Four Habits Of Highly Effective Digital Enterprises (None Of Them Involve Technology, Directly)

Yes, going digital pays off. But it takes time. It’s not an overnight miracle that occurs as new technologies and processes are built into the organization. Rather, it’s payback that occurs with maturity.


That’s the word from a recent study of more than 4,800 managers, executives, and analysts conducted by MIT Sloan Management Review and Deloitte. “Digitally mature” companies are different than the rest, the study’s team of authors, led by Gerald Kane of Boston College, conclude. They innovate more, and innovate differently. Their levels of innovation are clicking because they have figured out how to get everyone inside and outside their organizations on the same page and working together. But this isn’t learned overnight, and no technology platform is going to make it happen — corporate culture needs to be re-imagined. Interestingly, digital success, according to this study, is all based on culture, and has little to do with technology.

Working in sync toward a common purpose is the key — with the constellation of digital platforms and devices available, everyone can sort of establish their own separate clouds. The challenge is keeping all this energy contained and applied in the right direction and not running amok, the survey’s authors state. “The risk of increased agility is that it can lead a company’s innovation efforts to outpace its governance policies. It is particularly important, then, that these organizations have strong policies in place regarding the ethics of digital business.”

Digitally mature companies seemed have developed a knack for keeping everything flowing in the same direction. Here are the ways they differ from the newbies:

Digitally mature companies have learned to master innovation.Eighty-one percent of executives from digitally mature companies say innovation as a strength of the organization, compared with only 10% from early-stage companies, Kane and his team find.

Wait — doesn’t everyone want innovation? Yes, but corporate culture makes all the difference. “Innovation happens throughout digitally maturing enterprises; it isn’t caged in labs or R&D departments,” the co-authors observe. So, when John down on the assembly line has an idea for cutting out a process and saving money, it gets taken seriously. Indeed, “employees of digitally maturing organizations have more latitude to innovate in their jobs — regardless of what those jobs may be.”

Pushing decision-making and ideation down through the ranks has been talked up in management journals for decades now. Why is this being treated as some awesome new superpower of the digital age? Perhaps digital channels have opened up communication between the ranks in ways that were not previously possible. Perhaps the move to digital platforms makes experimentation much cheaper and less risky. Let’s hope we’re finally seeing organizations open up to their best source of innovation — their people.

Digitally mature companies collaborate with the outside. In business, the idea of openly working with other companies has been met with a degree of paranoia. Partnerships that are struck are done so with legal departments looking over their shoulders. And forget about teaming up with competitors. Digitally mature companies, on the other hand, appear to be more comfortable with working with outsiders. That separates them from the pack as well. While 80% of executives in digital mature enterprises say their organizations cultivate partnerships with other organizations to facilitate digital innovation, only one-third of early-stage companies do the same. “Digitally maturing organizations tend to form alliances that involve less formal, controlled relationships; they rely more on relational governance and less on detailed contracts,” Kane and his team find.

Digitally mature enterprises don’t put people in silos. The term of consequence in these forward-looking organizations is “cross-functional teams,” Kane and his co-authors observe. These teams have a great deal of autonomy as well. I have heard of some organizations in which employees band together as teams, on their own accord, as they see fit to address opportunities or problems. Very entrepreneurial.

Digitally mature organizations value governance. With this loose, entrepreneurial structure — or anti-structure — there’s risk of things running amok, as mentioned at the beginning of this post. Somehow, digitally mature organizations have figured out to channel the entrepreneurial energy they unleash with collaboration across the globe and everyone forming cross-functional teams. This calls for guardrails. “Digitally maturing companies are more likely to have ethics policies in place to govern digital business,” Kane and his co-authors state. Policies alone, however, are not sufficient. Only 35% of respondents across maturity levels say their company is talking enough about the social and ethical implications of digital business.” Again, what is needed is a corporate culture that provides a vision and keeps all on the same page.

Perhaps a good way to put it is culture eats technology for breakfast — and lunch.