“When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.” So said George Westerman, principal research scientist with the MIT Sloan Initiative on the Digital Economy.
Based on what I see in my client work with large companies around the world, George couldn’t have been more spot on. We see a lot of “really fast caterpillars.” Accenture research with IDC shows that an overwhelming 86% of companies are stuck in caterpillar mode, meaning they’re using digital technologies in pockets, rather than at scale and to their potential value. Meanwhile, the butterflies—companies that are really using digital strategically at scale—are seeing revenue increases of up to 10% and cost savings of up to 40%.
Our research with 600+ organizations shows only one in seven companies is a true transformer with new technology. Our research analysis revealed seven key characteristics these new technology leaders share. Do you see your company in any of these?
#1 Technology does not trump people. Scaling IT operations with analytics and automation, leaders increase the value of their existing staff rather than just using machines to replace people. They emphasize machines taking on what they do best, while humans are freed up for more complex, nuanced, and interesting tasks.
#2 Infrastructures are designed to play well with others. Leaders are building modular infrastructures that incorporate Application Programming Interfaces (APIs) and microservices, along with consistent strategies for integrating data from disparate data sources. I can’t emphasize enough how important this piece of the transformation puzzle is. Accenture worked with Star Alliance, the world’s largest global airline alliance to help it transform its operations in this area. Star Alliance includes giants like United Airlines, Lufthansa and Air Canada, among others. It wanted to offer its customers innovative, consistent digital services regardless of which of its airlines they were flying with at any given time. We developed a platform for connected digital and mobile passenger services, from baggage tracking to seat reservations. The platform helps Star Alliance achieve its strategic goal: to deepen operational integration and collaboration among member carriers.
#3 Innovation funding is not an extra. It’s deliberate. Relying on business-relevant metrics and data, companies prioritize the investments that drive the most tangible business results via innovation. They recognize the need to transition from legacy systems and operating models to new technology that can support continuous innovation. And they intentionally fund new technology with the goal of retiring legacy over time.
#4 Business-focused metrics drive IT value. Leaders rely on business-defined metrics, like revenue and time-to-market—metrics that measure real business impact, rather than traditional IT-related measures. Roughly six out of 10 of our transformers told us they use business-oriented metrics to track contribution to the top and bottom line, as well as measuring the impact of digital innovation.
#5 Ad hoc projects disappear. Leaders retire their project mindsets in favor of a comprehensive product-based strategy that is built around interdisciplinary teams. Leaders have moved beyond opportunistic, project-based investments and collaboration, to persistent cross-functional teams. If it doesn’t relate to growth or business impact, it’s not a priority.
#6 The IT team doesn’t own technology governance. Transformers don’t bury governance within their IT operations teams. Instead, governance is done in partnership with the business. IT and business teams act as one unit, with common ways of working and joint desired outcomes.
#7 Skilling for tomorrow happens today. Transformers invest in continuous learning for all employees. Transformers realize that a successful digital transformation requires a new-skilled workforce—and the necessary skills will change as technology changes. With intelligent machines taking on more tasks, leading companies are assessing the capabilities that their human workforce needs, emphasizing uniquely human skills like brainstorming, ideation, negotiation, storytelling and collaboration, but also skills that help them work with Artificial Intelligence (AI) in productive ways.
There is no one path to transforming with new technology. Each company will have its own journey. If you saw your company in the characteristics above, you have strengths to build upon. And if you didn’t, don’t be disheartened. I’ve seen companies begin to strategically transform with very little they can reuse. It’s completely within the realm of possibility with focused investments and attention.
By asking some key strategic questions and taking steps based on your collective answers, you can begin to move into “butterfly territory,” leaving caterpillar days far behind you.
I would welcome the chance to help you explore the answers.