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DigitalIQ

PwC’s 10th Research

Based on data for 2018

The no-excuses way to win in a digital world.

Pw

C D

IGIT

AL

IQ

20

18

Svetlana

Medvedeva

Partner,

IT-consulting leader at

PwC Russia

“Since 2007, we have conducted our annual Digital IQ survey.

This year, we’re celebrating the 10th anniversary of our survey of

business unit leaders. Over this period, we have come to the

conclusion that to be successful in the digital era, you do not have

to be the next Amazon, Google or Netflix. There is no need to follow

the example of Pitney-Bowes, which has transformed its entire

business by going digital.

However, companies may well have to change their operating

procedures to create a solid foundation for business development.

You are most likely to face obstacles. It is not about time or money.

It is not about the lack of resources, either. It is about you and your

attitude to digital strategy. It is time to turn your dreams into reality.

The 2018 survey was carried out with Oxford Economics (UK) from

January to March 2018. More than 2,280 respondents from 60

countries were surveyed, including 57 Russian participants.

Respondents included managers of business units and engineering

services, as well as managers responsible for digital experience

(user experience and digital technology). It is especially important

to point out that 61% of all respondents work for companies with

revenues of at least USD 1 billion, while 24% represent companies

whose revenues range from USD 500 million to USD 1 billion). The

share of Russian companies within these categories constituted

56% and 16%, respectively.

I very much hope that the content of our research will help your

company to implement a digital transformation and overcome any

potential obstacles along the way”.

4

You might be a digital poser.

Time to face it

EXPERIENCE

Companies say they’re digital, but many aren’t investing and

behaving digitally. Time to face reality. Stop pretending and

start changing.

Disruption surrounds you.

Time to take control

DISRUPTION

Only 31% representatives of companies globally and 25%

companies from Russia say digital disruption is a threat to their

business. They’re wrong. But it’s not too lateof top financial performers say their business faces a serious

threat from disruption, compared with 27% of others

Help wanted:

Real digital leaders

LEADERSHIP

Your team has more digital know-how than you do. That’s a

problem. You need more knowledge and new ways of

managing to succeed.

of top financial performers have an executive in charge

of employee experience

of top financial performers say their leadership is digitally

savvy and helps the workforce think in a new way,

compared with 41% of others

WORKFORCE

of top financial performers say they lack a strategic focus on

training, compared with 47% of others

You’ve got a skills gap. Not the

one you thinkThere’s a disconnect between the skills and technologies that

companies say matter most and what they’re investing in. More

than half don’t even have a structure for delivering training.

What the success consist of?

91%

64%

54%

28%

5

Efficiency Seekers

Use digital to do business smarter and faster

Modernizers

Create new capabilities to modernize our business

Redefiners

Change our core business model to redefine

our business

Industry Explorers

Break ground in new markets or industries

51%

22%

World Russia

36%16%

30%23%

18%4%

What does your company aspire

to do?

YOUR ASPIRATION

Choose an aspiration to see how each group is managing

digital experience, disruption, leadership and workforce and the

financial impact of those decisions.

Efficiency Seekers

Doing business smarter and faster

Efficiency seekers are focused on doing business smarter and faster using

technology, with a sharp eye toward measuring digital outcomes and bringing

new skills to the workforce. Many have been through at least one cycle of

disruption and feel confident. And yet, only 59% explicitly incorporate digital

strategy into corporate strategy and just over half say their leadership is digitally

savvy. Efficiency seekers are finding success, but shouldn’t stop at the end of

the efficiency comfort zone.

believes digital is synonymous with IT

7

EFFICIENCY SEEKERS: DIGITAL DEFINITION

Think smarter – close the gap

With 37% of efficiency seekers globally (33% from Russia)

equating digital with IT, there’s a disconnect between mindset

and results. Efficiencies have helped wring profits and secure

revenue, but the big prize will be in the full realization of digital.

Capitalize by working smarter, not just faster. Evolve digital

beyond software, hardware and technical tools into a way of

operating and encouraging innovation across the organization.

To realize the promise of digital, go beyond

speed and efficiency

Modernizers Industry Explorers

Digital reflects our unified approach

to business, customer & employee

experience and tech

Digital goes beyond tech reflecting a

mindset that embraces innovation and flat

decision making

Digital refers to efforts in a specific area

Digital refers to all the investment we are

making to integrate technology into all parts

of our business

Digital is synonymous with IT

Efficiency

Seekers Redefiners

8% 8% 16% 18%

12% 20% 30% 23%

24% 39% 28% 14%

19% 19% 13% 8%

37% 13% 14% 37%

37 %

8

EFFICIENCY SEEKERS. EXPERIENCE

Efficiency seekers who have an executive in charge of experience are more likely to see increased profits.

83%

84%

93%

92%

Companies that increased profits each of the last 3 years All other companies

Executive in charge of

employee experience


customer experience

Crush silos, involve employees and get results

Most of efficiency seekers say employee experience is critical

to business performance and some of them have an executive

in charge of customer and employee experience – yet more

than half said interdepartmental hurdles are a major barrier to

managing these experiences. Commitment to employee and

customer experience pays off. 64%say their digital investments have paid off by creating

better customer experience

9

Effective experience strategies equal stronger profits for efficiency seekers.


Our customer experience

strategy is effective

Our employee experience


90%76%

83%74%

Experience isn’t the foundation of digital strategy for all efficiency seeking companies, but it should be.

77%

76%

75%

88%Customer experience is critical

to our digital transformation

strategy

Employee experience is critical


strategy



10

Involve employees in important decisions to

better equip them with the right tools they need

to do their job. Provide constant training and

opportunities to learn. Next, break down barriers

by creating cross-department teams. You’ll boost

motivation, tap into new thinking and allow your

workforce to deliver better customer experiences

that drive greater profitability.

Recommendations


11

Sitting pretty – maybe unprepared.

Many efficiency seekers have already faced disruptive

skirmishes and have emerged intact. But they could be more

vulnerable than they think in the future. Disruption is a shift in

relative profitability from one prevailing business model to

another. The dominant companies, accustomed to the old

approach, lose market share to a new group of companies.

Overlooking those outside competitors increases efficiency

seekers’ vulnerability. The business landscape isn’t just filled

with companies whose known competitors bested them with

digital acumen, it’s also filling up with start-ups and competitors

from outside who are poised to exploit an unfilled or uncreated

customer need. In today’s market, you can see this in pockets

of healthcare, where the biggest digital disruption is just as

likely to come from new, unexpected players as it is from within.

Don’t ignore the signs of disruption.

Factors influencing efficiency seekers’ strategic digital transformation moves outside the organization.

Market intelligence

47%

Pressure from competitors

outside the industry


inside the industry

11% 19%

EFFICIENCY SEEKERS. DISRUPTION

12

Efficiency seekers have faced one round of disruption and don’t see new threats around the corner.

That’s misguided.

Some factors influencing efficiency seekers’ strategic digital transformation moves within the organization.

Financial readiness Insights from big data

Executive instinctCybersecurity and privacy risks

41% 20%

14% 6%

27%Of efficiency seekers believe they face a serious threat

from digital disruption.


13

Heading off disruption isn’t a top expectation for digital investment, but it is helping achieve that.

Embrace the promise of digital—that is, new

ways of solving problems, creating new

experiences and accelerating business

performance. Make better use of big data to

help inform decisions and refocus on external

competitors to seek new ideas and identify

potential threats. Don’t count on legacy

strengths or efficient operations as a hedge for

the next wave of disruption. The time to prepare

is always now. Shift the responsibility for setting

digital strategy away from just the CTO or CISO

and toward the CEO; 38% of top financial

performers in the survey do so already while

only 17% of efficiency seekers do.

44%

41%

43%

12%

6%

27%

We expect our digital investments to help Our digital investments have paid off

Innovate our products

Disrupting our own or other

industries

Combat new industry

entrants

Recommendations


14

Putting the lead in leadership

Now, catch up to your workforce in digital

Many efficiency seeker chief executives are on the right track for digital

Say their CEO is champion for digital

78%

There’s a knowledge gap between leaders and employees among efficiency seeking companies.

Our leaders are digitally savvy and

help the workforce think in new ways

Our workforce is digitally savvy 70%

55%

Companies and executives that take digital seriously include it in their overall strategy.

The executives in charge of digital are

involved in setting high-level business

strategy

We explicitly incorporate digital

strategy into corporate strategy59%

75%

EFFICIENCY SEEKERS. LEADERSHIP

15

Recommendations

Being digitally fit starts at the top. Emulate

digital behaviors: further incorporate human-

centered design and agile management into

everyday process and make cross-functional

teams a part of how you do business.

Strong digital leaders flatten decision making and encourage innovation.

Senior management encourages innovation at the

mid-management and employee level

72%

We have eliminated bureaucracy and can move quickly

to put decisions into action

We have empowered individuals across the organization

to make important decisions

65%

64%

EFFICIENCY SEEKERS. LEADERSHIP

16

Time to get to what’s next —now

70% of efficiency seekers say they arm their workforce with the

tools they need to work smarter. A focus on user experience

and human-centered design is paying off with better employee

and customer experience. And one-third say the largest share

of their digital budget has gone toward creating a more digitally

savvy workforce. But, there’s a disconnect: skills around

emerging tech like AI are sorely underdeveloped.

Leveraging emtech for future success.

Our organization’s mobile skills are highly or quite

developed

74%Our organization’s cloud skills: are highly or quite developed

When it comes to the basics, efficiency seekers have it covered

62%

EFFICIENCY SEEKERS. WORKFORCE

17

Efficiency seekers are missing the boat on emerging technologies

Our organization’s skills are highly or quite developed in:

58%

Internet of Things

32%

Robotics Augmented reality

14%

12%

Blockchain

11%

Virtual reality

9%

Robotic Process

Automation (RPA)

6%

Drones

1%

Artificial intelligence


18

Efficiency seekers are more likely to say their digital capabilities are highly or quite developed

72%

User experience and human-

centered design

68%

Digital strategy and planningCybersecurity and privacy

67%

67%

Creative strategy and design

65%

Technology architecture and

design

63%

Evaluating emerging

technology

63%

Data analytics

61%

Prototyping

UI

UX


19

The biggest obstacles for upskilling the efficiency seekers’ workforce are…

Lack of structure for delivering

training

Lack of time

Lack of interest among employees

49%

47%

64%

60%

Lack of institutional knowledge

Recommendations

The skills at the intersection of technology and

innovation can propel efficiency seekers

forward. 82% of top-performing companies

report paying close attention to the human

experience around digital and tech.

But traditional training programs are missing the

mark. Instead, focus on new tools and learning

plans that push toward new ways of learning

and working across departments and silos.


20

Be confident, but not overconfident

Efficiency seekers have many of the right digital tools and

behaviors in place and many have found financial success.

Their CEOs are champions for digital and their companies are

focused on experience and working smart. But there are signs

that this won’t be enough in the long run. Nearly one-third say

profit margins have been flat the last three years; 13% say

they’ve declined.

Disruption can happen to you again.

Get ready now.

say profit margins have been declined the last three years.

13%

Recommendations

Efficiency seekers should evolve their definitions of

digital, prepare for the next wave of disruption and

move beyond the obvious emerging tech and skills

they’re developing to be ready for what’s next. To

face their next disruptive battle boldly, they’ll need to

broaden their view of digital and instead adopt a

mindset where digital is woven through every area of

the business.

EFFICIENCY SEEKERS. SUCCESS PATH

Modernizers

Creating new capabilities for the future

Modernizers want to create new capabilities and most are embracing more

advanced definitions of digital to get there. Their senior leaders encourage

innovation at all levels and their digital efforts so far have improved retention

and recruitment. But, they say digital strategy is woven into corporate strategy

only about half the time. As a group, they’re facing disruption at different rates

and from different places and will need to align their beliefs about digital with the

challenges they face.

22

MODERNIZERS. DIGITAL DEFINITION

8% 8% 15% 18%

12% 20% 30% 23%

24% 39% 28% 14%

19% 19% 13% 8%

37% 13% 14% 37%

Living the evolution of digital

Nearly half of modernizers view digital as an investment into

integrative technology across the business. That focus is

contributing to strong financial performance. Realize the

promise of digital, by embracing broader definitions that

include collaborative, flat ways of working and bolstering the

digital acumen of senior leaders.

Modernizers are weaving new tools into

their business – and it’s paying off.

of modernizers say their digital investments are creating

better experiences for customers

39%



experience and tech



decision making




of our business


Modernizers Industry ExplorersEfficiency

Seekers

Redefiners

23

MODERNIZERS. EXPERIENCE

Your customers are demanding attention

Overall, 74% of modernizers see customer experience as

critical to digital transformation, but only 39% say their digital

investments are creating better customer experiences. That’s

less true for top financial performers in the group. Why? They

see customer and employee experience as equally crucial.

Investing in experience pays back

in dividends.

Putting an executive in charge of experience has financial value for modernizing companies.

73%

72%

85%

88%

Companies that increased profits

each of the last 3 yearsAll other companies


employee experience


customer experience

Is there a payoff for modernizers?

of modernizers say their digital investments are creating

better experiences for customers

39%

Effective experience strategies have helped bring stronger profit to modernizers who focus on it

24




Making experience matter to the bottom line pays off for modernizing companies.

88%68%

82%67%

Customer experience

is critical to our digital

transformation strategy

Employee experience

is critical to our digital

transformation strategy

Companies that increased profits each of the last 3 years Все остальные компании

74%

68%

82%

70%

Recommendations

Bolster employee and customer experience and

develop a strategy that ties in both to broader

digital and corporate priorities. The payoff?

More loyalty, bigger price premiums – and

profits.

All other companies

MODERNIZERS. EXPERIENCE



25

A muddled middle faces tomorrow

Modernizers are spread across the disruption spectrum, with

some facing imminent threats and others just emerging from

disruption. Yet, only one-third believe they face a serious

threat from digital disruption. Fortunately, modernizers are in a

strong position, with a workforce whose agile management and

human-centered design skills are strong. What’s more, nearly

60% of modernizers say they encourage innovation at all

levels.

Success today doesn’t equal the same

tomorrow.

of modernizers say their digital investments are helping

combat new industry entrants

45%

Factors influencing modernizers’ strategic digital transformation moves outside the organization.

34% 15% 27%

MODERNIZERS. DISRUPTION

Market intelligencePressure from competitors

outside the industry


inside the industry

26

37% 36%

Technological maturity

27%

Insights from big data

16%

Executive instinct

7%

Cybersecurity and privacy risks

Some factors influencing modernizers’ strategic digital transformation moves within the organization.

Too few companies anticipate disruption and take control 33%

Of modernizers believe they face a serious threat from

digital disruption the most of all groups.


Financial readiness

27

Heading off disruption isn’t a top priority for all modernizers, but for those who anticipate it, there are signs it is paying off

Recommendations

Adopt core principles for winning the game of

disruption. Companies with a clearly

differentiated identity are better able to thrive.

Spread these principles across the business

so people feel like they’re part of something

collaborative, transparent and bigger than

their own work. By doing this you can also

take advantage of the skills that already exist

among your workforce.

45%

54%

40%

15%

13%

34%



Disrupt our own or other

industries

Combat new industry

entrants


28

MODERNIZERS. LEADERSHIP

Attitude counts - and so do actions

Is it possible for leaders to champion digital and incorporate key

elements of working digitally while not fully embracing the

promise of digital themselves? For modernizers, the answer is

yes. On one hand modernizers build teams that bring together

technologists, creatives and business experts, and break down

bureaucracies to make faster decisions; however, they have yet

to fully incorporate digital into their broader corporate strategy

across the business or bring key leaders up to speed in mindset

and skills.

Time to embrace digital across the business

and bring leaders up to speed.

There’s a knowledge gap between leaders and employees

Our leaders are digitally savvy and help

the workforce think in new ways


50%

51%

69%

Excluding digital from broader corporate strategy creates vulnerability for modernizing companies.

The executives in charge of digital

are involved in setting high-level

business strategy

We explicitly incorporate digital

strategy into corporate strategy

Many executives at modernizing companies have the right mindset. That’s a good start

Our CEO is a champion for digital

75%

29

Strong digital leaders flatten decision-making and encourage innovation. Modernizers are getting closer.

Senior management encourages innovation at the mid-

management and employee level

69%

We have eliminated bureaucracy and can move quickly


We have empowered individuals across the organization

to make important decisions

67%

59%Being digitally fit starts at the top and requires

embracing a fail-fast culture and expanding

definitions of digital beyond the 71% of

modernizers that see digital as limited in

function--either as IT, as a one-off silo or as an

effort to integrate technologies into the

business.

Recommendations

MODERNIZERS. LEADERSHIP

30

Move into tomorrow, with a new focus

Although 68% of modernizers say they have changed their

recruitment and training processes to build a more digitally-

savvy workforce, they aren’t fully investing in—and building

employee skills in—the emerging technologies that can drive

to new, more modern iterations of their business. This group

might be missing out by not actively developing skills that align

more closely with where they want to take their organizations.

Now is not the time to get comfortable

MODERNIZERS. WORKFORCE

Our organization’s mobile skills

are highly or quite developed

59%Our organization’s cloud skills

are highly or quite developed

When it comes to the basics, modernizers are building up core skills

65%

31

But modernizers are still near the starting gate for most emerging technologies


47% 22% 20%

19% 8% 6%

6% 2%


Internet of Things Robotics

Augmented realityBlockchain

Virtual reality

Robotic Process

Automation (RPA)

Drones Artificial intelligence

32


Modernizers are more likely to say their digital capabilities are highly or quite developed

67% 65% 65%

60% 60% 60%

59% 58%

UI

UX User experience and human-

centered designDigital strategy and planning Cybersecurity and privacy

Creative strategy and design Technology architecture and

design

Evaluating emerging

technologyData analytics

Prototyping

33

The biggest obstacles for upskilling the modernizers’ workforce are:


training

Lack of time

Lack of strategic focus in training

49%

51%

54%

54%


Failure to upskill employees is a costly mistake:

38% of CEOs globally say a lack of key skills is

a threat to business growth, and about one-

third of the desired core skill sets of most

occupations will change – more than once – in

the next five to seven years. Many modernizers

need to transform the workforce by

incorporating the skills, working practices and

infrastructure to support digital

transformation. Align training and incorporate

digital tools to shift employee focus to push the

business forward.


Recommendations

34

MODERNIZERS. SUCCESS PATH

It’s not just about software and tech

Modernizers are out to bring new capabilities to their

companies and they’ve used investments in digital and more

agile ways of work to begin to build success. Nearly half of

them say they’ve seen profit margin increases up to 10% over

the past three years. But there’s still room to evolve.

.

To build new capabilities, evolve toward the

future — now.

Of profit growth over the past three years has been observed

in companies where they are trying to attract specialists with

new competencies and use more flexible working methods.

10 %

Leaders need to expand their concept of what

comprises digital. Hint: it’s everything. It’s not

just IT or siloed efficiencies – it’s a mindset and

way of working. Right now, only half of all

modernizers have leaders who boast real digital

know-how or have made digital an explicit part

of corporate strategy.

Recommendations

Redefiners

Changing and redefining the business at its core

Redefiners aim to change their companies and their business model. They are

most likely to embrace the mindset of constant innovation, flat decision-making

and the integration of tech across the business. But, their digital investments

aren’t yet driving success — 69% say they’re delivering less than expected.

That’s in part because leaders and workers lack digital savvy and digital isn’t

woven into corporate strategy. Redefiners have the right mindset, but aren’t yet

firing on all cylinders with digital.

.

36

REDEFINERS. DIGITAL DEFINITION

ModernizersIndustry

ExplorersEfficiency

Seekers

Redefiners

8% 8% 15% 18%

12% 20% 30% 23%

24% 39% 28% 14%

19% 19% 13% 8%

37% 13% 14% 37%

Words… and actions?

Nearly two-thirds of redefiners embrace the most

comprehensive and advanced definitions of digital. But there’s

a disconnect between words and actions when it comes to how

redefiners value employee and customer experience and how

digitally savvy leaders are (that is, not very).

Marry the right ideas about digital with

strategy to succeed.

30 %Say digital goes beyond tech reflecting a mindset

that embraces innovation and flat decision making



experience and tech



decision making




of our business


37

REDEFINERS. EXPERIENCE

Superpower or kryptonite?

Only 53% of redefiners – the lowest of any group – see

customer experience as critical to business performance.

Financially successful redefiners are far more likely to see

customer and employee experiences as critical and nearly all

(95%) of top financial performers in the group have an

executive in charge of employee experience.

Experience is everything.

The relationship between experience and

financial performance is real

Companies with an executive in charge of experience are more likely to see stronger financial performance

69%

66%

76%

95%

Top financial performance


employee experience


customer experience

Say their digital investments have paid off by creating better

customer experiences

27%

All other companies

Companies with an executive in charge of experience are more likely to see stronger financial performance

38

Top financial performance All other companies

Executive in charge of employee experience Executive in charge of customer experience

95%66%

76%69%

59%

59%

82%

82%


Is experience a foundation of your digital strategy? It should be.

Customer experience is critical


strategy



strategy

Top financial performers All other companies

39


Recommendations

Invest in experience leadership where it counts

to spark change, then take it a step further.

Consider moving money out of more ineffective

advertising spend to bolster employee – and in

turn, customer – experience, and you could

realize up to a 16% price premium.

40

REDEFINERS. DISRUPTION

Get ready for disruption

Redefiners have the hallmarks of the early stages of disruption: new entrants are beginning to elbow their way into their industries.

Consider the energy industry. New entrants are lining up, trying their hand in new ways. For instance, the shale business has seen

new entrants taking advantage of cheaper financing and new opportunities to “frack” for shale oil that were long ignored by legacy

players. Businesses that might never have imagined getting into more regulated, investment-heavy types of energy can get into shale

relatively inexpensively, less concerned about legacy players. These new players will help reshape the industry.

The time to prepare is coming to an end.

Factors influencing redefiners’ strategic digital transformation

moves outside the organization

Market intelligence

36%


outside the industryPressure from competitors

inside the industry

17% 24%

35%

Financial readiness

39%


28%


16%

Executive instinct

5%


Some factors influencing redefiners’ strategic digital transformation moves within the organization

41

КREDEFINERS. DISRUPTION

Heading off disruption isn’t a top expectation for digital investment, but for companies that expect it, there are signs it is paying off

Recommendations

It’s crucial for laggard redefiners to align their

actions and mindset around digital and the

possibility of disruption in order to not just

survive disruption, but also come out on top.

Those who are seeing stronger financial

performance offer a roadmap for other

redefiners to follow. Top performers are far

more likely to use human-centered design and

agile management as well as cross-functional

teams. As the dynamics of business become

more complex and digital, it’s crucial to change

with it.

52%

46%

34%

14%

15%

39%




industries

Combat new industry

entrants

29%Of redefiners believe they face a serious threat from

digital disruption

42

REDEFINERS. LEADERSHIP

59%

36%

CEO, heal thyself

Only 36% of redefiners say their company leadership is digitally

savvy and helps the workforce think in new ways. That’s a

problem for a group that aims to change their core business

model. Less than half say senior management encourages

innovation among employees and 64% aren’t explicitly

incorporating digital strategy into broader corporate strategy

across the businessров.

The quest to redefine a company needs

a new type of leadership.

Leaders lack digital knowledge and so does a chunk of the workforce. That’s a problem

Our leaders are digitally savvy and

help the workforce thins in new

ways

Our workforce is digitally savvy

37%

57%

Keeping digital siloed is a barrier to success.

The executives in charge of digital are


strategy

We explicitly incorporate digital strategy

into corporate strategy

To lead the company forward digitally, executives need more digital knowledge


65%

43

REDEFINERS. LEADERSHIP

Encouraging innovation across the business is crucial – but redefiners don’t do this


management and employee level.

61%

We have eliminated bureaucracy and move quickly


We have empowered individuals across the

organizations to make important decisions

58%

41%

Redefiners aspire to change their business

model and redefine their company, but to do

so, they’ll need to change the way they lead –

and start to build the digital skills they

lack. Bring in new, nontraditional leaders –

including creative designers or executives

from other, more digital environments – who

may be able to boost digital acumen and help

lead through change more productively.

Recommendations

44

Get the skills and payoff equation right

One-third of redefiners say they’ve put the largest share of

digital budget towards creating a more digital workforce. 62%

of redefiners say they’ve changed the way they recruit and

train to create a more digitally-savvy workforce, but just 28%

say that investment is paying off. Why? In large part, this is

because redefiners haven’t focused on what matters to

employees in technology and ways of working. The essential

skills for tomorrow incorporate creative strategy, data analytics,

agile management and development to push ideas, products

and business forward.

Redefiners are missing the mark— and

getting too little return.

Of redefiners say they’ve changed recruiting and training to

build a more digital workforce

62%

REDEFINERS. WORKFORCE

Our organization’s mobile skills are highly

or quite developed

60%Our organization’s cloud skills are highly

or quite developed

64%

When it comes to the basics, redefiners are building up core skills

45

Redefiners are less capable in emerging technologies

Specialists in our organization have high or sufficient qualifications in the following areas:

42%

Internet of Things

25%

Robotics

Augmented reality

24%

19%

Blockchain

8%

Virtual reality

4%

Robotic Process

Automation (RPA)

6%

Drones

3%



46

Redefiners are more likely to say their digital capabilities are highly or quite developed

59% 58%

Digital strategy and planning Cybersecurity and privacy

56%

56%

Agile development

54%


design

55%

Evaluating emerging

technology

54%

Data analytics

53%

Prototyping

User experience and

human-centered designUI

UX


47

The biggest obstacles for upskilling the workforce are:


training

Lack of time

52%

52%

54%


Embrace an approach that emphasizes

collaborative, digital ways of working that are

most likely to increase productivity, speed up

problem solving and bring faster breakthroughs

to help redefine the business. Take training

seriously and make the time for it. Consider

bringing in experts from outside the industry

that can help deliver structured programs and

new approaches to solving problems.


Recommendations

48

To change your core, change more

Redefiners tout the most advanced definitions of digital and

over half say they’ve been successful at combating new

industry entrants. But what they say isn’t matching up to

reality. Profit margins for redefiners have lagged over recent

years and as a group, redefiners show many of the hallmarks

of early disruption.

Time to connect your vision of digital with

the way you work.

of redefiners encourage innovation at all levels, but many

more should

40%

In aspiring to change their core business model,

redefiners must also change the way they lead

and shift to more digital ways of working and

thinking across the business. Consider bringing

in new, nontraditional leaders to bolster

creativity and bring a fresh way of thinking

about people and process. It’s about fostering a

mindset where ideas are encouraged across

levels, more agile ways of work push progress

and failing is a part of innovating.

REDEFINERS. SUCCESS PATH

Recommendations

Industry Explorers

Breaking ground in new markets and industries

Industry explorers are fighting for their futures and breaking ground in new

markets and industries. Despite having some of the boldest aspirations, this

group puts the least emphasis on its employees and customers. Fewer than

one-quarter explicitly incorporate digital strategy into overall corporate strategy.

There’s opportunity to be had by embracing digital as a force for cultural,

process and strategic change.

50

INDUSTRY EXPLORERS. DIGITAL DEFINITION

8% 8% 15% 18%

12% 20% 30% 23%

24% 39% 28% 14%

19% 19% 13% 8%

37% 13% 14% 37%

It’s time to move beyond IT

Despite being the group facing disruption most immediately

and actively, 37% still see digital as synonymous with IT. As

the playing field shakes out, those who espouse that limited

definition stand to fall the furthest behind. Realize the promise

of digital and survive disruption by embracing broader

definitions of digital.

Adopt more advanced ideas of digital

to survive.

of explorers equate digital to IT, an outdated definition

that misses the promise of digital

37%

ModernizersIndustry

ExplorersEfficiency

Seekers

Redefiners



experience and tech



decision making




of our business


51

INDUSTRY EXPLORERS. EXPERIENCE

You’re missing the mark on experience

Explorers are focused on the core goal of coming out ahead

in a disruptive environment. But it will be difficult to get there

without a focus on experience. This group is the least likely

to have effective experience strategies and investments when

customer and employee experience aren’t paying off (fewer

than 20% have seen better customer outcomes or stronger

talent retention and recruitment).

There’s work to be done before it’s too late.

Industry explorers are the least likely to say their experience strategies are working well




strategy is effective46%

52%


employee experience


customer experience

43% 64%

Industry explorers are the least likely to have executives in charge of experience

Of the group are top financial performers – those with

revenue growth and profit margin increases of 5% of

more over the past three years and expected revenue

growth of 5% or more over the next three years

10%

52

INDUSTRY EXPLORERS. EXPERIENCE

Many industry explorers don’t value experience as part of their digital efforts

Customer experience is critical


strategy



strategy46%

56%

Experience is the difference between coming

out ahead or finding yourself disrupted and left

behind. Acknowledge this, dedicate resources

to experience and assign ownership to senior

leaders. Experience, of employees,

of customers, is everything and impacts profits,

not just people. Employees drive the customer

experience, and getting it right is worthwhile —

customers say they’re willing to pay a 16%

premium for a better experience.

Recommendations

53

INDUSTRY EXPLORERS. DISRUPTION

Facing disruption head on

Many industry explorers are in a difficult period of disruption –

one where industry stalwarts and new entrants are duking it

out for supremacy. Even so, just 31% believe their business

faces a serious threat from digital disruption. Worse, only one-

quarter say their investments have successfully helped them

disrupt their own or other industries.

To find your way and come out on top,

shift your mindset – stat.

of explorers say their investments have helped them

disrupt their own or other industries

25 %

Competitive pressure is a significant influence on industry explorers’ strategic digital transformation moves

Market intelligence

41%


outside the industryPressure from competitors

inside the industry

32% 15%

54


Being more aware of disruption will benefit industry explorers 31%

полагают, of industry explorers believe they face a serious

threat from digital disruption – the most of all groups

27%

Financial readiness

38%


26%


15%

Executive instinct

6%


Some factors influencing industry explorers’ strategic digital transformation moves within the organization

55


Digital investments aren’t focused enough on the elements of disruption that industry explorers are likely facing – and it shows

Struggling industry explorers should follow the

lead of their more successful peers. That will

require a collaborative effort from all parts of the

organization and strong commitment to

upskilling, no matter how different their

processes, systems, and cultures have been in

the past.

10%

25%

24%

46%

13%

41%




industries

Combat new industry

entrants

Recommendations

Our leaders are digitally savvy and help

the workforce think in new ways


22%

23%

36%The executives in charge of digital are


strategy

We explicitly incorporate digital strategy

into corporate strategy

56

INDUSTRY EXPLORERS. LEADERSHIP

Ignore the future at your peril

Lacking the digital know-how to lead,

it’s time to reflect and change.

Leaders are falling short – and so is the workforce

Digital is barely part of corporate strategy for industry explorers. That’s a problem.

Time to marry up effort with knowledge.


71%

65%

50%

57

INDUSTRY EXPLORERS. LEADERSHIP

Without encouraging innovation across the business, digital success will be hard to fund for industry explorers

We have eliminated bureaucracy and can move quickly to put

decisions into action

58%


management level

We have empowered individuals across the organization to

make important decisions

42%

52%

Industry explorer executives will need to begin

to boost their own digital savvy. Bring in fresh

thinking and help steer momentum. Consider,

for instance, Mattel’s hiring of digital media

executive Ynon Kreiz who built out a stable

of YouTube stars — brought in to instill a more

problem-solving, creative, entertainment

culture, and ultimately, to invigorate lagging

sales on legacy products partly using data-and-

consumer-driven insights.

Recommendations

58

INDUSTRY EXPLORERS. WORKFORCE

Unprepared in uncharted territory

Industry explorers allocate a large share of digital budget

toward creating a more digital workforce. But they’ve got a long

way to go--only 18% say the investment is paying off in better

talent retention and recruitment. Just over half say they’ve

changed their recruitment and training processes to build a

more digitally-savvy workforce, but only 38% say their

employees are digitally savvy now.

.

Time for more than a basic upgrade.

Of industry explorers say their employees are digitally savvy

62%

Our organization’s mobile skills are highly or quite

developed

35%Our organization’s cloud skills are highly or quite

developed

When it comes to the basics, industry explorers are behind the curve

31%

59


Industry explorers are barely showing up through emerging technologies


28%

Internet of Things

8%

Robotics

Augmented reality

5%

8%

Blockchain

3%

Virtual reality

5%

Robotic Process

Automation (RPA)

5%

Drones

2%


60


Industry explorers are least likely to say their digital capabilities are highly or quite developed

45% 37%

Digital strategy and planning Cybersecurity and privacy

39%

50%

Agile development

42%


design

32%

Evaluating emerging

technology

37%

Data analytics

31%

Prototyping

User experience and

human-centered designUI

UX

61

The biggest obstacles for upskilling the workforce are:


Lack of time

54%

62%

52%


training

To meet aspirations of breaking into new

markets, develop a new mindset around digital

skills and ways of working. Make it a priority to

adopt a training structure that builds basic

digital skills and instills a collaborative working

style. If it seems like you don’t have the time,

find it. This is crucial to survival.


Recommendations

62

INDUSTRY EXPLORERS. SUCCESS PATH

At DEFCON 1? It’s do or die

Weave digital into broader corporate strategy, from tech

decisions and adoption to the experiences created for

customers and employees. Upskill your leaders and bring new

ones in to change up the pace. Set the workforce up to gain

the new skills they’ll need, change their behaviors, and adjust

their mindset to work in more agile, cross-department ways.

You’ll need it to break new ground.

Radical change is a must to survive

disruption.

of explorers have seen profit growth over the last three years

31 %

Recommendations

Weave digital into broader corporate strategy, from

tech decisions and adoption to the experiences

created for customers and employees. Upskill your

leaders and bring new ones in to change up the

pace. Set the workforce up to gain the new skills

they’ll need, change their behaviors, and adjust their

mindset to work in more agile, cross-department

ways. You’ll need it to break new ground.

For more information, please contact our experts:

© 2019 PwC. All rights are reserved.

Svetlana Medvedeva

Partner, IT-consulting leader

PwC Russia

+7 (495) 967 6119

[email protected]

Alexei Okishev

Partner, Technology leader

PwC Russia

+7 (495) 967 6000

[email protected]

pwc.ru/en/diq-2018

Digital IQ - PwC · experiences and accelerating business performance. Make better use of big data...

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