In the study Understanding Digital Mastery Today: Why companies are struggling with their digital transformations, we asked more than 1,300 managers how far they progressed with their implementation. The result shows a clear need for action: Companies are still not taking the implications of digital transformations for their employees seriously enough.
The first wave of digital transformation has been implemented. According to a recent Bitkom study, the majority of German companies are now actively pursuing a digitization strategy in order to optimize their customer experience, operational processes, or entire business models. We have examined how far companies have come with their digital transformation since the previous study six years ago. Clear progress should be expected, but the outcome is different: today organizations are hardly further advanced in the implementation of the digital transformation than they were six years ago.
Only a minority of companies have the right digital competence (39% internationally, 31% in Germany) and the appropriate transformation management (35% internationally, 30% in Germany). The biggest omission, however, concerns the human factor: companies have so far failed to sufficiently integrate their employees actively into the digital transformation and prepare them accordingly for the changes. Ian Rogers, chief digital officer at LVMH, puts it in a nutshell: “The greatest moment for an organization is when they understand and assume that digital transformation is not a technical problem, but a cultural change.”
What are Digital Masters doing better?
They are investing more in their digital capabilities: Digital Masters understand their customers better, establish standard processes and use data across all areas of the company. Seventy-one percent of Digital Masters use new technologies not only in customer processes, but also in operational processes. Above all, their leadership skills set them apart from other companies. Four recommendations can be derived for accompanying transformations:
- Digital Masters have created a strong digital culture that is constantly being tested and developed. Sixty percent of Digital Masters give their employees responsibility for implementing new ideas. It is important to provide continuous feedback and reward behaviors that are conducive to the company’s digital culture. Under the leadership of CEO Satya Nadella, Microsoft has reinvented itself in the direction of a learning organization, thereby tripling its share price.
- Digital Masters have implemented structures and governance that are strongly linked to the digital vision. Sixty-one percent of Digital Masters report that they have adapted role descriptions and KPIs to the transformation goals. On average for all study participants, this is only the case for 33%. “The Board and the CEO must be fully behind the transformation program,” says Mats Munkhammar, senior vice president and CIO/IT director of Green Cargo, a Swedish logistics company. “Besides, you have to get the organization excited about the program and ensure its involvement.”
- Digital Masters empower their employees. They create a good environment for learning and experimenting and work actively to close competence gaps. In almost 70% of Digital Masters, employees have the necessary skills, while this only applies to a quarter of companies that are still at the beginning of their digital transformation.
- Digital Masters work in new structures between business and IT. Almost two-thirds of Digital Masters say it’s easy for them to organize cross-functional teams – compared to 19% of beginners. Volvo, for example, has merged the roles of CIO and CDO. This will make it easier to jointly drive external customer centricity and innovation as well as internal digitization.
The path of digital transformation leads those companies that walk it together with their employees to success. Therefore, the vast majority of companies must take their role in the digitization strategy much more into account. As Munkhammar says: “without a clear plan for implementation, you won’t be able to convince the organization.”
About People and Organization
Capgemini invent’s People and Organization practice prepares and supports organizations, their leadership and their people for the transition into the digital age, focusing on different stakeholder groups as well as a conducive organizational setup and culture – enabled by our new approach to change management.
If you would like to discuss how we can help you, click here to contact us.