digital in collaboration with MIT Sloan Management Review(MIT SMR)

7years researching digital’s business evolution

Annual surveys of business executives, managers, and analysts from organizations globally to understand how the digital enterprise is evolving

27,300+

EXECUTIVE INTERVIEWS

C-suite and other executives, subject matter specialists

150

1/3 @>$1BREVENUE

2011 - 2018

TOTAL RESPONSES

COUNTRIES161

40%UNITED STATES

60%INTERNATIONAL

28INDUSTRIES

Copyright © 2018 Deloitte Development LLC. All rights reserved. 92018 MIT Sloan Management Review and Deloitte Digital global research studyCopyright © 2018 Deloitte Development LLC. All rights reserved. 92018 MIT Sloan Management Review and Deloitte Digital global research study

PlayState

C U R R E N T

O F


POLL:

Imagine an ideal organization utilizing digital technologies and capabilities to improve processes, engage talent across the organization, and drive new and value-generating business models.

How close is your organization to that ideal on a scale of 1–10?


Companies appear to be coming of age in a digital environment

1. Respondents were asked to “Imagine an ideal organization utilizing digital technologies and capabilities to improve processes, engage talent across the organization, and drive new and value-generating business models. How close is your organization to that ideal?” (Answers on a 10 point scale where 10 is most mature). Numbers do not total 100 percent due to rounding.

2. 2017 data sourced from, “Achieving Digital Maturity,” MIT Sloan Management Review and Deloitte University Press, July 2017.

Digital maturity is growing according to survey respondents2

Current digital maturity% all 2018 study survey respondents1

Early

25%Developing

44%Maturing

30%

Change from 2017-18 -9% +3% +5%

1 2 3 4 5 6 7 8 9 10

3%

8%

14% 13% 14%17%

15%

8%

4%3%


Organizations are struggling to get their employees to take risks…but organizational challenges persist

% RespondentsBiggest challenge impacting company’s ability to compete in a digital environment

20%

13%

12%

10%

9%

8%

8%

5%

4%

4%

7%

0% 5% 10% 15% 20% 25%

Experimentation (getting people to take risks)

Ambiguity and constant change

Buying the right technology

Distributed decision-making

Transparency, democratization of information

Fluidity in organizational structures

Multigenerational workforce issues

Transient, rapidly changing team structures

Workforce augmentation

Segmentation of customer bases

Other / don't know

Results are consistent across all maturity levels


Doing business in a digital environment is fundamentally different than in the past 20th-century era

…and the business environment is very different

% Respondents

What is the main difference between working in a digital environment vs a traditional one?

Respondents were free to enter whatever they wished. More than 3,300 responses were coded and categorized.

Open Text Question

1%10%

13%16%

18%19%

23%

0% 5% 10% 15% 20% 25%

Other / no differenceGreater connectivity

Improved access to, use of toolsImproved productivity

Flexible, distributed workplaceCulture and mindset

Pace of business


The difference between talk and action

The role of digital business is:(TOP RESPONSE)

34% 30% 66%

Early Developing Maturing


Organizations and individuals are evolving how they learn in a digital environment

Learning:


Individuals are evolving how they learn

How often do you need to update your skills to work effectively in a digital environment?

73%

Continuously:

At least everysix months:

44%


But employees are not satisfied with the learning opportunities they receive

50%44% 42%

38%33% 30% 28% 24% 24%

14%

94% 93% 94% 93% 91%96%

87%83% 85%

93%

0%

20%

40%

60%

80%

100%

Tech & IT Media Prof Services

Telecom Banking Retail Providers Auto Mfg Consumer Goods

Industry

Need for learning not being addressed by companies I need to update my skills at

least annually to succeed in a digital environment

I am satisfied with how my company is developing me for a digital environment

% Respondents

Learning and Development Gap


How learning happens needs to expand

Most important opportunity your company provides you to develop in a digital environment(Top 3 responses shown here for digitally maturing companies)

On-the-job training may be more important than traditional training programs.

27% 26% 16%On-the-job

learningTraining programs

Supportive work environments


Companies can’t simply decide to be more experimental, they should also provide the necessary supportive and transparent environment in which employees and the organization overall can learn

Learning must also be cultivated at the organizational level

0%

20%

40%

60%

80%

100%

1 2 3 4 5 6 7 8 9 10

ExperimentalMy organization encourages new ideas to be shared and tested at all levels of the organizations

SupportiveMy organization encourages feedback and iteration to learn how to work in new ways

TransparentLeaders in my organization share results from failed experiments in constructive ways that increase organizational learning

% Respondents who agree or strongly agree

Digital Maturity

Digitally maturing companies create an environment for learning



Untapped potential

OF EARLY COMPANIES SAY THEY LACKSUFFICIENT TALENT

72%

ARE DEVELOPING OR UTILIZING THEIR EXISTING TALENT

<20%UNTAPPED

POTENTIAL OF EARLY STAGE COMPANIES


The talent gap

Provides its employees with the resources and/or opportunities to thrive in a digital business

Effectively utilizes the digital knowledge, skills, and experience held by employees

Lacks sufficient talent today to support organization's digital business strategy

The talent ‘gap’ is impacting both early and developing companies

My organization…



Maturing and developing companies tend to first look inside, not out

E A R L Y D E V E L O P I N G M A T U R I N G

1 Hire Contractors/Consultants

Develop Employees

Develop Employees

2 Don't know External Relationships

Recruit Digital Employees

3 External Relationships

Hire Contractors/Consultants

External Relationships

4 Develop Employees

Recruit Digital Employees

Recruit Digital Leaders


Lack of digital opportunities may increase attrition

CIO VP/Director SalesStaff

3% 2%

7%

29%31%

43%

Percentage who plan to leave their company in one year or less given digital trends

Company does provide opportunities to develop in a digital environment

Company does not provide opportunities to develop in a digital environment

VP/DIRECTORS ARE

15xAS LIKELY TO LEAVE IN ONE YEAR


All levels of the organization are called to lead in a digital environment

Leadership:


The majority of companies surveyed note a need for new leadership in a digital environment. Only the maturing companies though appear to be doing something to address the need.

Executive leadership should evolve as well

% Respondents

My organization needs to find new leaders for the organization to succeed in the digital age. (Strongly agree / agree)

My organization is effectively developing leaders who have the capabilities necessary to lead the organization in a digital environment.(Strongly agree / agree)

Digital Maturity

Leadership Gap

Even maturing companies need new leaders

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1 2 3 4 5 6 7 8 9 10



Survey results suggest leaders need to set the stage for their employees to excel, creating the conditions that will foster agility, collaboration and innovation

.. creating conditions to enable success

What would you like your leaders to have more of to navigate digital trends?

(Top 3 responses) composite score

Direction: Providing vision and purpose

Innovation: Creating the conditions for people to experiment

Execution: Empowering people to think differently

What is the biggest difference between working in a digital business environment vs. a traditional one? (Top 3 responses)

Increased pace of business 23%

Culture, mindset and values 19%

Flexible, distributed workplace structure

18%

#1

#2

#3


Culture:


Three levels of culture

Artifacts

What we see. What a newcomer, visitor, or consultant would notice (e.g., dress, physical

layout, furnishings, degree of formality)

Espoused values Underlying assumptions

What they say. What we would be told is the reason things are the way they are and should be

(e.g., company philosophy, norms, and justifications).

What they deeply believe in and act on. Unconscious taken-for-

granted beliefs about the organization and its work,

purpose, people, rewards, and so on.


Three things about digital culture

DRIVES ADOPTION

3Digital culture is critical to driving digital business adoption.

1DISTINCT

Digital culture is distinct and consistent, associated with digital maturity.

INTENTIONAL

2Digital culture is intentional and actively cultivated.


1. Digitally maturing organizations have a distinct culture

My organization…

ACCEPTS RISK OF FAILURE

ACTIVELY INCREASES AGILITY

ENCOURAGES EXPERIMENTS & CONTINUAL LEARNING

RECOGNIZES & REWARDS COLLABORATION

INCREASINGLY ORGANIZES AROUND CROSS-FUNCTIONAL TEAMS



Percentage of organizations who are actively implementing initiatives to strengthen their culture by bolstering risk-taking, agility, and collaboration

2. Digital culture is intentional

Digitally Maturing

Early Stage

80% 23%


3. Culture can drive digital business adoption

Percentage who say their organization primarily drives digital business adoption and engagement internally through:

Expecting employees to be motivated to embrace digital

business opportunities

Cultivating a strong digital business culture that strives for risk taking, collaboration,

agility, and continuous learning

Mandating from management



Transforming Organization:

‘Coming of age’ in a digital world likely requires new ways of learning and leading

T H E L E G A C Y


Competencies of the past can create traps that stymie new value creation and hinder digital maturity

Legacy organizations face unique challenges

19% 26% 23% 29% 25%

40%44% 46%

47%45%

41%30% 31% 24% 30%

0%

20%

40%

60%

80%

100%

Digital Maturity by Company Age % Respondents

Company Age

Only

32%are pushing decision-making down into the organization

Only

36% of employees facilitate or mostly facilitate change

Only

29% are developing their leaders for a digital environment

Companies >50 years


<10 years >50 years10-25 years 26-50 years Average


When my organization implements digital business initiatives, they tend to start as:

N O T E : C H A R T S D O N O T T O T A L 1 0 0 P E R C E N T D U E T O N / A R E S P O N S E S

MOSTLY SMALL EXPERIMENTS

MOSTLY BIG, ENTERPRISE-WIDE EFFORTS

BOTH SMALL & BIG ENTERPRISE-WIDE EXPERIMENTS

Scale: experimentation is not enough



Structure: organize your company for digital maturity

Our organization is increasingly organized around cross-functional project teams to implement digital business priorities

Managementstructure and practices interfere with our ability to engage in digital business successfully


Organizational structure and digital maturity


Companies are increasingly pushing decision-making down into the organization as they digitally mature, necessitating new skills and new ways of learning for employees

Individuals are being asked to do more

My organization is increasingly pushing decision-making authority down in the organization.

% Respondents who agree or strongly agree

24%18%

23%

32% 32%

43%

50% 52%

63%67%

1 2 3 4 5 6 7 8 9 10

Digital Maturity



Which functional areas are primarily leading your organization’s digital progress?Strategy: Who Is Leading Digital Progress?


Takeaways C O N C L U D I N G


Legacy companies that recognize the need to adopt new learning and leadership models can be better positioned to succeed in a digital environment

Opportunities exist to better learn and lead

Learning Leadership

Org

aniz

atio

n Organizations can learn more by developing new knowledge through practice and experimentation

Organizations improve leadership through influence and transparency

Ind

ivid

ual On the job learning

enables continuous individual learning

Individual leadership needs to be pervasive across the organization

Beginning Principles to Consider

• Commit to developing leaders and employees for digital.

• Create pockets of fresh thinking and innovation.

• Experiment and encourage new ways of learning.

• Leverage learnings from success and failures.


Many Silicon Valley companies follow a Zoom Out & Zoom In approachTo Have Vision, You Have to Look:

Zoom OutConsider a 10+ year

time horizon by defining what the market will

likely look like and what customers will expect.

Zoom InAddress the next six to

twelve months and identify the two or

three business initiatives that will have the

greatest potential to accelerate movement

toward the longer-term destination.

“Strategy time frames greater than 10 years may be needed in a digital environment”

- JOHN HAGEL, CO-CHAIRMAN OF THE CENTER FOR THE EDGE, DELOITTE CONSULTING LLP


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As used in this document, “Deloitte” means Deloitte Consulting LLP, a subsidiary of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte USA LLP, Deloitte LLP and their respective subsidiaries. Certain services may not be available to attest clients under the rules and regulations of public accounting.

Copyright © 2018 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited

Thank you.

Global Study and study data ©Massachusetts Institute of Technology.

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Copyright © 2018 Deloitte Development LLC. All … › marketing.mitsmr.com › events › ...drives digital transformation. ‘Doing digital’ is not enough. Organizations need