My colleagues and I at Deloitte Digital and MIT Sloan Management Review have just completed our fifth annual digital business study and are excited to share our findings. Today, we’re releasing our 2019 report, Accelerating Digital Innovation Inside and Out: Agile Teams, Ecosystems, and Ethics, based on a survey of more than 4,800 managers, executives, and analysts from organizations around the world.
Each year we explore the significant challenges and opportunities organizations face as they seek to digitally transform. This includes examining the shifts that companies are seeing around strategy, structure, culture, talent, and leadership.
This year’s research focuses on how digitally maturing organizations are driving innovation in a digital environment through the power of networks and teams, specifically how these companies are moving beyond their “four walls” to leverage digital ecosystems to increase innovation and how cross-functional teams within an organization are formed and supported to help in the process.
- Digitally maturing companies are increasingly participating in ecosystems to drive innovation. As in prior years, we asked respondents to evaluate the digital maturity of their organizations on a scale from 1 to 10. Three maturity groups were observed: early (1-3), developing (4-6), and maturing (7-10). Our research shows that digitally maturing companies are more likely to collaborate with external partners and participate in digital ecosystems, instead of traditional partnerships. Slightly more than 80 percent say their organizations cultivate partnerships with other organizations to facilitate digital innovation compared to only one third of early stage companies. These ecosystems entail less formal, controlled relationships, relying more on relational governance than on detailed contracts.
- Cross-functional teaming within the organization is also a critical source of innovation. Digitally maturing companies are more likely to use cross-functional teams and those teams look different than in less mature companies. Cross-functional teams at digitally maturing companies are given greater autonomy, and their members are often evaluated as a unit. Participants on these teams are also more likely to say their cross-functional work is supported by management. Nearly three quarters of respondents from digitally maturing companies say their senior leadership effectively create an environment in which cross-functional teams can succeed, while less than 30 percent of respondents from early stage companies say the same.
- More teaming externally and internally requires greater flexibility and autonomy but with that comes the possibility of making mistakes, including ethical ones. We’ve observed in our research that companies need policies that create sturdy ethical guardrails around this increased autonomy. Digitally maturing companies are more likely to have ethical policies in place to govern digital business. Policies alone are likely not enough. Only a third of respondents across maturity levels say their companies are talking enough about the societal and ethical implications of digital business. Even less than half of CEOs (46 percent) say their organization’s leaders spend enough time thinking about and communicating the impact their organization’s digital initiatives have on society.
In today’s rapidly changing marketplace, a company’s belief in the importance of innovation is an important enabler of digital maturity. Companies that want to advance digitally need to build on that belief and take concrete steps to drive innovation further. A company’s approach to innovation can have a decisive impact on its progress toward full digital transformation. Read the full report Accelerating Digital Innovation Inside and Out: Agile Teams, Ecosystems, and Ethics to learn more as your company continues its innovation efforts.
Dr. Doug Palmer is a principal in Deloitte Digital, Deloitte Consulting LLP, working globally with leading firms to establish digital strategies and implement digital technologies. With over 20 years of experience in developing and executing technology and business strategies, he works closely with Deloitte’s alliances and technology start-ups to bring digital technologies and business processes to bear on client problems. Doug leads Deloitte’s research on Digital Business with MIT Sloan Management Review which is focused on understanding how businesses advance and mature in a digital world.