While many companies use individual digital technologies such as social, mobile, analytics and cloud to solve discrete business problems, maturing digital companies integrate all of these technologies to actually transform processes, talent engagement and business models, according to the July report, “Strategy, Not Technology, Drives Digital Transformation,” published by MIT Sloan Management Review and Deloitte University Press.
The report highlights several digitally maturing manufacturers, including McCormick & Co. The Sparks, Md.-based spice and flavoring manufacturer developed FlavorPrint, an algorithm representing the company’s flavors as a vector of 50 data points. McCormick currently uses FlavorPrint to recommend recipes to its consumers, but eventually, all flavors will be digitized, and the company will be able to tailor them to regional, cultural and even individual personal tastes.
Another manufacturer listed in the report is working with the film school at the University of Southern California to hone its storytelling abilities. According to the report, storytelling is becoming a popular means of gaining employee buy-in and organizational traction for digital transformation.
“We are learning new approaches to create narratives about digital,” says the company’s vice president of strategy, research and new business innovation. She points out that although the context is different—cinematic arts—a huge amount of the film school’s work is about telling a story and telling it well.
Overall though, the manufacturing sector is providing digital skills to employees but has yet to realize digital gains. “The issue may be that executives in the sector need to increase their efforts to encourage employees to use digital technologies to innovate,” the authors wrote.
B. Bonin Bough, senior vice president and chief media and e-commerce officer for Mondelēz International, the global snack food spinoff of Kraft Foods, pointed out that when digital transformation first appeared on the business world’s radar, there weren’t many executives with a deep understanding of digital technologies. There also weren’t many digital natives with senior-level experience in large companies.
“Now we have an entire work force of digitally fluent talent that has worked in big businesses such as Amazon and Google,” Bough said in the report. “Digital fluency is on the rise.” and manufacturers are benefiting from that.
McKinsey & Co. director Paul Willmott explained in a 2013 video on the consultant firm’s website that it’s vital for companies to get “beyond obvious and small applications of technology to drive the creation of truly “digital enterprises.” But there are challenges.
“First of all, who’s accountable for digital?” Willmott asked. “Some firms have created a chief digital officer role. Others are driving the digital agenda from the IT function. But increasingly, we’re seeing that the firms that are really making a difference are doing so because the chief executive is getting personally involved.”
To compete effectively, businesses need digital skills not just in marketing and in sales but, increasingly, in operations and across the whole value chain, he said.
“Perhaps what is most challenging for organizations is to operate in a joined-up, end-to-end way,” Willmott said. “Many organizations are siloed around different functions or geographies. But digital customers expect a fully consistent and joined-up experience. That requires companies to think … differently about the way they organize, their governance structures, and their standards for data and systems.”
Furthermore, a true digital enterprise is fundamentally more economically efficient than others that haven’t embraced digital technology, John Newton, founder and CTO of open source technology provider Alfresco, wrote in a Feb. 15 Information Age article.
“It is a misconception to think that investing in BYOD, cloud storage or big data analytics alone puts companies at the forefront of the digital revolution,” Newton wrote. “In a digital business, digital technology must be at the heart of what the business is doing and how it generates revenue, seizes competitive advantage and produces value. A true digital business will have a profound impact on the way individuals work and the way companies do business in the future.”