What Executives Can Do to Improve Digital Maturity and Drive Transformation
A recent global research study suggests that the manufacturing industry is behind the digital curve compared to other industries. When it comes to embracing digital strategies as an opportunity for business transformation, the industry as a whole is falling flat.
According to research released in July from MIT Sloan Management Review and Deloitte Digital, more than 70 percent of respondents from ages 22 to 60 want to work for a digitally-enabled company or a digital leader. Survey respondents in the manufacturing industry rated their companies’ average digital maturity very low relative to other sectors, coming in 16 out of 18 sectors analyzed. These findings present an opportunity for a shift in approach to digital adoption by manufacturing organizations and their leaders.
While it may be tempting to simply suggest that the solution to the reported dissatisfaction in the industry is for companies to more aggressively use new technologies to drive digital progress, the research suggests otherwise. Rather than focus on the technology channels themselves, the most effective way to drive transformative digital change is to focus on the business fundamentals of strategy, culture, and leadership.
Digitally maturing companies develop and leverage strategies that seek to transform the business. Only 15 percent of respondents from companies in the early stages of digital maturity say their company has a clear and coherent digital strategy compared to more than 80 percent in maturing companies. Less digitally mature organizations also tend to focus on individual technologies, and have strategies that are operational in focus.
Digital strategies in leading organizations are developed with an eye on transforming the business to create greater efficiencies and rise above competitors. The manufacturing sector has an opportunity to improve exponentially in this area, ranking among the bottom five of out of 18 sectors in percentage of respondents saying their company has a clear and transformative digital strategy.
Digitally mature organizations embrace risk as a cultural norm. Respondents from less digitally mature companies consider their organization’s fear of risk and experimentation as a major barrier to success compared to maturing companies who accept failures as learnings, and an integral. Not surprisingly, fewer respondents from these early stage companies view their companies as innovative; only 26 percent vs. 83 percent for maturing companies.
Here as well, the manufacturing sector is coming up short with slightly more than a half of respondents rating their companies as innovative. Being more accepting of risk may require a cultural change not only for manufacturing leaders, but also for their employees who could be just as risk averse as their managers and will need support to become bolder.
Digital maturity is driven from the top. Maturing organizations are nearly twice as likely as less digitally mature entities to have a single person or dedicated group leading the effort. In addition, employees in digitally maturing organizations are highly confident in their leaders’ understanding of digital trends.
The manufacturing sector ranks among the lowest in the percentage of respondents who believe their company leaders understand relevant digital trends and emerging technologies. Leaders don’t have to be technology experts, but they should understand how technology can transform their business and be able to articulate that understanding to employees, and provide access to digital tools that fuel innovation.
Three areas manufacturers can focus on to accelerate digital progress:
- Develop and implement an enterprise-wide digital strategy that goes beyond implementing technologies. Target improvements in innovation, decision-making and skill building. Make sure you communicate the strategy to employees in a consistent, engaging and effective way to help ensure company-wide by off.
- Create a company culture that fosters digital initiatives, experimenting and innovation. It may be necessary to change your company mindset to increase collaboration and risk taking. This means being ok with projects that fail, learning from them, and looking for new opportunities that emerging technologies bring.
- Lead the digital vision. Regardless of how packed a leader’s strategic agenda may be, understanding what can be accomplished at the intersection of business and technology is critical. Too many executives today are fluent in one and not the other. Keep in mind employees are paying attention to their leaders’ digital passion and understanding.
Across industries and across age groups, employees want to work for digital leaders, but just focusing on the next emerging technology won’t get your company where it needs to be. To attract and retain talent and compete effectively in the near and long-term, manufacturing executives should look to the business fundamentals of strategy, culture, and leadership to get their organization on the successful digital track.
Jerry Kane is the MIT Sloan Management Review guest editor for the Digital Transformation Strategy Initiative.
Doug Palmer is is a principal in the Digital Business and Strategy practice of Deloitte Digital.