In our 2014 Digital IQ survey of almost 1,500 business and technology executives, only 20% of respondents are highly confident in their organization’s Digital IQ—a company’s acumen in understanding, valuing and weaving technology throughout the enterprise.
How can a company raise its Digital IQ and harness the full power of technology to advance their business performance? Top performers—companies that reside in the top quartile for revenue growth, profitability, and innovation—point the way.
We analyzed the responses of top performers to understand what they do differently to fuse business and technology. For top performers, digital isn’t window dressing or corporate speak. Digital is a way of life. Following are five key best practices that top performers employ to outdo the competition:
1. CEO is the Digital Leader
81% of top performers say their CEO is an active champion of using information technology to achieve business goals, compared with 68% of other companies. Executives tell us that CEO involvement in shaping strategy provides them with a competitive advantage. Once the company determines its digital strategy, the CEO must define clear roles, accountability, and governance for how the strategy is executed. The scope should address who is responsible, and how the functional or business unit leaders will work together—for example, what the CMO is responsible for in a customer initiative, what the CIO does, and together what they will deliver and when.
2. CMO and CIO are Collaborative Partners
The CIO and CMO relationship is critical to success because many digital technology initiatives are driven by marketing needs. 70% of top performers say their CIO and CMO have a strong relationship, compared with just 45% of the pack. The growth in digital marketing spending, often independent of IT, has led to debate among industry analysts about whether the marketing organization will soon yield more spending power than the IT department.
3. Innovation is Driven from the Outside-In
Top performers are more likely to seek outside sources to help fill their idea pipeline, in addition to internal sources. They take what we refer to as an “outside-in” approach to innovation. Given the wealth of potential sources, outside-in innovation can generate significantly more ideas. It’s crucial for companies to use a well-defined process to effectively filter and discern which emerging technologies will be the most disruptive to their unique company, market, and customers.
4. IT is Fast, Flexible and Future-minded
Top performers are remaking IT to better meet the needs of the business. They are creating more flexible integration architectures and cultivating the ability to roll out technology services faster, embrace myriad devices and data, and deal with relentless cyber threats. In our study, while top performers were considerably better at completing strategic IT initiatives on time, within scope, and on budget, they fail to meet delivery goals more than one-third to more than one-half of the time. Sweeping IT transformation needs to be front and center for all organizations.
5. Digital Capability is Distributed across the Business
As the lines between IT and business blur, it’s essential that IT understands the business to help drive business value. Our study found that IT organizations within top performing companies consistently understand key aspects of the business in areas like corporate strategy, sales and marketing, supply chain, human resources, supply chain, and so on. For example, 35% of IT organizations within top performing companies understand the corporate strategy compared to only 20% of overall respondents. Not only do top performer IT professional have a better understanding of different aspects of the business, they also maintain broader business-oriented skills. In terms of strategy, for example, 35% of IT organizations within top performing companies claim skills in strategy, versus 21% of overall respondents. Going forward, the make-up of the IT group will evolve, as IT transforms from a centralized authority of technology to a strategic orchestrator of business services.
Company leaders ready to ramp up their Digital IQ and develop these interlocking capabilities will find that as they add each behavior, they will be better positioned for high performance. The proof is in the pudding. Companies in our study that took this path were twice as likely to be top performers in revenue growth, profitability, and innovation. What is your business waiting for?
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