Pulse Survey RETHINKING DIGITAL TRANSFORMATION New Data Examines the Culture and Process Change Imperative in 2020

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We are living in an era of unprecedented change and possibilities, marked by the rise of the internet and fueled by the accelerating pace of digital innovations. In this era, access to information is increasingly democratized, creating the potential for anyone in the world to use technology to produce fundamentally new business value. The relationship between people and technology is dramatically strengthening, and it is accelerating behavioral change in ways we’ve never seen before. To successfully leverage this opportunity within our own business, we must recognize that the modern organization is becoming a complex socio-technical system. MIKE WALKER GLOBAL DIRECTOR RED HAT OPEN Modern Organizations Are Complex Socio-Technical Systems INNOVATION LABS Complex socio-technical systems, unlike their predecessors, can’t be fully understood or diagnosed by an expert. Outcomes of these systems are difficult to predict through typical cause-and-effect logic. Therefore, the prescriptive techniques we’ve used in the past to accelerate change and create business value are becoming increasingly ineffective. It’s no wonder so many businesses are struggling to effectively transform, as evidenced by this study.

What Can Business Leaders Do? In complex socio-technical systems, it is groups of people, not individuals or managers, who can create innovative change. These groups must tune the system through a perpetual cycle of probing, sensing, and responding to outcomes. Nevertheless, leaders play an important role. They must: • Foster a growth mindset, where curiosity and learning are celebrated • Assemble groups aligned to principles of collaboration, community, inclusivity, adaptability, and transparency • Empower groups to apply the scientific method, using observation, hypothesis, and experimentation to learn • Invite feedback, and use it to direct change via data-driven decision making • Enforce the need for practice and repetition among teams, in order to create new habits that replace old ones In doing so, leaders can create the context for cultural change, and continually improve their organization.

Change Over Time By surveying digital transformation leaders annually, we are able to move beyond point analysis and synthesize trends over time. By doing this, we get better predictions of our own future and what it will take to maximize digital transformation outcomes. I now invite you to further explore the challenges, strategies, results, and learnings from digital transformation leaders across the globe in order to more effectively inform your own strategy. RETHINKING DIGITAL TRANSFORMATION New Data Examines the Culture and Process Change Imperative in 2020

The current state of digital transformation can be summed up in four HIGHLIGHTS words: the same but different.

What’s remained the same? For years, global executives have understood what it takes to succeed in this area. Eighty-six percent of nearly 700 respondents in a 84% OF THE EXECUTIVES SURVEYED recent survey by Harvard Business Review Analytic Services say transformation AGREE THAT NEW BUSINESS requires a combination of the right culture, revised business processes, and new OPPORTUNITIES ARE EMERGING AS technology. However, only 20% of them—not many more than in the recent past— THEIR ORGANIZATION DIGITALLY TRANSFORMS. rate their transformation strategies as being effective. What’s different?The drive for digital transformation has only intensified and become more essential for business success. Ninety-five percent of the executives 70% surveyed say it has grown in importance over the past two years, with 70% SAY OVER THE PAST TWO YEARS DIGITAL describing the change as significant. TRANSFORMATION HAS BECOME SIGNIFICANTLY MORE IMPORTANT “The push for digital transformation is accelerating in a world where companies TO BUSINESS SUCCESS. increasingly compete on innovation, speed, and adaptability,” notes Deborah Ancona, professor of management at the Massachusetts Institute of Technology (MIT) and founder of its Leadership Center. 63% Another change is that the modest rise in the effectiveness of change management RANK CULTURAL CHALLENGES strategies is forcing organizations to rethink their approaches to transformation. AS THE BIGGEST IMPEDIMENTS TO TRANSFORMATION EFFORTS. “Many business leaders are recalibrating their strategies as they’re becoming more realistic about the difficulty of achieving digital transformation,” says Melissa Swift, leader of the digital advisory unit of Korn Ferry, a consulting firm based in Los Angeles. “They’re realizing that the answer isn’t better technology, 20% it’s better everything else around it. Unfortunately, a large number of companies RATE THEIR COMPANIES’ DIGITAL TRANSFORMATION EFFORTS AS still lack a cohesive strategy from a people perspective about how to move the EFFECTIVE. organization forward.” The Harvard Business Review Analytics Services survey identified a select group of digital-transformation leaders who have taken this people and process imperative to heart. They’ve implemented policy and organizational changes designed to create a culture of transformation. As a result, these organizations are doing more than overcoming stubborn problems that have been diluting transformation efforts. They’re also reaping business rewards for their efforts. For example, twice as many transformation leaders than the rest of the sample say revenues have grown significantly as a result of digital transformation, and they surpassed their peers by double-digit rates in other key areas, including operational efficiency, competitiveness, and customer retention rates.

Pulse Survey | Rethinking Digital Transformation Harvard Business Review Analytic Services 1 Transformation leaders also provide helps everyone in the organization a guide for others about how to understand why transformation is improve their transformation efforts important, brings together cross- in the months ahead. Their success functional teams to address the starts with a detailed understanding biggest barriers, and formulates not only of the main roadblocks that metrics to monitor progress and keep impede success, such as cultural, efforts on track. process, and technology issues, but also of the underlying complexities Success Remains Elusive for within these areas that make change Many Companies so difficult. From this baseline, leaders Transformation requires a multifaceted define a multifaceted strategy that effort encompassing cultural change, business process modernization, and targeted technology investments. FIGURE 1 But one of those pillars requires special attention. Sixty-three percent CULTURE IS KEY TO TRANSFORMATION SUCCESS of the executives surveyed name Transformation leaders distinguish themselves in multiple cultural categories cultural issues as the biggest barrier How important are each of the following cultural characteristics in enabling digital transformation to transformation success. Comparing in your organization? that number to results from the baseline survey conducted by Harvard EXTREMELY IMPORTANT Business Review Analytic Services TRANSFORMATION LEADERS THAT POSSESS THE CHARACTERISTIC in 2018 shows that organizations THE REST OF THE ORGANIZATIONS THAT POSSESS THE CHARACTERISTIC are still having trouble addressing Collaboration cultural problems. 71% Two years ago, 55% of the respondents 71% ranked culture as the top roadblock. If 30% overcoming cultural issues is critical, Transparency and most executives recognize this 64% reality, why aren’t they seeing more 61% success? One explanation is that 24% as organizations delve deeper into Adaptability cultural change, they are finding 63% the challenge is more complex than 65% they first realized. “Transforming 23% the culture for digital transformation Inclusivity is easier said than done,” says 60% Behnam Tabrizi, academic director 65% of Stanford University’s executive 23% program and author of the books Community Rapid Transformation and The 60% Inside-Out Effect: A Practical Guide to 60% Transformational Leadership. “It takes 26% a new operating system outside of the regular norms of the organization to SOURCE: HARVARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, NOVEMBER 2019 change cultures.”

“Digital transformation is not just the IT department’s job; it requires having a team come together to redefine how to access and use data for business results,” says Dave Ulrich, Rensis Likert professor at the University of Michigan’s Ross School of Business.

2 Harvard Business Review Analytic Services Pulse Survey | Rethinking Digital Transformation Follow-on questions shed light on Likert professor at the University of the complexities that impede cultural Michigan’s Ross School of Business change. When executives ranked the and coauthor of the book Reinventing importance of five components of the Organization: How Companies Can transformational cultures in the latest Deliver Radically Greater Value in Fast- survey, 71% identified collaboration Changing Markets. “Form a digital team as the most important characteristic. consisting of experts from finance, However, only 38% say their marketing, IT, HR, operations, and organization possesses this quality. other departments so that the overall That’s only a slight improvement over digital agenda goes forward.” 32% in 2018. Other cultural characteristics also Business Processes showed only moderate improvement Need Upgrades since 2018, with one exception— The second transformation pillar— adaptability. The number of process modernization—also shows organizations overall that possess this gaps between its perceived importance quality rose by 10 percentage points. and a company’s ability to implement it successfully. FIGURE 2 A solid majority While the year-over-year results were (68%) of executives in the latest similar, significant differences emerged survey highly value continuous between transformation leaders integration/continuous delivery (CI/ and the rest of the respondents. For CD), a process for expediting the example, 71% of transformation leaders rollout and ongoing enhancement of say their organizations are collaborative new applications to address changing versus only 30% of the rest of the sample. FIGURE 1 Transformation leaders also distinguish FIGURE 2 themselves in other cultural elements. Sixty-five percent of that select group FORMAL METHODOLOGIES SUPPORT PROCESS MODERNIZATION say their organizations are geared Organizations continue to struggle with implementations for adaptability, for example, by enabling information to flow freely How important are the following process changes to enabling digital transformation? and empowering certain individuals EXTREMELY IMPORTANT to make decisions that respond ORGANIZATIONS THAT IMPLEMENTED THE METHODOLOGY,  to changing business conditions. ORGANIZATIONS THAT IMPLEMENTED THE METHODOLOGY,  However, only 23% of the remaining survey respondents say their Continuous integration/continuous delivery (CI/CD) organizations support adaptability. 68% The low percentages may relate to 43% 35% two challenging stumbling blocks. First, many organizations struggle Agile development processes to break down departmental barriers 67% that discourage information sharing. 55% 55% Second, senior executives must be willing to adjust hierarchical decision- Agile project management processes making structures to allow more junior 65% managers and frontline staff to act on 47% 46% their expertise when appropriate. DevOps approaches In addition, 61% of the high performers 58% benefit from cultures designed for 31% transparency compared to just a 26% quarter (24%) of the rest. Lean/startup methodologies “Digital transformation is not just the 55% IT department’s job; it requires having 30% 28% a team come together to redefine how to access and use data for business results,” says Dave Ulrich, Rensis SOURCE: HARVARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, NOVEMBER 2019

Pulse Survey | Rethinking Digital Transformation Harvard Business Review Analytic Services 3 Call out Use National Regular to highlight a key phrase.

“WE SEE SOME FUNDAMENTAL DISCONNECTS BETWEEN BUSINESS GOALS AND TECHNOLOGY INVESTMENTS WHEN COMPANIES START CHASING SHINY OBJECTS.” MELISSA SWIFT, LEADER OF THE DIGITAL ADVISORY UNIT OF KORN FERRY business requirements. Yet, just 43% FIGURE 3 of respondents say their organizations have implemented this methodology, BUSINESS GOALS DICTATE TECHNOLOGY REQUIREMENTS Executives report slight gains in digital effectiveness which is only a moderate gain from the 35% who were using CI/CD in How important are the following technology capabilities to your organization’s digital 2018. A complementary process transformation efforts? methodology focuses on improving project management by applying agile EXTREMELY IMPORTANT ORGANIZATIONS THAT IMPLEMENTED THE METHODOLOGY,  techniques, which include assembling ORGANIZATIONS THAT IMPLEMENTED THE METHODOLOGY,  cross-functional teams that promote transformation through a series of Responding rapidly to customer demands iterative steps. While agile project 72% management is also highly rated among 31% a majority of the executives responding 24% to the survey, fewer than half of Updating systems efficiently the organizations have successfully 66% adopted this approach. 28% 25% This gap between understanding the importance of process changes and Developing and delivering new applications quickly successful implementation shows 59% 27% how much fundamental change is 18% required to adopt concepts like cross- departmental collaboration and Controlling maintenance costs to budget more money for innovation “fail-fast” iterations. The underlying 54% attitudinal changes and resource 30% 24% commitments remain difficult for many traditional organizations to make. SOURCE: HARVARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, NOVEMBER 2019 The effectiveness of technology also continues to lag behind shifting business requirements. Digital transformation’s overarching goal is to Tackling Challenges to use innovative technology to create new Transformation Success business models, products, or services. The survey respondents report that Accordingly, nearly three-quarters their organizations are strengthening (72%) of the survey respondents their commitments to addressing the prize the technical ability to respond three core roadblocks to transformation rapidly to customer demands. FIGURE 3 success—shortfalls in cultural change, Yet, only 31% of executives say their business process modernization, and organizations effectively meet this goal, technology capabilities. But companies which represents only limited progress are first tackling the areas seen as less since 2018 when a quarter (24%) of the challenging than cultural change. organizations said they were effective Seventy-seven percent of respondents in this area. say their commitment to addressing technology advancements is much The lack of well-defined business goals higher than two years ago, while 74% helps explain why organizations aren’t say they are committed to process getting the anticipated value of their modernization. Seventy percent say technology investments. “Executives their commitment to the most difficult must make sure any new technologies challenge, cultural change, is much they implement are truly business higher than in 2018, but relatively less centered,” Korn Ferry’s Swift says. “We than for the other two factors. This may see some fundamental disconnects be a sign that executives know culture between business goals and technology is important, but they’re unclear about investments when companies start how to fully address it. chasing shiny objects. If improving customer experience is what’s really However, transformation leaders are important to the business, for example, breaking from their less successful IT must be aligned with that desire.” peers in how they’re prioritizing their

Pulse Survey | Rethinking Digital Transformation Harvard Business Review Analytic Services 5 As the low percentages and lack of significant year-over-year progress shows, cultural change remains much harder to assess. Organizations will need to prioritize the development of metrics in this area to keep digital transformation efforts on track.

FIGURE 4 response to transformation challenges. For leaders, commitment to cultural ORGANIZATIONS HAVEN’T FULLY REVISED KPIS change ranks highest, followed by FOR TRANSFORMATION process modernization. Flipping the Monitoring progress remains a struggle order of priorities seen across the entire survey shows leaders have a much Which of the following key performance indicators (KPIs)would be the best measures of the higher appreciation for which factors success of your digital transformation efforts? require the most attention for effective RESPONDENTS WHO CHOOSE THIS KPI AS THE BEST MEASURE transformation strategies. RESPONDENTS THAT HAVE IMPLEMENTED THE KPI,  RESPONDENTS THAT HAVE IMPLEMENTED THE KPI,  Finally, a stumbling block that’s related to the three core challenges has also Customer retention/loyalty lingered since 2018—the difficulty of 56% accurately monitoring transformation 31% progress, which is necessary for 26% identifying strategy and technology Operational efficiency gaps that must be addressed in the 56% months ahead. Respondents agree 36% which key performance indicators 30% (KPIs) are best for monitoring Growth/revenue generation transformation efforts. The executives 55% continue to rank the same KPIs in 51% the top five (three are tied for fifth 44% place). FIGURE 4 But there is only marginal Market position vs. competitors improvement in how many companies 45% are actually using these gauges to 29% measure success. 27% Employee satisfaction Revenue growth and profitability are the go-to measurements. Other 44% 26% key business metrics, ranging from 21% customer retention and operational Cultural change efficiency to employee satisfaction, are also important not only for gauging the 44% 13% impact of digital transformation efforts, 9% but also for assessing the overall Profitability competitive strength of a company. However, as the low percentages and 44% 44% lack of significant year-over-year 38% progress show, cultural change remains much harder to assess. Organizations will need to prioritize the development SOURCE: HARVARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, NOVEMBER 2019 of metrics in this area to keep digital transformation efforts on track.(For guidance, see Step 3, page 9.) As noted earlier, digital transformation leaders are not only measuring their

6 Harvard Business Review Analytic Services Pulse Survey | Rethinking Digital Transformation 77% OF RESPONDENTS SAY THEIR COMMITMENT TO ADDRESSING TECHNOLOGY ADVANCEMENTS IS MUCH HIGHER THAN TWO YEARS AGO. transformation results; they are also STEP 1: DEFINE AND COMMUNICATE TRANSFORMATION seeing clear business benefits for their UNDERLYING BUSINESS GOALS. efforts.FIGURE 5 People throughout the organization— LEADERS HAVE CLEAR from the C-suite to frontline STRATEGIES FOR DRIVING Five Steps for Boosting employees—must understand why Transformation Success transformation is important and how the company will evolve as a result. ORGANIZATIONAL AND What do leaders know about transformation success that “Paint a vision that shows you will be TECHNOLOGICAL CHANGE continues to elude their less mature a better company as transformation TO SUPPORT INNOVATION. peers? Transformation leaders continues,” advises George Westerman, have clear strategies for driving senior lecturer at the MIT Sloan School organizational and technological of Management and author of the book change to support innovation and the Leading Digital: Turning Technology into ongoing enhancements of business Business Transformation. “The vision models, products, and services. should be clear and compelling for Survey responses from leaders, people, but it doesn’t need to have all along with insights from consultants the details spelled out. Be clear enough and academics who specialize in to set the direction but open enough organizational change, offer five that people can fill in the details.” guidelines for promoting the success of transformation projects. For example, a large bank in Singapore that he worked with struggled to overcome chronically low customer- experience ratings. To change this FIGURE 5 shortcoming, senior leaders asked staff TRANSFORMATION LEADERS ENJOY CLEAR BUSINESS BENEFITS members to envision ways to make Revenue growth and efficiency gains boost bottom lines banking more joyful for customers. “The executives didn’t define what Which of the following measures of corporate performance have improved significantly as a result ‘joyful banking’ is,” Westerman of your organization’s digital transformation? explains. “But they did say that waiting in long lines before making TRANSFORMATION LEADERS THAT REPORT SIGNIFICANT IMPROVEMENT a transaction is clearly unjoyful for NON LEADERS THAT REPORT SIGNIFICANT IMPROVEMENT customers. The bank’s executives then Growth/revenue generation said, ‘If you ever see anybody waiting, let’s figure out how to fix that.’” 40% 20% Suggestions for improvements Operational efficiency streamed in from many frontline 36% workers. Changes included using 26% additional digital tools to make it Customer retention/loyalty easier for customers to conduct 35% routine tasks without coming to a 19% physical branch. They streamlined Market position vs. competitors reports and exception processes so that customers who still had questions 35% 18% could get answers quickly. This and other measures reduced wait times Employee satisfaction by millions of hours per year. “The 33% company went from being the worst 11% for customer experience to the best,” Profitability Westerman says. 31% 12% Articulating a business case for this effort will help paint a shared vision Cultural change of the future. “Make sure leaders 21% recognize what digital offers the 14% business in terms of value created for all stakeholders,” the University of SOURCE: HARVARD BUSINESS REVIEW ANALYTIC SERVICES SURVEY, NOVEMBER 2019 Michigan’s Ulrich says.

8 Harvard Business Review Analytic Services Pulse Survey | Rethinking Digital Transformation Ulrich adds that it’s also important productive in their regular jobs because that people throughout a company they see the larger vision of what the have realistic expectations about the company is trying to accomplish. impact of innovation. “Some people “It’s a potent combination because now think digital transformation will change you have all these change agents across more than it does,” he explains. “Digital the organization,” Tabrizi says. “I often transformation uses technology to see people who work on these teams provide data to make better decisions— get promoted because senior people it is good to keep that in perspective.” see them in action. They’re not hidden STEP 2: REDOUBLE EFFORTS TO within multiple layers of the corporate ACHIEVE CULTURAL CHANGE. hierarchy. This approach can be a win Transformation veterans say for everyone.” committing to a distributed leadership One hospital Tabrizi worked with model—where effective leadership sought to increase its patient load exists at all levels, not just at the without reducing the quality of care top—will enhance important cultural or hiring additional employees. For characteristics, such as collaboration, answers to this balancing act, the transparency, and adaptability. “This organization created cross-functional requires senior executives to change teams that included doctors, nurses, from feeling like they must always and facilities people. The team created be directing people about what to do, a central management center that to enabling people throughout the tracked every patient and calculated organization to take part in decision any delays they experienced in making,” MIT’s Ancona says. “That’s receiving treatments. This data often scary for senior leaders unless provided a baseline measurement they recognize that they can be great of patient cycle times from hospital leaders by architecting a system where admittance to discharge. The many people can lead.” information identified efficiency gaps Cultural change through distributed and opportunities to streamline patient leadership also represents a new way care. As patient volume increased for mid-level executives to work. “Their 15% over three years, avoidable delays role shifts to helping entrepreneurial- in the hospital decreased 15%, along minded members of their staff have with a 50% reduction in the number of their ideas heard,” Ancona says. ambulances being turned away. Developing cross-functional teams STEP 3: DEVELOP KPIS TO TRACK will further the cultural evolution CULTURAL CHANGE. of modern organizations. Because Performance measures designed to transformation impacts a wide range of cultivate collaboration and adaptability business initiatives, large organizations among workers will help organizations may need a variety of different teams. update policies for how employees “One may be dedicated to revising will be evaluated and compensated. performance incentives, while another “Steer away from performance metrics works on the company’s go-to-market that flatly telegraph, ‘This is a public strategy. Each team may have seven company that has to meet quarterly to 10 members,” Stanford University’s financial milestones that we can’t fail Tabrizi explains. “Ideally, these cross- to hit,’” Swift says. “You need to also boundary teams would report directly measure people according to how “PAINT A VISION THAT to a governance team, thus flattening collaborative and adaptable they are.” organizational hierarchies and driving Cultural change starts with a baseline SHOWS YOU WILL BE transparency, accountability, and quick understanding of the current decision making.” organization. Tools such as the A BETTER COMPANY He adds that as team members interact Organizational Culture Assessment AS TRANSFORMATION with senior people, they gain an Instrument, developed by University understanding of business challenges of Michigan professors Robert Quinn CONTINUES.” GEORGE outside of their departments, which and Kim Cameron, can identify helps team members become more gaps between existing cultural WESTERMAN, MIT SLOAN

Pulse Survey | Rethinking Digital Transformation Harvard Business Review Analytic Services 9 “TRANSFORMATION ISN’T JUST A PROJECT. IT’S SOMETHING THAT MUST BECOME A PART OF AN ORGANIZATION’S BEING. THAT MEANS PUTTING A CULTURE IN PLACE SO THAT TRANSFORMATION BECOMES A NATURAL WAY OF WORKING.” GEORGE WESTERMAN, MIT SLOAN characteristics and future goals. To transformation that entails—are hitting leaders have earmarked funds for measure progress toward those goals, it out of the park,” Swift says. “The business process automation. Other organizations should first focus on ones that are struggling expect those significant investment areas for near-term assessments. That may process changes to solve all of their leaders have included cloud analytics include gauging the participation transformation problems. They think, platforms (57%), digital automation of individuals and work groups in ‘We implemented agile [methodology], systems (51%), and artificial brainstorming innovation ideas and why didn’t everything change for intelligence technology (50%). In piloting those proposals. Executives the better?’ The answer is that they each category, transformation leaders can then turn to tracking longer- haven’t also addressed the elements outspent their peers, in some cases by term results. For example, they of transformation beyond process significant amounts. may measure the percentage of the modernization.” Across all the companies surveyed, workforce that is actively involved A majority (56%) of leaders are also spending plans for the next 18 months in cross-functional teams devoted to pairing their use of agile techniques will shift some priorities. Notably, digital projects. Organizations may collaboration platforms are expected also tally the number of innovation with CI/CD practices, which helps to drop to fourth place on technology ideas that have been adopted by the foster ongoing change in iterative steps. roadmaps, while AI takes over organization and the percentage of Methodologies aren’t the only answer the top spot. internal staff that have been promoted for improving business processes. In to key digital roles. some cases, organizations must solve A New Way of Working “Also, determine how to recognize lingering interdepartmental friction Some, but not all, aspects of digital people who are good collaborators that gets in the way of change. For transformation have remained who sometimes go unrecognized, such example, some IT staff and business essentially the same since 2018, as introverts,” Swift adds. “Stop only departments aren’t closely aligned. including stubborn complexities rewarding the old-fashioned, often “I hear it over and over again from that continue to surround cultural, stereotypically masculine model of business executives, ‘Digital is fast, business process, and technology success: the people who are successful but our IT department is slow, so we’re modernization. at getting their ideas across because going to do transformation without they are the most vocal in meetings. As the IT people,’” Westerman says. However, a small group of long as we keep rewarding that model, “That’s a bad idea. Beyond simple transformation leaders are forging a we’re not going to get the level of stand-alone apps, it’s very hard to different path. The five steps above collaboration and silo breaking needed do real transformation without the offer a view of how they are setting for the kind of integrated work that knowledge that IT people have.” themselves apart from industry peers properly drives digital transformation.” A slow pace may be necessary for and gaining business value from digital STEP 4: ADDRESS BUSINESS IT to accurately assess the security innovation. These leaders are also PROCESS CHALLENGES. and compliance implications of able to tie these efforts to key business goals, such as revenue growth, The best efforts aimed at helping proposed new technology and operational efficiency, and customer workforces become more collaborative services, and to ensure that similar retention. Fortunately, misguided and adaptable will falter if outdated capabilities aren’t already available notions about technology being at corporate structures continue to via existing applications. “Many the heart of digital transformation reinforce old behaviors. To avoid companies have lived with decades appear to be dismissed by leaders this risk, executives should shift to of slow and overly bureaucratic IT, and followers alike. In their place is organizational structures designed for security, and compliance processes,” a clear appreciation for fundamental nimbleness and agility. Westerman says. “But this can change, if senior business execs insist on it, organizational change, brought about Transformation leaders from the by reimagined corporate cultures, and are willing to change the way Harvard Business Review Analytic business-process modernization, and they work, too.” Services survey showed they technology upgrades. understand that businesses become STEP 5: IDENTIFY HIGH-IMPACT “Transformation isn’t just a project,” better at innovating and addressing TECHNOLOGY INVESTMENTS. Westerman says. “It’s something that customer needs when they adopt Transformation leaders have clear must become part of an organization’s agile techniques. More than half ideas about which technology being. That means putting a culture in (58%) of the transformation leaders investments will best support business place so that transformation becomes a have expanded agile methods from transformation. Over the past two natural way of working.” the IT department and are now years, most leaders (63%) have invested using relevant principles for project in collaboration platforms to promote management. “Organizations that multi-channel communications have successfully integrated agile throughout their organizations. In techniques—along with all of the other addition, 61% of the transformation

Pulse Survey | Rethinking Digital Transformation Harvard Business Review Analytic Services 11 METHODOLOGY AND PARTICIPANT PROFILE A total of 690 respondents drawn from the HBR audience of readers (magazine/ enewsletter readers, customers, HBR.org users) completed the survey.

SIZE OF ORGANIZATION 19% 9% 24% 10% 39% 100–499 500–999 1,000–4,999 5,000–9,999 10,000+ EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES EMPLOYEES

SENIORITY 19% 44% 19% 17% EXECUTIVE SENIOR MIDDLE OTHER MANAGEMENT/ MANAGEMENT MANAGEMENT BOARD MEMBERS

KEY INDUSTRY SECTORS ALL OTHER INDUSTRIES WERE 6% OR LESS.

13% 11% 10% 8% 7% 7% FINANCIAL MANUFACTURING TECHNOLOGY BUSINESS/ CONSULTING GOVERNMENT/ SERVICES PROFESSIONAL NOT FOR PROFIT SERVICES

JOB FUNCTION ALL OTHER JOB FUNCTIONS WERE 7% OR LESS. 20% 16% 13% 11% 11% 10% 8% 8% GENERAL/ CONSULTING FINANCIAL SALES/BUSINESS MANUFACTURING TECHNOLOGY BUSINESS/ IT/SOFTWARE EXECUTIVE SERVICES DEVELOPMENT/ PROFESSIONAL ENGINEERING MANAGEMENT CUSTOMER SERVICE SERVICES

REGIONS 37% 25% 21% 7% 7% 2% NORTH AMERICA EUROPE ASIA/PACIFIC LATIN AMERICA MIDDLE EAST/ OTHER AFRICA

Figures may not add up to 100% due to rounding.

12 Harvard Business Review Analytic Services Pulse Survey | Rethinking Digital Transformation

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