Introduction
A large multinational conglomerate ("Company X") had been on a journey of organizational transformation for decades, expanding from its origins in one industry into diverse business segments. Under the leadership of its CEO, Company X adopted an empowerment model in 2005 to provide frontline staff with entrepreneurial authority to quickly meet changing customer needs. This decentralized thousands of internal groups into autonomous micro-enterprises and "activity platforms." In this context, our MIT research team studied Company X’s progress toward becoming a fully digital organization. Through interviews, surveys, and performance data, we assessed digital leadership, organizational characteristics, capabilities, and outcomes. The purpose was to provide recommendations for how Company X could solidify its digital foundation and ensure all parts of the enterprise advanced together.
Key Findings
Digital leadership comprises a set of distinct behaviors such as establishing a shared vision for digital transformation, building productive IT-business relationships, establishing digital governance practices, and engaging the broader workforce in the transformation. The research revealed that most digital leadership behaviors were in place at Company X. However, there was some inconsistency across roles in how employees perceived the extent and nature of digital leadership. This inconsistency was most pronounced between different levels of the organization, and between the legacy and more contemporary businesses.
Digital organization is characterized by a particular combination of mindset, practices, workforce, and resources. Collectively, these characteristics position an enterprise for digital dexterity. Survey analysis showed that many of these facets were already present:
Mindset: There was enthusiasm for adopting digital solutions, representing a strong digital mindset. However, many in the organization still perceived digital as risky or threatening to their roles or their functions.
Practices: Digitization, collaborative learning, and data-driven decision-making were entrenched. But some believed core processes were not fully automated.
Workforce: Engagement was generally high, but digital skills were uneven across the organization. Concerns about acquiring and retaining digital talent were widespread.
Resources: Most survey respondents reported having access to data and tools to work effectively. However, many believed Company X's digital tools didn't yet match its aspirations.
The use of digital technologies to transform how business is conducted is called digital capability. Analysis revealed that Company X’s digital capabilities clustered around customer experience, operations efficiency, learning/innovation, and partnering. At Company X, the practice of collaborative learning was the most significant factor associated with all four types of digital capability. Other aspects of digital organization were associated with different types of digital capability to different degrees.
Digitally-enabled performance describes the contribution of digital technologies to aspects of platform performance, such as revenue growth, product innovation, or improvements in relationships. Performance gains were acknowledged, especially for product and service innovation. However, concrete benefits in the form of revenue and market share growth were perceived as more modest, likely due to the timeline; these would take more time to emerge.
Recommendations
To fully transition its workforce and realize digital benefits, Company X was advised to tailor communications to better align understanding of digital leadership roles. It was also advised to intervene in those groups and platforms where digital was still perceived as a threat, to cultivate more positive associations. Investing in skills development and encouraging digital activity was particularly important in the company’s legacy platform businesses. Helping the different platform businesses address customer expectations based on their business realities was also recommended.
Conclusion
While Company X had a strong digital foundation overall, the research revealed opportunities to strengthen its approach. Inconsistency in perceptions of digital leadership pointed to a need for greater alignment. Targeted interventions and skills investments would unify the workforce to ensure all parts of Company X advanced together on their digital journey.