g-f(2)8 The Evolution of Digital Transformation at MIT SMR: Digital Masters to Transform Digital Technology into Business Advantage

Extra-condensed knowledge

Executive awareness of the powerful and ever-evolving ways in which digital technology can create competitive advantage has become pervasive. Acting on that awareness remains a challenging prospect.

• It requires that companies become what we call digital masters. 
• Digital masters cultivate two capabilities: digital capability, which enables them to use innovative technologies to improve elements of the business, and leadership capability, which enables them to envision and drive organizational change in systematic and profitable ways. 
• Together, these two capabilities allow a company to transform digital technology into business advantage.

Genioux knowledge fact condensed as an image.

Condensed knowledge 

• Since 2014, when our article “The Nine Elements of Digital Transformation” appeared in these pages, executive awareness of the powerful and ever-evolving ways in which digital technology can create competitive advantage has become pervasive. But acting on that awareness remains a challenging prospect. It requires that companies become what we call digital masters. Digital masters cultivate two capabilities: digital capability, which enables them to use innovative technologies to improve elements of the business, and leadership capability, which enables them to envision and drive organizational change in systematic and profitable ways. Together, these two capabilities allow a company to transform digital technology into business advantage.
• In 10 years of research, we have seen digital transformation grow increasingly complex, with a new wave of technological and competitive possibilities arriving before many companies mastered the first. 
• Advances in a host of technologies, such as the internet of things, artificial intelligence, virtual and augmented reality, and 5G, have opened new avenues for value creation.
• Leaders understand that they have to move from disconnected technology experiments to a more systematic approach to strategy and execution.
• As COVID-19 accelerates the shift to digital activity, digital masters are widening the gap between their capabilities and those of their competitors.
• We’ve revisited the elements of digital capability to reflect the opportunities and impact of new digital technologies. Some of the original elements remain relatively unchanged, some have been reconfigured, and some new elements have emerged. (See “The New Elements of Digital Capability.”) The elements aimed at improving customer experience and internal operations remain important. Employee experience has expanded from a single element to its own set of elements, since employees make the business run and have firsthand insights on where processes need to improve. The elements of business model innovation have expanded, too, with the rise of multisided platform businesses and the increasing dominance of global platform players, such as Alibaba, Amazon, and Google. Last, we’ve given more prominence to the digital platform that underpins all the other elements in a company.

The New Elements of Digital Capability

Category 2: The Big Picture of the Digital Age

[genioux fact extracted from MIT SMR]

Authors of the genioux fact

Fernando Machuca

References

The New Elements of Digital Transformation, Didier Bonnet and George Westerman, November 19, 2020, MIT Sloan Management Review.

ABOUT THE AUTHORS

Didier Bonnet (@didiebon) is affiliate professor of strategy and innovation at IMD Business School and executive vice president of Capgemini Invent. George Westerman (@gwesterman) is senior lecturer with the MIT Sloan School of Management and principal research scientist for workforce learning in MIT’s Abdul Latif Jameel World Education Lab.

Didier Bonnet is Affiliate Professor of Strategy and Digital Transformation at IMD. Professor Bonnet areas of expertise cover digital economics, digital strategy, innovation and the process of large-scale digital transformation for global corporations. He is also a strategy consultant and EVP with Capgemini Invent, where he leads the digital transformation practice. He has more than 30 years' experience in strategy development and business transformation for global clients and has worked in over 15 countries.

Dr. George Westerman works at the dynamic intersection of executive leadership and technology strategy.  During more than 17 years with MIT Sloan School of Management, he has written three award-winning books, including Leading Digital: Turning Technology Into Business Transformation. As a pioneering researcher on digital transformation, George has published papers in Harvard Business Review, Sloan Management Review, and other top journals.  He is now focused on helping employers, educators, and other groups to rethink the process of workforce learning around the world.