g-f(2)9 The Evolution of Digital Transformation (DT) at MIT SMR: DT grows increasingly complex, competitive advantages have evolved and it is needed a more systematic approach to strategy and execution

Extra-condensed knowledge

Digital mastery is more important than ever because the risks of falling behind are increasing. Digital transformation has risen much higher on the corporate agenda since our article and book in 2014, and the drive to maintain operations disrupted by COVID-19 has made it an even higher priority. But even as companies have had to move quickly to adjust to the realities of a global pandemic, their leaders also need to take a longer view. 

• They need to consider how digital technologies can be used not only to enhance their products and processes but also to reinvent their businesses. 
• In this article, we have shared examples that can help executives identify opportunities to increase digital capability across the business. This digital capability and the leadership capability to envision and drive organizational change are the key ingredients for meeting this challenge.

Genioux knowledge fact condensed as an image.

Condensed knowledge 

• Digital mastery is more important than ever because the risks of falling behind are increasing. 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. When we began our research, most large traditional enterprises were using digital technologies to incrementally improve parts of their businesses. Since then, this first phase of activity has given way to a new one. 
• 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. 
• More important, leaders now recognize the need for — and the possibility of — truly transforming the fundamentals of how they do business. They understand that they have to move from disconnected technology experiments to a more systematic approach to strategy and execution.
• Transforming the Customer Experience. Seeing the business from the outside in — from the customers’ perspective — is as relevant and necessary today as it was in the first phase of digital transformation. But while the focus on customers has not radically changed, the elements needed to create compelling experiences have changed. Today, the three elements are experience design, customer intelligence, and emotional engagement.
• Transforming Operations. As ever, well-managed operations are essential to converting revenue into profit, but now we’re seeing a shift in the focus of digital transformation in this arena. Advances in sensors, cloud, machine learning, and IoT are allowing companies in every industry to transform their operational capabilities. In addition, leaders are seeing how operational excellence can move beyond back-office efficiency to enable engaging customer experience and business models that competitors cannot copy. This operational transformation is occurring in three elements of digital capability: core process automation, connected and dynamic operations, and data-driven decision-making.
• Transforming Employee Experience. If we’ve learned anything during the past decade of digital transformation, it’s that employees can be either the greatest inhibitors or the greatest enablers of transformation success. Accordingly, companies have begun to focus on the employee experience as intently as they do on the customer experience. Three elements of employee experience transformation have emerged in recent years: augmentation, future-readying, and flexforcing.
• Transforming Business Models. In 2014, despite much talk about business model transformation, we found that only 7% of companies were using digital initiatives to launch new businesses and only 15% were creating new business models with digital technology. Times have changed. Now, executives in every industry are paying closer attention to how digital prowess can yield business model innovation. Without falling victim to the “everything is being disrupted” mantra, it is clear that the extent of business model transformation is broadening. We see three elements supporting business model transformation: digital enhancements, information-based service extensions, and multisided platforms.
• Transforming the Digital Platform. The foundation for digital transformation is a clean, well-structured digital platform — the technology, applications, and data that power a company’s business processes. None of the other digital elements can achieve their full promise without it.
• Advances in technology and methodology in recent years have made the challenge of building a solid digital platform simultaneously easier and tougher.

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.