Digital disruption has been a true game-changer for organizations, taking many of them from a “survive and thrive” mentality to one of “evolve or die,” with companies like Blockbuster and Borders serving as well-known cautionary tales. The latest global research study by MIT Sloan Management Review and Deloitte Digital focuses on the race to digital maturity, which is proving to be a marathon rather than a sprint. The study reveals five key practices that distinguish more mature digital organizations, starting with making systemic changes in how they organize themselves.
The most digitally mature organizations studied have moved beyond traditional hierarchical structures, understanding that they get in the way of agility. More than 70 percent of these mature organizations report being organized around cross-functional teams versus only 28 percent of companies at early stages of digital development. These mature organizations are also far less likely to report that their structures keep them from being able to effectively operate digitally.1
Organizational structure and digital maturity2
Moving to a team-based structure can help activate the digital organization in several ways:
- Breaks down functional silos to unite all parts of the organization in the effort to meet strategic and operational goals.
- Builds in agility, as teams can be quickly formed and disbanded to meet specific needs.
- Fosters an iterative environment, where ideas can quickly be tested and accepted, rejected, or evolved because mission-critical decisions are handled at the team level rather than having to progress through a lengthy decision-making hierarchy.
- Expands thinking and challenging the status quo as team members from different disciplines and parts of the organization share, reconcile, and build on their diverse perspectives.
These qualities of team-based structures can mean organizations spend less time talking about doing digital business and more time being a digital business. Showing a commitment to digital can also come with a positive ripple effect: the tendency toward stronger employee “stickiness.” Our previous research into digital practices showed that employees are twice as likely to jump ship when their company is at the low end of digital maturity.3
Making the shift—understanding your digital DNA
Organizing around cross-functional teams is both a characteristic of digital maturity and a by-product of it—a kind of virtuous circle in that digitally mature organizations increasingly use teams to get work done, and digital maturity inherently fosters a less hierarchical, more agile (team-based) way of operating.
So how do you start the circle in motion?
Activating digital in your organization starts with understanding its digital DNA—23 traits that our research has shown characterize digital maturity and “being digital.” Evaluating your organization against these DNA traits reveals strengths and gaps and helps prioritize the traits you want to invest in to become more digitally mature.
Realize, though—and this is important—digital maturity is an ongoing journey. The MIT Sloan-Deloitte study specifically refers to the highest-maturity organization as “digitally maturing,” acknowledging that there’s no real endpoint marking arrival at full maturity. Even digitally native companies that have never operated any other way are still evolving their digital maturity. For example, Facebook (as well as Deloitte, for that matter) has looked at its own digital DNA and is using it as important input into its continued digital evolution.
Making the shift—Leaders are critical
Great leaders are necessary for any business to excel, and much of what makes leaders great doesn’t change in the digital organization. They still need to understand how to be collaborative, to inspire, and to make business decisions. But digital adds another dimension: the need for leaders to understand the changing context they lead in.
While a traditional leader may need to build talent to grow in their depth of skills and capabilities, a leader in a digital context may have to develop talent to be more agile—able to rapidly prototype, market test, and refine products or concepts. Digital leaders may also have to influence a wider range of stakeholders, both within and outside the organization. They set the tone, they set the pace, they model the behaviors and vision, and the articulation of that vision, and get people to work together toward common goals.
Building (or buying) these leaders should be a top priority of any organization striving for digital maturity—which, frankly, should be every organization! (For more context, see this series of posts by our colleague, Noah Rabinowitz, about transformational leaders.) There isn’t an organization we talk to that doesn’t have “becoming digital” as part of their strategy, recognizing that it’s necessary for the organization to achieve its goals. Formally (re)organizing around networked teams—or at least encouraging an environment that supports such teams—is an essential step toward digital maturity.
1G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron, and N. Buckley, “Achieving Digital Maturity,” MIT Sloan Management Review and Deloitte University Press, July 2017.
3G. C. Kane, D. Palmer, A. N. Phillips, D. Kiron and N. Buckley, “Aligning the Organization for its Digital Future” MIT Sloan Management Review and Deloitte University Press, July 2016.