23 and You: How many traits of digital DNA does your company have? has been saved
23 and You: How many traits of digital DNA does your company have?
CFO Insights - November Edition
In this issue of CFO Insights, we’ll discuss how CFOs can assess how digitally mature their companies are, how digitally mature they need to be, and how they can absorb digital DNA.
- More digital by the day
- Traits of digital DNA
- Avoiding random acts of digital
- Get In Touch
Given how frequently the words “digital” and “transformation” appear side by side, it’s easy to overlook the real distance between them. After all, digital technology—understanding it, as well as implementing it—represents just one of many challenges organisations need to conquer to orchestrate a full transformation. And achieving a digital transformation transcends any single technology implementation, whether it be artificial intelligence (AI), internet of things (IoT), or virtual reality (VR).
This “DNA” of digitally mature businesses actually consists of 23 traits, identified by Deloitte Consulting LLP over three years. In parallel, Deloitte collaborated with MIT Sloan Management Review on a four-year research project, which drew more than 16,000 respondents from 157 countries and 28 industries and forms the basis of a new book, The Technology Fallacy: How People are the Real Key to Digital Transformation (MIT Press, April 2019). In the book, the authors tie Deloitte’s work on digital DNA to their research findings to provide a framework for isolating and prioritising the most critical digital traits, mapping a series of incremental changes aimed at infusing existing DNA with the digital kind.
For finance executives who understand the potential of digital technology, enumerating those traits can help overcome challenges as they strive to articulate goals and align the funding needed for digital transformation.
More digital by the day
In the Deloitte MIT/SMR research, 85 percent of respondents agreed that digital transformation was integral to business success. As broad and compelling as an organisation’s vision may be, however, achieving a high level of digital maturity means committing to a relentless day-by-day climb, making investments in infrastructure and skills that can test a company’s willingness and ability.
Companies will inevitably bump up against any number of obstacles, including burdensome governance processes, outdated practices, and leaders who may be overly attached to the status quo. Among survey respondents, 50 percent reported that traditional business practices interfere with the ability to engage successfully in digital business.
Those obstacles only serve to make a stronger case for imbuing a company with digital DNA. To do so, though, requires vigilant executives capable of making a strong case and ensuring that the company is investing in capabilities that reinforce their digital vision. They also have responsibility for aligning elements of the company culture—incentives, training, and hiring practices—with its emerging digital incarnation. An organistional culture powered by digital DNA supports employees eager to experiment with digital technologies to come up with innovative ways of creating value.
For digital DNA to flourish, it’s also up to those leaders to identify broad aspects of the organisation’s culture that need to be better adapted to a digital world. Then by making minimally viable changes—big enough to inject some digital DNA, but small enough to minimise resistance and rejection—companies can rebuild practices and mindsets, transforming hearts and minds. (See 'The technology fallacy: Embracing the human face of digital transformation,' CFO Insights).
Based on the 2018 Deloitte MIT/SMR research findings, many companies have a lot of growing up to do, given the digital traits many have yet to display. The report outlines three criteria to help lift the level of digital maturity.
Traits of digital DNA
The 23 traits associated with digital DNA are not meant to be consumed in one sitting. It’s not only impractical—different parts of the company are likely to have reached different levels of digital maturity—but also unnecessary. Some of the more digitally mature functions or units can serve as role models for the rest of the organisation.
For starters, organisations should focus on three to five traits from the full list below that could potentially have the most impact in the next 12 to18 months. Consider which traits, if spliced into your organisational DNA, could drive the most value in that time frame. Keep in mind, however, that the journey will likely mean remaking or replacing legacy systems, organisational structures, and workflows.
Read the full report for the list of dominant traits of digital DNA.
Avoiding random acts of digital
Digital transformation represents a threat to traditional ways of working. Tinkering with the technology, pursuing random acts of digital here and there, almost invariably sets off a backlash. Moreover, sporadic attempts to go digital may delude executives into thinking they are undertaking transformation but such activities will neither enable them to disrupt, nor protect them from disruption.
Instead, by nurturing digital DNA, an organisation can change in ways that enable it to do things differently and create new value-generating business models. CFOs and other executives, who may feel more comfortable dealing with costs and strategy, as opposed to culture, need to communicate a vision of their digital future. By educating and updating, they can win over employees—and, in the process, grow more and stronger digital DNA.
As urgent as the shift may feel, cultural evolution takes time—and there is no end state. Given how fast the world is changing, it’s impossible for companies to reach a final state of being digital; they must constantly identify, iterate, and evolve. In successfully balancing speed with perfection, they fortify their digital confidence. And in time, the aim should be that digital DNA becomes indistinguishable from the organisation’s everyday DNA.
CFO Insights - October Edition