Accelerating digital innovation inside and out

Accelerating
Digital Innovation
Inside and Out
Agile teams, ecosystems, and ethics
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2 | Copyright © 2019 Deloitte Development LLC. All rights reserved. 2019 MIT Sloan Management Review and Deloitte Digital global research study2 | Copyright © 2019 Deloitte Development LLC. All rights reserved. 2019 MIT Sloan Management Review and Deloitte Digital global research study
INTRO

Our fifth annual
research report
studying digital
trends, 2019
Undertaken by Deloitte Digital in
collaboration with MIT Sloan
Management Review (MIT SMR)
4,800 125
31% U.S.69% INTERNATIONAL
28 29%
E X E C U T I V E
I N T E R V I E W S
C-suite and other
executives, subject
matter specialists
14
of business executives,
managers, and analysts from
organizations globally to
understand how the digital
enterprise is evolving
industries Are +$1B
in revenue
Business executives
and professionals
countries
S U R V E Y B Y T H E N U M B E R S
Survey in Fall 2018
+

Accelerating
innovation through
digital ecosystems
Digitally maturing companies
are not only innovating more,
they are innovating differently.
As innovation continues to accelerate,
digitally maturing companies are
considering both the social and ethical
implications of digital transformation.

Digital ecosystems, platforms, and cross-
functional teaming spur innovation
Our research shows
that digitally maturing
organizations are more
innovative, are more
likely to engage in
external partnerships
and ecosystems for
digital innovation, and
are more likely to be
organized into cross-
functional teams.
More importantly, it's
not just that they do
these things more
often, it’s that they
fundamentally
approach these
activities differently
than do their less
mature counterparts.
These companies
reflect what Karl Weick
called a loosely coupled
organization - those
that are characterized
by increased
autonomy of business
units and more
relational governance.
As organizations
collaborate more
internally and
externally and in
more rapid, agile
ways, ethical
challenges can arise.

INNNOVATION

How close is your organization to that ideal?
Connecting
innovation with
digital maturity
Imagine an ideal organization utilizing
digital technologies and capabilities to
improve processes, engage talent
across the organization, and drive new
and value-generating business models.
1 2 3 4 5 6 7 8 9 10
3%
7%
14%
13% 14%
17%
16%
10%
4%
2%
E A R L Y D E V E L O P I N G M AT U R I N G
24% 44% 32%

Innovation
drives digital
maturity
At these companies, continual
improvement is the new normal,
and staying at the forefront of
digital innovation demands
repeated self-reinvention.
Digital innovation is a strength of my organization
E A R L Y
D E V E L O P I N G
M AT U R I N G 81%
36%
10%
(respondents who agree or strongly agree)

… but not everyone
is committed
Innovating toward maturity
E A R L Y M AT U R I N G
My organization provides
enough resources (time, money,
people) to support innovation.
My organization cultivates or
supports an entrepreneurial
mindset among its employees.
My organization has moved
significantly closer to an
ideal digital maturity over
the past three years.
15% 32% 22% 39% 51% 60% 74% 77% 87%
D E V E L O P I N G
D I G I TA L M AT U R I T Y
(respondents who agree or strongly agree)

1 2 3 4 5 6 7 8 9 10
0%
20%
40%
60%
80%
100%
<10% of my work involves
the opportunity to
experiment and innovate.
>10%
A little goes a
long way
As companies mature digitally,
they allocate time for their
employees to innovate.
Making space for innovation and experimentation
%OFRESPONDENTS

One important way
digitally maturing
companies innovate
is by participating in
digital ecosystems
A digital ecosystem can include
traditional partnerships and consortia
but is broader and can encompass less
formal ways in which ﬁrms collaborate.
Innovation ecosystems may include
start-ups, large companies, and
academics or digital platforms that
include multiple layers of activities.
We consider ecosystems to be a group of
companies cooperating on innovative
activities, often without formal ties

Partnerships and
digital maturity
Leaders across all maturity levels
recognize the importance of
partnerships to innovation, but only
at the maturing level are organizations
consistently cultivating them.
My organization’s external
partnerships are vital to its
digital innovation efforts.
My organization cultivates
partnerships with other
organizations to facilitate
digital innovation.
75% 33% 78% 59% 81% 80%
Digitally maturing companies are more than
2x as likely to be cultivating partnerships
compared with early-stage companies.

Networking should
be occurring within
the organization as
well through cross-
functional teaming
A cross-functional team is loosely
coupled in that it is comprised of people
from multiple functional areas and gives
them the freedom to work across
traditional organizational boundaries.

E A R L Y
D E V E L O P I N G
M AT U R I N G
Hallmarks of digitally maturing teams
Digitally maturing organizations operate cross-functional teams differently than early stage companies.
Cross-functional team
leaders in my
organization have
considerable autonomy
regarding how to
accomplish team goals.
My organization effectively
evaluates the performance of
cross-functional teams as a unit,
instead of evaluating only the
individual performances of the
people on that team.
Our organization's
senior leadership
effectively creates an
environment in which
our cross-functional
teams can succeed.
38%
53%
69%
20%
33%
54%
29%
48%
73%

ETHICS

As organizations become more networked
and distributed, governance models
and ethical guardrails need to evolve.

Ethical guardrails
enable agility
Digital maturing companies are more
likely to have adopted policies to support
their organization’s ethical standards
with regard to digital initiatives.
43% 16% 62% 30% 76% 57%
>2.5X >2X
Our organization has explicit
policies in place to support our
ethical standards with respect to
our organization’s digital initiatives.
Our organization’s leaders
spend enough time thinking
about and communicating the
impact our organization’s digital
initiatives have on society.
B U T M O R E F O C U S I S N E E D E D
Less than one-half (46%) of CEOs agree their leaders
spend enough time thinking about and
communicating the impact of digital on society.

HOW TO BEGIN

Believing in the importance of innovation isn’t suﬃcient—
taking action is what matters
Look beyond your
organization to
drive innovation.
Loosen formal
hierarchies and let
teams explore and
occasionally fail,
learning fast and
correcting as you go.
Reassess how
you cultivate and
support cross-
functional teams.
Establish ethical guardrails
as you drive innovation in
your company—make it a
priority, keep it in mind
through all aspects of
operations, review more
than periodically to keep
pace with innovations and
market changes.
H O W T O B E G I N

… And don’t forget your
organization’s mindset
Digital maturity is rooted (at least partly) in mindset and whether
people believe they can adapt, or whether they think digital
disruption is eroding whatever finite advantage they have.
I N 1 0 T O 2 0 Y E A R S , M Y O R G A N I Z AT I O N W I L L …
Not exist (either will be
out of business or bought
by another company)
Exist but be in a much
weaker position
Exist but be in a
weaker position
Exist and be no
better or worse off
Exist and be
in a stronger
position
Exist and be
in a much
stronger position
Market and
competitive forces
Digital
capabilities
44%
16%
37%
22%
41%
25%
17%
36%
17%
48%
17%
56%
Cause of
position change

Want to learn more?
Read the full report here:
www.deloitte.com/insights/mit-smr-digital-study.html
@DeloitteInsight
@DeloitteDigital
@MITSMR
Join the conversation:
#DigitalEvolution

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All rights reserved. Member of Deloitte Touche Tohmatsu Limited
Thank you.
Global Study and study data ©Massachusetts Institute of Technology.

Accelerating digital innovation inside and out

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