Most large companies take a similar approach to corporate innovation, running it out of centralized innovation groups. But companies in China, both domestic and foreign, are much more likely to turn to market-facing sources of innovation, including customers, competitors, and front-line employees. China's fast growth is producing a disproportionately large share of new customers for many industries, which demands an orientation toward generating ideas closer to customers to drive more market-led innovation.

The Michelin case study is about business and cultural change through the implementation of a digital transformation. It describes how Michelin, a 130-years old leading global player in the tire industry, was facing intense competition from Asian low-cost players, who were commoditizing the core product. In addition, large digital platforms, such as Amazon or Alibaba, were disintermediating distribution and vehicle ownership patterns were also changing with the emergence of new rental and car-sharing models. These changes brought the message home to the management that Michelin needed to refocus on putting its customers at the heart of everything the company does, simplify operations, empower its people to make the change happen and innovate its business model to find new sources of value. Michelin embarked on a digital transformation that was the catalyst for all the transformation of the global business. The case details the steps taken by senior management to initiate and deploy its digital transformation and, in parallel, evolve what was a very strongly entrenched company culture. The success of Michelin's digital and culture change was in large part due to a strong commitment to digital transformation from senior management and a careful execution orchestration taking into account the highly decentralized and global nature of the organization.

Recent advances in digital technology and the shift to digital activity accelerated by COVID-19 make digital mastery more essential than ever. In this article, Didier Bonnet of IMD and George Westerman of MIT's Sloan School reappraise the elements of digital capability and identify where the opportunities lie for gaining competitive advantage in customer experience, internal operations, employee experience, and business model innovation, as well as the digital platforms needed to access them.

Forging partnerships and investing in startups for new technologies can help companies catch up with rivals, but it doesn't always give them a competitive advantage. Most would do better to rethink their innovation systems. They must treat external innovation as a way of balancing and broadening their portfolios, not as a substitute for internal innovation. Only then will they be able to execute the transformations that will allow them to win the digital future.

This is an MIT Sloan Management Review article. A study by MIT Sloan Management Review and Capgemini Consulting finds that companies now face a digital imperative: adopt new technologies effectively or face competitive obsolescence. While there is consensus on the importance of adopting digital technology, most employees find the process complex and slow. Many say their leaders lack urgency and fail to share a vision for how technology can change the business. Companies that succeed tend to have leaders who share their vision and define a road map, create cross-organizational authority for adoption and reward employees for working towards it.