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Digital delivers major impact for 21% of enterprises. What about the rest?

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Gianni Giacomelli

Chief Innovation Leader

September 15, 2016 - Four crucial points on the impact of digital technologies on global organizations have emerged from new research by Harvard Business Review Analytic Services in association with Genpact. Having questioned over 680 executives across functions and industries – from financial services to manufacturing and technology – these results offer a helpful guide for digital investments.

  1. Digital is a competitive weapon but its impact is unevenly distributed. While optimistic about the future, only 21% of executives see significant results from digital transformation in their enterprises today. These leaders consider digital a key contributor to growth, and say that it plays a major role in establishing a superior competitive position.

    But why is success not more pervasive, and what can we learn from the leaders?

  2. The challenge isn't technology prowess, budget, or access to extraordinary talent. The study indicates that the biggest hurdles are the inability to experiment, change management, legacy systems, a risk-averse culture, and organizational silos.

    But leaders see things differently, as silos and an aversion to risk are lower barriers. And crucially, an enterprise's business architecture—beyond the technology component—seems to influence the results: 53% of organizations with strong alignment between customer expectations and their organization's middle- and back-office functions/systems are achieving significant positive business impact from digital, compared with 3% of those with little alignment.

  3. The necessary leadership, skills, vision, and approach are often fragmented or immature. These qualities don't even appear to fully reside in the CIO's organization, the traditional home of enterprise technology and business transformation. Indeed, only around a third of respondents think that the IT organization can align digital interventions to business outcomes; design customer-focused solutions with, for example, design-thinking approaches; use Lean to integrate middle- and back-office functions and systems; and consistently act on insight from data.

  4. Leaders focus their efforts differently. Only half of respondents believe that their companies have an enterprise-wide digital strategy, but digital leaders (77%) stand out. Only 40% of respondents say that their companies use metrics to pinpoint interdependencies across organizational processes, but 71% of leaders do. And tenured employees remain the backbone of change, as only 38% of companies say that they rely on digital natives for their digital efforts—although leaders depend on them more.

    The design and implementation approaches respondents use are not seen as very effective at overcoming legacy system and process challenges, but leaders are better off. And while partners offer some help, leaders seem to find the right third parties to support them.

Against this backdrop, we question whether the key to digital success lies in technical acumen or something else in this study: Accelerating the pace and impact of digital transformation.

Our experience shows that as large companies evolve they are supported by four pillars. They (i) infuse adequate business domain expertise into the transformation program, (ii) methodically focus on the end user's journey through design-thinking or equivalent methods, and (iii) harness Lean practices that enable end-to-end process design beyond sales and marketing and into middle- and back-office functions. This results in (iv) better digital technology and analytics choices.

These pillars make digital work. We call this approach Lean DigitalSM.

The findings from this research are essential reading for any business. I'm keen to hear your views on the results.