Five lessons in cross-function collaboration to do digitalization right

As COVID-19 has interrupted businesses and business functions including digitization, industrial companies have been forced to grapple with the question of whether they are getting value from digital investments. The pandemic revealed the importance of digital technology both for enabling business resilience and helping firms partner with other organizations to innovate. It is thus critical that industrial companies re-evaluate their digital strategies to ensure they can deliver resilience for the future and drive innovation.

Firms could benefit from following the example of collaboration ‘Champions’ that are leading the way. As highlighted in the Accenture Industry X.0 ‘Together Makes Better’ report, these Champions are earning four times the revenue growth of their industry peers. Their example provides a template for success that will help industrial and other firms adapt to the post-COVID-19 world.

Champions are successful because they take a collaborative approach to transformation that integrates business units and breaks down business silos. Our research identifies five key behaviors that set Champions apart. Considering that these businesses secured EBIT (earnings before interest and tax) growth of 27% between 2017-19 compared to the 2.1% experienced by their peers, there is good cause to take note of what they are doing. They are likely to emphasize:

Clarity and a common goal. Unlike in siloed businesses where different functions often run their own transformation programs and compete for resources, Champions clarify what digital success means for the organization, and why collaboration is an imperative. They also provide a clear plan for how the departments will reach their objectives simultaneously and in a joint manner.

Caterpillar has done just that. The company centralized its digital responsibilities in a single team and the CEO mandated a top-down collaborative culture. This enabled core engineering and production systems to reengineer around digital and connect with each other, something that led to immediate efficiency gains. To drive further value, Caterpillar created digital roles across the entire organization and rolled out new internal business structures and units to foster collaboration.

Executive accountability. Eighty-two percent of Champions have one C-suite executive who drives digital transformation and is responsible for its success in each part of the enterprise. These businesses have also put measures in place to ensure that every transformation project is checked against the broader business and digitalization strategy. Function leaders and their teams communicate regularly to align on objectives, execution and overall progress.

One North American technology company achieves these goals by creating teams from different departments to work on cross-function ‘lenses’ (things like the customer journey, the product journey, etc.). The firm’s chief digital officer is solely responsible for the program and drives focus, accountability and collaboration across all related functional operations. Since its inception, the initiative has helped achieve a 15% increase in revenue and a 5% reduction in IT costs.

Choosing the right bets. Champions know where and how to allocate capital. They do it by prioritizing projects that require collaboration across function borders, before allocating funds and driving focused execution.

Take Spanish shipbuilder Navantia. The company uses a digital twin platform called Shipyard 4.0 to optimize its activities. The platform is overseen by The Navantia Technology Center (NTC), which brings together experts in engineering and design, production and maintenance. The engineers use physical-asset specifications provided by the production experts to create the digital twin. They then leverage usage and maintenance data to model simulations.

Platform interoperability. Champions invest in and scale collaborative platforms while avoiding siloed solutions. They understand how to harmonize different platforms in the cloud and ensure they work together seamlessly toward shared outcomes. This empowers different business functions to collaborate virtually and continuously.

Covestro, a German chemicals company, understands this well. Its Optimized System Integration (OSI2020) platform digitizes production systems and unites both the systems and the data they contain within a single integrated, cloud-based platform. The company has also replaced its design and engineering applications with a plant and engineering platform that captures, manages and shares data about asset specifications and procedures, making for a safer and more efficient plant.

IT-OT convergence. Champions build smart Information Technology-Operating Technology governance policies from the outset. They provide clear guidelines on how their IT and OT teams should work together and favor multidisciplinary teams with the tech know-how to gather, deliver and analyze data that yields high-value business insights.

This is the approach taken by Western Digital. At the beginning of its digital transformation, the company established a data governance group across the two technology domains. The group focuses on guiding ‘data stewards’— employees who champion data quality and data sharing initiatives within and between their respective divisions. The group also helps manage core platform decisions for the company. This allows Western Digital leaders to efficiently organize, secure and extract valuable insights from its entire data warehouse.

Cross-functional collaboration is a prerequisite for successful digitalization in industrial and other companies. As digital will be essential to navigating change in the post-COVID ‘never normal’ world, companies need to put the foundations in place now. Those that do manage to enable greater collaboration across functional boundaries will reduce waste and costs and earn measurable financial returns.

About the authors: Nigel Stacey is global lead for Accenture Industry X.0 and Raghav Narsalay is global lead for Accenture IX.0 Research.