Accelerating Digital Innovation Inside and Out
Agile Teams, Ecosystems, and Ethics
Digitally maturing companies innovate at far higher rates than their less mature counterparts. Eighty-one percent of respondents from these companies cite innovation as a strength of the organisation, compared with only 10% from early-stage companies. Maturing organisations invest more in innovation and constantly drive toward digital improvement in ways that less mature companies do not. Notably, innovation happens throughout digitally maturing enterprises; it isn’t caged in labs or R&D departments. Digitally maturing companies are more likely to participate in digital ecosystems, and their employees are often organized in cross-functional teams.
Employees of digitally maturing organisations have more latitude to innovate in their jobs — regardless of what those jobs may be. Nearly five times as many survey respondents from maturing companies as from early-stage companies report that their organisations provide them sufficient resources to innovate. This year’s research also finds a strong relationship between a company’s rate of digital innovation and its staffers’ confidence that the organisation will be stronger in the future, thanks to digital trends.
Digitally maturing companies are far more likely than their less mature counterparts to collaborate with external partners. While 80% say their organisations cultivate partnerships with other organisations to facilitate digital innovation, only one-third of early-stage companies do the same. The nature of collaboration also differs depending on maturity level. Digitally maturing organisations tend to form alliances that involve less formal, controlled relationships; they rely more on relational governance and less on detailed contracts. Formal partnerships can still serve a vital role in collaboration and often exist as part of larger business ecosystems.
Cross-functional teams are another important source of digital innovation. Not only are digitally maturing companies more likely to use cross-functional teams, those teams generally function differently in more mature organisations than in less mature organisations. They’re given greater autonomy, and their members are often evaluated as a unit. Participants on these teams are also more likely to say that their cross-functional work is supported by senior management. For more advanced companies, the organizing principle behind cross-functional teams is shifting from projects toward products.
Digitally maturing companies are more agile and innovative, but as a result, they require greater governance. Organisations need policies that create sturdy guardrails around the increased autonomy their networking strength allows. Digitally maturing companies are more likely to have ethics policies in place to govern digital business. Policies alone, however, are not sufficient. Only 35% of respondents across maturity levels say their company is talking enough about the social and ethical implications of digital business.
When asked to predict whether their company will be stronger or weaker moving forward, respondents from digitally maturing and early-stage companies show striking differences. The former believe their organisations have the power to adapt to changes wrought by digital disruption and expand their capabilities, while the latter see disruption as a result of market forces they cannot control.
Accelerating Innovation Through Digital Ecosystems
Choosing a health plan can be tough, especially if you’re one of the nearly 60 million seniors receiving Medicare benefits. With thousands of private insurers vying to administer Medicare plans to people older than age 65, many seniors have difficulty identifying an appropriate plan, one that optimizes the right mix of costs, physician access, and health coverage.
Enter California-based Enroll Hero, a startup that calls itself a concierge for Medicare. The company’s online tool compares Medicare health insurance plans and offers customized recommendations to its users. Enroll Hero recently joined forces with insurer MetLife to promote its service in seven-plus states. The promotion reached thousands of MetLife customers but did not recommend a single MetLife health plan. The reason: MetLife doesn’t offer a Medicare health plan, and even if it did, Enroll Hero’s mission is to be an unbiased platform. It wouldn’t tout a plan unless it was the right one for that customer.
MetLife has operations in more than 40 countries and total annual revenues of more than $60 billion, but for Greg Baxter, the company’s chief digital officer, working with start-ups through Techstars is sound strategy. It helps ensure that MetLife can succeed in what Baxter calls the critical phases of innovation: ideation, incubation, and implementation. “Innovation is synonymous with growth,” he notes.
The Techstars-MetLife venture typifies the approach to innovation that digitally maturing companies embrace, according to the research that supports the 2019 MIT Sloan Management Review and Deloitte report on digital business.
In this year’s research, we found that digitally maturing companies are far more likely to encourage digital innovation throughout their enterprises. Yet it isn’t just that these companies do more innovation; they also innovate differently from other companies. Digitally maturing organisations are more inclined to rely on external partnerships for innovation. While organisations at all maturity levels report these partnerships to be vital, those developed by digitally maturing companies are generally organic and fluid rather than carefully contracted and structured. These organisations are also more likely to use cross-functional teams as a mechanism for driving innovation. What’s more, their teams operate differently: They’re offered greater autonomy, are evaluated as a unit, and are given a more supportive environment for success. These internal and external sources of innovation increase digitally maturing companies’ abilities to respond quickly to changes in a competitive environment.
Our research also uncovered risks to that increased agility, which can lead a company’s innovation efforts to outpace its governance policies. With the proper ethical guardrails in place, however, digitally maturing organisations are well-prepared to thrive in the face of digital disruption. Their innovation efforts will be critical as technologies and market conditions continue to evolve. As John Bungert, MetLife’s assistant vice president for innovation, says of his industry.
“There’s a lot of effort, energy, and capital flowing into people and companies that are interested in forming new business models, new experiences, and new products around insurance. We can go the way of Bethlehem Steel3 and ignore it, or we can find ways to work together and be the incumbent that delivers all of those new values to our customers.”