Tech's Transformation Conundrum

Constant, disruptive change is the new normal for organizations. Future success will be determined by their ability to transform not just once, but continuously. We call this “digital sustainability,” and we built a data-driven index to analyze what digitally sustainable organizations do differently. In this series, we share key findings from the research, including the leadership and organizational capabilities needed to thrive in the digital world.

To paraphrase Charles Dickens, it is the best of times; it is the worst of times…for the tech industry. Not unlike the book that classic line opens, a troubling dichotomy between the haves and have-nots currently exists in tech. For every high-growth disruptor company, there is an opposite slow-growth legacy one. And while organizations in the former category are well suited to the constant change demanded by digital transformation, those in the latter category are ill prepared for the future.

“Decades-old legacy tech giants are in need of structural, cultural and work process reform,” said Werner Penk, president of Korn Ferry's Global Technology practice. “Once pioneers of the industry, the more traditional firms now need to overhaul their strategies and work processes to ensure future survival.”

As a result, the technology industry isn’t as ready for the digital world it helped create, as many—including tech industry leaders themselves—think. A study commissioned by Korn Ferry and conducted by Oxford Analytica and The Korn Ferry Institute on digital sustainability, or the capacity of organizations to continually transform to respond to digital change, found that Technology, as an industry, scored lower than Financial Services on digital fitness. Overall, Technology’s digital sustainability score totaled 44 out of 100, which is as bad as it looks. The global study ranked 362 organizations across five industries and 14 countries on five dimensions—Agility, Connectivity, Discipline & Focus, Empowerment & Alignment and Openness & Transparency— and assigned a score out of 100 that reflects overall digital sustainability and performance in each dimension. By comparison, Financial Services’ scored 73 out of 100, beating out Technology by nearly 30 points for the top spot. Moreover, Technology only managed to score two points higher than Life Sciences & Healthcare (Consumer and Industrials are the other two industries measured by the index.).

Technology suffers most from a lack of Connectivity between networks of people and organizations, and Empowerment & Alignment, meaning the organization lacks a clear purpose with an engaged workforce equipped to make decisions to achieve its goals. The more employees understand what the organization stands for, its strategy, and how their skills contribute to what it is trying to achieve, the more likely its digital transformation efforts are to succeed. Fostering this kind of internal culture is where Technology, particularly legacy firms, falls down—the industry scored less than 10 out of 100 in both dimensions. Put another way, large, bureaucratic, siloed technology firms operate just like large, bureaucratic, siloed firms in every other industry.

“Much can be learned from the leading technology organizations in their approach to co-developing solutions with clients, partners, and even competitors to accelerate delivery,” said Penk. “With weaker networks and lower levels of external collaboration, traditional companies could see themselves falling behind their less isolated rivals.” The data bears this out—Technology firms individually ranked as the first, fourth, and eighth most digitally sustainable organizations in our overall Index, in part because of their strong scores in Connectivity and Empowerment & Alignment.

Technology also outperformed every other industry on Openness & Transparency, scoring 92 out of 100. That may seem ironic given recent headlines, which range from harassment scandals to diversity myopia to investigations about how advertising and news fraud may have impacted the U.S. Presidential election. But the industry’s high score is owed more to internal and external communications and collaboration among employees than external clarity on business practices and corporate decision making.

To learn more, read our new Digital Sustainability report.

Read how other industries fared in the Korn Ferry Digital Sustainability Index:

Financial Services

Healthcare & Life Sciences

Industrials

Consumer