Today, all roads lead to digital. From business strategy to execution, digital technology has become the foundation for everything we do. Nearly every organization lays claim to being a digital enterprise, but only 20% of respondents in this year’s Digital IQ Survey rated their companies as having ‘excellent’ Digital IQ. What is Digital IQ? How well companies understand the value of technology and weave it into the fabric of their organization.
Our study revealed that five behaviors make the difference in enabling a business to realize sustained value from digital technology and raise its Digital IQ.
Those businesses in our study that have a strong Digital IQ, the byproduct of leveraging these five interlocking behaviors, were 2.2 times more likely to be top-performers in revenue growth, profitability, and innovation.
In considering how digital technology will transform their companies and industries, business and IT leaders shared strong concern about a number of threats to growth, with the inability to quickly understand and adopt the technology essential to remain competitive as the most pressing. In top-performing companies, leaders are more likely to be addressing these threats in their corporate strategies than their nonperforming peers.
81% of top performers say their CEO is an active champion in the use of IT to achieve business strategy, compared with 68% of other companies. The percentage of CEOs as digital leaders varies widely by industry.
When it comes to Digital IQ, we know that strong relationships among senior executives are essential to success. But what’s really notable in 2014 is just how critical the CIO-CMO relationship has become: 70% of top-performing companies say they have a strong CIO-CMO relationship, compared with just 45% for non-top performers. It is also noteworthy that many consumer-facing industries show average or below-average relationships, possibly indicating a more palpable CIO-CMO tension where digital marketing is at the forefront.
Innovation is a top priority for many companies. Global CEOs ranked product and service innovation as their top strategy for growth, over increasing market share, entering new geographic markets, M&A, or joint ventures and strategic alliances. Top performers in the 6th Annual Digital IQ Survey were more likely to look to outside sources to fill their idea pipelines, in addition to internal sources. But all companies in our study tend to rely most heavily on traditional sources like internal planning sessions and workshops. A better approach is what we call “outside-in” innovation because it embraces new ideas and experimentation that comes from unlikely sources and industries.
A company’s IT capabilities and infrastructure face crushing pressure from every direction in the digital age. The IT function must institute change on multiple fronts. To address these demands, we believe an integration approach is required—what we call the New IT Platform. The New IT Platform addresses how IT’s mandate, processes, architecture organization, and governance must change to keep up with the business.
Which emerging technologies are in play? When it comes to which technologies they are betting on, all companies in our study agreed that mobile customer technology, private cloud, data mining and analysis, externally-focused social media, and cybersecurity would be of the most strategic importance in three to five years.
There are core skills that provide the centerpiece for an organization’s digital capability. These skills focus on ensuring that the corporate strategy is accurately defined in project plans and designs. Here again, top performers were more likely to excel at cultivating these critical skills.
It is important to create a common talent framework to manage and develop those in digital roles, regardless of where they reside in the organization. The framework also enables the organization to identify gaps or overlaps in its skills inventory.