By Jonas Andrén, Lokesh Dadhich, Johan Treutiger and Tove Kjellén, Arthur D. Little from global management consultancy Arthur D. Little
Most modern technologies are enabled by digital innovation and creativity to address new digital usages, behaviors and needs, rather than enhancing and supporting traditional methods. This means traditional, “analog-native” companies need to become digitally mature enough to compete in this environment, or they will be outperformed by “digital-native” players. However, our recent Digital Transformation Study has found that most traditional companies have yet to get out of the starting block. To aid digital transformation, we have identified four key areas for companies to consider.
How can we adapt organizational structures to accelerate transformation and become more digitally mature?
To match the agility and customer centricity of digital players, analog-native companies need to break down legacy functional silos. They must create organizations that foster cross-functional collaboration, with processes that flow seamlessly across departments, enabling the digitalization of products, processes, and touch points end to end. Collaboration needs to stretch outside the organization to ecosystem partners and customers, as well as internally through the organizational structure.
How can we ensure company-wide digital governance and investments?
Digital-native players leverage the investment and competencies of each component, such as process, product and platform, across the organization. Replicating this in an analog-native organization requires strong and robust governance to ensure that the right digital investments are made, shared throughout the organization to avoid costly duplication, and managed in the best way possible. Another key responsibility of the governance function is to constantly monitor the organization’s transformation progress, to steer the business towards higher levels of maturity.
What are the skills, competencies and roles required for a digital business model?
Digital-native organizations rely on new digital competencies, processes and working methods, as well as unique leadership roles in their organizations, to deliver the core elements in their DNA, such as customer centricity, agility, data centricity and a culture of continuous experimentation. On the other hand, analog-native firms typically attract people with specific industry and functional specializations, and therefore possess gaps in their digital skills and competencies.
What cultural shift is required to build a fundamental advantage over digital competitors?
In order for an organization to digitalize across its layers, it needs to overhaul its corporate culture. Analog companies, which have often succeeded through creating systems and structures to control complicated tasks, generally have cultures that hinder rather than help digital transformation, and the traits that hold back digitalization need to be identified to move forward. While the technology to enable the digital shift is often already in place, ways of working and thinking within the organization need to be challenged for operational culture to change too.