Global technology consultancy Thoughtworks describes organizations that can respond to market changes with continuous adaptation as “evolutionary organisations”. He argues that instead of focusing only on technological change, organizations should focus on building capabilities that support continuous reinvention. Although many organizations recognize the benefit of adopting agile approaches in their technology capabilities and architectures, they have not extended these structures and ways of thinking throughout the operating model, which would allow their impact to extend beyond the d ‘a single transformation project.
Global spending on digital transformation is growing at a rapid pace: 16.4% annually according to IDC. The firm’s 2021 “Global Digital Transformation Spending Guide” predicts that annual transformation spending will reach $2.8 trillion by 2025, more than double spending in 2020.1 At the same time, Boston Research Consulting Group shows that 7 out of 10 digital transformation initiatives fall short. of their goals. Organizations that succeed, however, achieve nearly twice the growth in profits of those that fail and more than twice the growth in the total value of their firms.2 Understanding how to make these transitions successful, then, should be ‘key interest for all business leaders. .
This MIT Technology Review Insights report is based on a survey of 275 corporate leaders, supplemented by interviews with seven digital transformation experts. Its key findings include the following:
• Digital transformation is not just a technological problem. The adoption of new technologies by itself does not set up the organization to continue to adapt to changing circumstances. Among respondents, however, transformation is still synonymous with technology, with 70% planning to adopt new technology in the next year, but only 41% pursuing changes to their business model.
• The business environment is changing faster than many organizations realize. Most respondents (81%) believe their organization is more adaptable than average, and nearly all (89%) say they are keeping up with or ahead of their competitors, suggesting a wide gap between the rapidly evolving reality and executives’ perceptions of their preparation.
• All organizations must build capabilities for continuous reinvention. The only way to keep up is for organizations to continually change and evolve, but most traditional businesses lack the strategic flexibility to do so. Almost half of business leaders outside the executive suite (44%), for example, say organizational structure, silos or hierarchy are the biggest obstacle to their company’s transformation.
• Focusing on customer value and empowering employees are key to the evolution of the organization. The most successful transformations prioritize creating customer value and improving the customer and employee experience. Meeting evolving customer needs is the constant source of value in a world where everything is changing, but many traditional organizations lack this long-term vision, with only 15% of respondents most concerned about not meeting customer expectations if they do not transform.
• Rapid experimentation requires the ability to fail and recover quickly. Organizations agree that iterative and experimental processes are essential to finding the right solutions, with 81% saying they have adopted agile practices. However, they are less confident in their ability to execute decisions quickly (76%) or to shut down initiatives that are not working (60%).
