By Rob Starr, Big4.com Content Manager
Issued earlier this year, the PwC 6th Annual Digital IQ Survey found business leaders urgently seeking to upgrade their innovation capabilities. The most recent companion Digital IQ Innovation Snapshot, “Innovation at the Speed of Disruption,” fleshed out more information like the fact IT executives are concerned that the speed of technological change is a threat to their growth prospects. Chris Curran, PwC Advisory principal and Chief Technologist, answered some questions about the salient trends for Big4.com.
Why are IT executives concerned the speed of technological change is a threat to their growth prospects?
In considering how digital technology will transform their companies and industries, business and IT leaders share 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.
Innovation today is a key driver of organic growth for all companies—regardless of sector or geography. New customer demands and competitive pressures require increased levels of innovation across the organization.
Emerging technologies, such as analytics, big data, social media, the cloud, sensors and others are essential to innovation. The variety of emerging technologies and the velocity of their introduction will accelerate in the foreseeable future.
This means that business leaders, including IT executives, must be more aggressive in learning about emerging technology in order to understand, filter and prioritize innovation opportunities.
Another threat to many organizations’ growth prospects is that legacy IT platforms are often unable to support innovation efforts effectively. These legacy information platforms must be migrated to new platforms to capitalize on ongoing technology evolution and revolution. The time to start is now.
Can you explain the dedicated approach to innovation that’s needed?
It starts with enabling enterprise-wide innovation, embedding innovation throughout the fabric of the entire organization. Innovation tends to get trapped inside functional areas, leading only to incremental improvements. Breakthrough innovation can only occur when the c-suite sees innovation as a competitive advantage and insists on an enterprise-wide approach.
Leading innovators design an innovation strategy and plan for technological change by aligning their innovation practices with their intended business outcomes.
It’s also important to empower the CIO to fuel innovation. CIOs at leading companies are adept at business skills and an instrumental part of the innovation team.
Innovation should be treated like work. The most innovative companies treat innovation as they would any other business process. They work at and invest in it.
Finally, organizations should be able to facilitate rapid understanding and adoption of emerging technology. Top performers adapt their strategies and processes to account for the breakneck pace of innovation, putting plans into action by adopting agile process. They also embrace an outside-in approach to innovation, making sure they look to the many external sources (i.e. open source communities, maker communities, crowdfunding platforms, marketplaces and contests, etc.) of learning and opportunity to help fuel, filter and prioritize their innovation opportunities.
What are the other highlights from the report?
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 in our Digital IQ Survey, we found that only 20 percent of respondents rated their companies as having ‘excellent’ Digital IQ.
We define Digital IQ as how well companies understand the value of technology and weave it into the fabric of their organization. Our study revealed four additional behaviors that make the difference in enabling a business to realize sustained value from digital technology and raise its Digital IQ:
- CEO actively champions digital: 81 percent of top performers say their CEO is an active champion in the use of IT to achieve business strategy, compared with 68 percent of other companies. The percentage of CEOs as digital leaders varies widely by industry.
- The CIO and CMO have a strong working relationship: When it comes to Digital IQ, we know that strong relationships among senior executives are essential to success. But what’s really notable is just how critical the CIO-CMO relationship has become. Seventy percentof top-performing companies say they have a strong CIO-CMO relationship, compared with just 45 percent for non-top performers.
- An integrated approach to IT transformation : 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.
- Understand that digital skills are an enterprise-wide capability: 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.
Those businesses in our study that have a strong Digital IQ, the byproduct of leveraging these interlocking behaviors, were 2.2 times more likely to be top-performers in revenue growth, profitability, and innovation.
Can you explain a bit about how these digital disruptors are having an effect?
Business and IT leaders share strong concern about a number of threats that digital disruption will have on growth, with the inability to quickly understand and adopt the technology essential to remain competitive as the most pressing.
Emerging technologies, such as analytics, big data, social media, the cloud, sensors and others are essential to innovation. And the variety of emerging technologies and the velocity of their introduction will only accelerate in the foreseeable future.
Because of this, business leaders realize they must be more aggressive in learning about emerging and disruptive technology in order to understand, filter and prioritize innovation opportunities. Legacy IT platforms are often unable to support innovation efforts, causing organizations to migrate their legacy information platforms to new platforms, in order to capitalize on ongoing technology evolution and revolution.
What other trends are developing?
CEOs are beginning to actively champion digital and understand that digital skills are an enterprise-wide capability. The CIO is starting to build strong working relationships with other business leaders, including the CMO. Organizations are taking an integrated approach to IT transformation.
Enterprises are taking an “outside-in” approach to fuel innovation by embracing fresh ideas, experiences and capabilities from unlikely external sources such as open source communities, maker communities, crowdfunding platforms, marketplaces and contests, independent application developers and global innovation hubs.