Competing priorities is at the top of the list of challenges for many organizations when defining their digital transformation strategies. One of the goals of this report is to provide data, analysis and case studies that will help organizations prioritize and identify criteria for strategic decision-making.
18 key findings are explained below. (First published in November 2016.).
1 – Most organizations are in the Developing stage—a midway point.
52% of the organizations in the 2016 research are in the Developing stage, with the others split between Starting at 32% and Maturing at 16%. See descriptions of the stages of maturity and the Foundational Framework, used to determine maturity scores for the past 3 years.*
2 – Primary goals for digital transformation are focused on efficiency.
The primary goals of transformation initiatives are to increase efficiency and improve existing business models and processes. They are followed by improve the customer experience and engagement and improve employee experience and engagement. There is then a big drop for the goals of facilitating innovation, strengthening the digital mindset and improving decision-making. At the bottom of the list we have finding new business models and supporting talent management. More here.
3 – Although senior leaders are increasingly on board, most are not yet demonstrating sustained commitment.
Senior leaders are beginning to get involved, but most have not yet demonstrated sustained commitment and the conviction that digital is a strategic asset for the organization. 33% of the organizations say their top-level managers understand and support digital initiatives. This was the case in only 18% of organizations in the previous report. There is considerable progress to be made, however, because only 15% report their managers show sustained commitment and conviction that digital is essential to the way we work (vs. an even lower 8% in the previous year).
4 – Compelling visions need tangible, actionable strategies: top down is not enough.
Digital transformation today is either primarily a top-down strategy without sufficient grounding in the organization, or multiple independent initiatives with insufficient leadership support. It’s hard to define a compelling vision for digital transformation. It’s still harder to build a strategy that is tangible and actionable, meaning it is understandable, memorable and relevant for everyone in the organization. Very few organizations have managed to do this so far.
In Keys to an Actionable Strategy in the chapter From Vision to Reality, the report takes a look at a segment of 38 organizations that have defined a compelling vision for their digital transformation to see how they are making it tangible and actionable. One example: most of the 38 have clearly defined how digital transformation fits into the strategic vision of the organization (vs. only 40% of the full survey.)
5 – Digital capabilities that foster unpredictable outcomes are not yet widespread.
Technologies that enable people to share information, communicate and co-create documents are now deployed in most organizations. However, deployment of capabilities for activities with unpredictable outcomes such as crowdsourcing and problem-solving are less common.
6 – The mobile workforce has a considerable way to go before being truly mobilized.
The mobile-equipped workplace is becoming a reality through provision of corporate devices and policies allowing use of personal devices. Even so, there are still insufficient mobile applications and services available in most organizations. The report includes a list of 14 types of mobile applications that are either implemented or in developing or piloting stages. Mobile applications for daily work and tasks are implemented in fewer than 30% of organizations. Piloting and developing rates are even lower. It is therefore not surprising to see a high reliance on email by workers away from the office.
7 – Organizations enable individuals and teams, but stop short when it comes to mobilizing horizontally across the enterprise.
Work practices based on cross-organizational sharing are less common than those based on individual or team practices. For example, individuals can set their own objectives, but these objectives are not necessarily always visible across the organization. Teams can set their own goals, but it is rarer for them to work out loud, sharing with the organization as a whole.
8 – Visibility and openness are key in an entrepreneurial work culture, even more than autonomy for people and teams.
The report looks at a small group of 15 organizations that say they have a very entrepreneurial work culture. The differences between them and the others is primarily in work practices. There is a much higher degree of working out loud, greater freedom to challenge practices and business models, and the ability to shortcut enterprise processes when necessary. (See my post here or on the Drucker Europe Society blog: Seeding an Entrepreneurial Work Culture.)
9 – The customer-facing workforce—the eyes and ears of the organization— is often disconnected from corporate systems and information flows.
In the last two reports, and again in 2016, fewer than half the organizations said it was easy for their customer-facing workforce to find the information they need, provide rapid service, collaborate with their customers and colleagues, and in general have a smooth and efficient work experience.
The 2016 report looks at the organizations that say it is easy, in order to find out what they are doing differently. Among the factors identified: decision-making about digital matters is more distributed, and includes operational managers. The Success Factor Checklist in the section At the Edges identities other differences.
10 – Few organizations are approaching customer data strategies systematically.
Improving customer service is the top goal for customer data strategies but it is very early days. Only 17 organizations self-assessed their customers’ digital experience as ahead of the competition. In Ingredients for a Customer Data Strategy in the chapter At the Edges we take a look at what the 17 are doing differently. Among the differences: they involve customers, the customer-facing workforce and senior people directly in product and service innovation activities, which is not the case for most organizations.
11 – Learning is easier than remembering.
Learning in the natural flow of work is becoming easier. E-learning, real-time access to experts and communities of practice facilitate learning while working. 56% now say it is easy, compared to 23% three years ago. Responsibility for learning lies primarily with people themselves, rather than their manager or the HR department.
Remembering, or retaining knowledge and know-how when people leave the organization is extremely difficult. In the last three editions of the report, fewer than 15% of organizations expressed confidence in retaining knowledge and know-how when people leave. These organizations differ from the others in several ways, but two primary distinctions are that people tend to work out loud and leadership styles in the organization are open and participatory.
12 – Obstacles around decision-making persist after many years.
Many organizations face decision-making obstacles when defining their digital transformation strategies. Too many competing priorities has been at the top of the list for the last three reports for 50% of the organizations. 30-40% says internal politics and slowness because of the need for consensus are severe obstacles that hold us back. These challenges are not eliminated, but drop considerably in organizations where there is a work culture of a strong, shared sense of purpose.
13 – People and stories trigger change.
As the workplace evolves, organizations encounter challenges triggered by management’s fear of losing control or a general hesitation to rethink work practices. In nearly all cases, the primary change factor is behaviour—that of senior leaders and that of peers and colleagues. Senior management behavior is cited by 54% as a key change factor, followed by a compelling story of why, internal success stories and behavior of colleagues.
14 – Change agents are key, especially at the Maturing stage.
Change agents (or activists) are people inside organizations working to bring about change through actions that may not be within their scope of work and may not even be approved by management. The 2016 data show that they are more important at the Maturing stage than at the Developing and Starting stages. (See my post Change Agents—nearly as important as senior leaders.)
15 – Technology is a top investment priority; education and change are low; data and analytics will increase in priority in 2017.
Technologies and development are at the top of the priority list in 2016 for all organizations regardless of their digital maturity. However, data and analytics along with education and change will move up the list in 2017. In 2017, 40% of the Maturing stage plan to increase their investment in education and change management, compared to 20–25% of the other stages. As organizations increase in maturity, they feel a need to invest in facilitating change and offering learning opportunities for the people.
16 – Investment decision-making factors vary based on maturity.
Factors that influence decision-making differ for the three stages of maturity. For example, Maturing organizations place building our foundational capabilities as part of a long-term transformational strategy at the top of the list. Organizations at the Starting stage place cost-savings and increased revenue as top factors.
17 – Awareness is growing that digital and organizational transformation is a journey, not a quantifiable destination.
The requirement to have a quantified ROI (return on investment) or business plan before investing has decreased, and budgets and resources are more available today than in past years although they still remain a challenge for some. (See my post: Senior Management Almost On Board.)
18 – The vision is broad and deep, the journey is long.
We asked participants to indicate how close they feel their organization is to this vision on a scale of 1 to 10:
Imagine an organization where the workforce is engaged, leadership is open and participatory, and the work culture is based on trust and purpose. Digital transformation has both streamlined and enriched work practices; employees and customers collaborate and innovate; and the organization operates in an entrepreneurial mode—encouraging initiatives and accountability throughout.
Only 4% responded very close, 17% close, most were split between on the way at 39% and far at 32%, with 8% stating very far.
A special thanks to Modus, research supporter for 2016-2017.
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The 10th edition of my research included 311 people from 27 countries who answered over 100 questions online. The data were collected in the second quarter of 2016.
Why “The Organization in the Digital Age”?
Over the past ten years, this research has explored the internal digital work environment in organizations. For the last two years the focus has been on the organization in the digital age, a subtle but significant shift from the term digital workplace. Culture, leadership and work practices—internally and with customers—are critical dimensions that were explored in the research.
* The degree of maturity is based on self-assessment where participating organizations respond to an extensive online survey with over 100 questions. A selection of answers are mapped to a Foundational Framework Scorecard.
Most participating organizations have taken part in the research for 3 to 4 years, and some as long as 8 or 9 years.