Continuous evolution key to organisational transformation: MIT

A new report by MIT Technology Review Insights seeks to understand how organisations approach transformation and the obstacles they encounter in adapting to a continually changing business and technology environment.

The report, "Evolutionary organisations reimagine the future," is produced in partnership with Thoughtworks and draws on a survey of 275 executives and business leaders along with in-depth interviews with digital transformation, business strategy, and emerging technology experts from organisations including Prudential Financial, PEXA, and INSEAD.

The findings are as follows:

Digital transformation is not solely a technology issue. Adopting new technology for its own sake does not set the organisation up to continue to adapt to changing circumstances. Among survey respondents, however, transformation is still synonymous with tech, with 70% planning a new technology adoption in the next year, but only 41% pursuing changes to their business model.

The business environment is changing faster than many leaders think. Most survey respondents (81%) believe their organisation is more adaptable than average and nearly all (89%) say that they're keeping up with or ahead of their competitors - suggesting a wide gap between the rapidly evolving reality and executives' perceptions of their preparedness.

All organisations must build capabilities for continuous reinvention. The only way to keep up is for organisations to continually change and evolve, but most traditional businesses lack the strategic flexibility necessary to do this. Nearly half of business leaders outside the C-suite (44%), for example, say organisational structure, silos, or hierarchy are the number-one obstacle to transformation at their firm.

Focusing on customer value and empowering employees are keys to organisational evolution. The most successful transformations prioritise creating customer value and enhancing customer and employee experience. Meeting evolving customer needs is the constant source of value in a world where everything is changing. However, many traditional organisations fail to take this long view, with only 15% of respondents most concerned about failing to meet customer expectations if they fail to transform.

Rapid experimentation requires the mindset to accept failure and the ability to recover quickly. Organisations agree that iterative, experimental processes are essential to finding the right solutions, with 81% saying they have adopted agile practices. Fewer are confident, however, in their ability to execute decisions quickly (76%) - or to shut down initiatives that aren't working (60%).

Evolutionary organisations will succeed in the future. Companies that develop the capability to repeatedly reinvent what they do - not just the technology they use to do it - will be most prepared to respond to future disruptive technologies, market ecosystem changes, and societal shifts. When adaptive structures and mindsets are woven into strategies and operating models, organisational value is created and extends beyond that of a single digital transformation initiative.

"Successful transformation requires more than just adopting new technology - it demands a focus on building an organisation's capability for continual evolution," says Laurel Ruma, global director of custom content for MIT Technology Review. "Enterprises that develop the ability to repeatedly reinvent themselves will be the ones to succeed in the future."

"Transformation suggests there's a beginning and an end. Yet this research shows that organisations must constantly evolve and adapt to changing market dynamics and customer needs," said Marcelo  De Santis, Chief Digital Officer, Thoughtworks.

"For the modern digital business, transformation is a continuous series of 'experiments' in pursuit of building an 'evolutionary mindset' organically throughout all levels of the organisation - one shift at a time."