The pandemic posed acute challenges to businesses and will continue to help drive faster adoption of digital technologies to enable companies to be more agile and react quickly and productively in a changing world.
Responses to COVID-19 sped the adoption of digital technologies by several years, a McKinsey study finds. Overall, companies accelerated digitization of customer and supply chain interactions, as well as internal operations, by three to four years, McKinsey says.
Such investment increases enterprise agility, which became a defining hallmark for success in 2020, indicates a report, Organizational Agility: Roadmap to Digital Acceleration, stemming from a global Workday survey of 1,024 C-suite executives and business leaders.
The Workday survey — conducted amid the pandemic in mid-2020 — indicates that not only do business leaders plan to accelerate digital initiatives, but one third notes that accelerated rates of digital growth would be the single change that would improve organizational resilience in future crises.
Over one-third of executives expect 75% of revenue to come from digital (either digital products or traditional goods sold via online means) in three years. This has tripled since 2019, where one-in-10 firms had the same projection.
No doubt, the pandemic highlights the business case for agility. Overall, organizations that responded fastest to the pandemic are more likely than others to have embraced agility by embedding things such as data accessibility and cross-functional collaboration, the study showed.
Fast vs. slow responders
The research asked firms whether they were equipped to respond to the COVID-19 pandemic at speed and scale. Two groups were identified, "fast responders" (73%) and "slow responders" (27%). Fast responders were always further ahead in their digital transformation journeys. The study indicates that fast responders are more:
- Focused on digital growth. Thirty-five percent ranked accelerated digital growth as the most important change to ensure resilience in a future crisis versus 32% of all firms. Fast responders also reported much higher levels of digital revenue growth during the pandemic than slow responders.
- Data savvy. More than one-third (36%) make timely, accurate data accessible to those who need it, while data is completely or somewhat siloed among 50% of slow-responder firms.
- Aligned internally. In general, fast responders report higher levels of alignment between the CEO and the rest of the C-suite, and a greater propensity for employees to self-organize in collaborative teams.
- Inclined to continuous planning. Half of fast responders take a continuous approach to planning, compared to 43% of respondents overall. Those that embraced continuous planning-a new best practice-found three core enablers for success: access to data, deployment of smart technologies, and an agile culture.
Challenges to digital acceleration
Even fast responders were caught unaware by the pandemic. A majority (84%) of leaders surveyed reported barriers to working remotely when the pandemic hit. In McKinsey's survey of almost 900 global executives, nearly all of the companies stood up workable solutions within a few months.
Leaders also face challenges in successfully deploying digital acceleration plans, and culture is a big part of it.
In the Workday study, while more than half of organizations (56%) say their technology is compatible with digital transformation goals, only 16% of the organizations say the same about their company's culture. Without additional emphasis on employees and culture, organizations run the risk of not getting the desired returns on technology investments.
CEOs clearly see the cultural challenges. The Workday study identified them as the most optimistic of the C-suite in regard to their firm's digital transformation efforts. Yet CEOs also view culture as a barrier to almost all aspects of agility, with nearly one-in-three seeing culture as the biggest barrier to continuous planning (31%) and data accessibility (32%).
Strategies to achieve agility
Creating an adaptable culture to embrace agility was identified by the Workday study as a key strategy to adopting digital technologies to achieve greater organizational agility.
Other strategies identified in the report include:
- Leveraging cross-functional teams to boost up-skilling and reskilling to empower employees.
- Investing in smart technologies to increase digital revenue growth. Finance is especially focused on ensuring that systems are highly integrated (64%) and cloud technology is deployed (49%) to improve the planning/reporting loop as well as mitigate the risk of future crises.
- Ensuring real-time access to data. The skills deemed most valuable among IT and operations leaders are the ability to use smart technologies (33%) and advanced analytics and data visualization (30%).
No doubt, business leaders have been forced to assess what they're doing right, and what needs improving to drive digital growth, increase agility and be more prepared for the next crisis. Doing nothing to accelerate digital growth is no longer an option, and agile organizations have never been as strongly positioned to benefit.