The Digital Advantage - How Leaders Outperform Their Peers in Every Industry.
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THE DIGITAL ADVANTA GE HOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY INDUSTRY Transform to the power of digital
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New digital technologies like social media, mobile, and analytics are advancing rapidly on the economic landscape. These innovations are used widely by consumers and employees alike. Facebook has more than 1 billion users. There are more than 6 billion mobile phones. Employees often have better digital solutions at home than they do at work, and many customers are more technology savvy than the people trying to sell to them.Executives in every industry – from media to electronics to paint manufacturing – face a bewildering array of new digital opportunities. They are paying attention, but they have few signposts to guide them. Most stories in the business media focus on fast-moving startups like Zynga and Pinterest, or on a few large high-tech firms like Apple, Google, or Amazon. Unfortunately, to many leaders, stories of these nimble and innovative firms just do not make sense for traditional companies that are older, larger, and burdened with inflexible legacies.We decided to find out what fast-moving digital innovations mean for large traditional companies. In two years of study covering more than 400 large firms, we found that most large firms are already taking action. They are using technologies like social media, mobile, analytics and embedded devices to change their customer engagement, internal operations and even their business models. But few firms have positioned themselves to capture the real business benefits. Our research points to a real “digital advantage” to those that do.Digital maturity matters. It matters in every industry. And the approaches that digitally mature companies use can be adopted by any company that has the leadership drive to do so.
Transcript of The Digital Advantage - How Leaders Outperform Their Peers in Every Industry.
THE DIGITAL
ADVANTAGEHOW DIGITAL LEADERS OUTPERFORM THEIR PEERS IN EVERY
INDUSTRYTransform to the power of digital
Copyright © 2012 MIT CDB and Capgemini Consulting
What is digital maturity?
Digital Intensity Transformation Management Intensity
Technology-enabled initiatives in:•Customer Experience•Internal Operations
Leadership capabilities including:•Vision•Governance •Engagement•IT-Business Relationships
Copyright © 2012 MIT CDB and Capgemini Consulting
Four levels of digital maturity
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CONSERVATIVES•Overarching digital vision exists, but may be underdeveloped•Few advanced digital features, but traditional capabilities may be•Strong governance across silos•Taking active steps to build digital skills and culture
BEGINNERS•Management skeptical of the business value of advanced digital technologies•May be carrying out some experiments•Immature digital culture
FASHIONISTAS•Many advanced digital features (such as social, mobile) in silos•No overarching vision•Underdeveloped coordination•Digital culture may exist in silos
DIGIRATI•Strong overarching digital vision•Good governance•Many digital initiatives generating business value in measurable ways•Strong digital culture
Copyright © 2012 MIT CDB and Capgemini Consulting
Mastering both dimensions is the key to achieve the digital advantage
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Social Media Digital Product Design
Customized Manufacturing
Digital Division: Nike Digital
Sport
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DIGITAL INTENSITY
TRANSFORMATION MANAGEMENT INTENSITY Digital marketing
Digital product innovation/design Digital commerce (e/m-commerce) Digital technologies (GPS, mobile, etc.) Customer analytics
FIRM-LEVEL TRANSFORMATION+
Copyright © 2012 MIT CDB and Capgemini Consulting
DIGIRATI
CONSERVATIVES
FASHIONISTAS
BEGINNERS
Digital maturity varies widely*
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* Digital maturity of 391 companies in our sample
Copyright © 2012 MIT CDB and Capgemini Consulting
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+6% +9%
-4% -10%
Basket of indicators:•Revenue / Employee•Fixed Asset Turnover
Revenue Generation Efficiency
-11% +26%
-24% +9%
Basket of indicators:•EBIT Margin•Net Profit Margin
Profitability
-12% +12%
-7% +7%
Basket of indicators:•Tobin’s Q Ratio•Price / book ratio
Market Valuation
Digitally-mature companies have significantly better financial performance* Revenue generation, profitability and market valuation
* Average performance difference for firms in each quadrant versus the average performance of all large firms in the same industry for the 184 publicly-traded companies in our sample
Copyright © 2012 MIT CDB and Capgemini Consulting
Some industries are more mature than others…
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Banking
Consumer Packaged Goods
Insurance
Manufacturing
Pharmaceuticals
Retail
High Technology
Telecoms
Travel and hospitality
Utilities
Average industry maturity:
Copyright © 2012 MIT CDB and Capgemini Consulting
…but every industry already has digirati
Percentage of firms in each industry by quadrant:
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Copyright © 2012 MIT CDB and Capgemini Consulting
Innovation challengesDigital Service Unit
Digirati have a common Digital DNAThey invest in 100% of the Transformation Management elements…
Vision
IT/Business
Governance Engagement
• Transformative Vision• Shared Vision
• Digital Tsar• Digital Units• Investment Committees
• Promoting Change• Employee Participation• Investing in Skills
• Shared understanding between IT and business executives on role of IT
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Chief Digital Officer at Starbucks Digital Year
“The IT Team (...) now work hand in hand with the Creative Media team.”
“Boeing believes that the future of the aviation industry lies in the ‘digital airline’. To succeed in the marketplace, airlines and their engineering and IT teams must take advantage of the increasing amount of data coming off airplanes, using advanced analytics and airplane technology to take operational efficiency to the next level.”
Copyright © 2012 MIT CDB and Capgemini Consulting
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Digirati have a common Digital DNA…and they make strategic decisions on where to excel digitally
Focus Investments on Where they Choose to Excel
Digitally
Combine Digital Capabilities to
Exploit Synergies
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Customer Experience
Social media
Mobile channel
In-store
OnlineUnified Processes/ Integrated Data
Process Excellence
Supply-chain
Integration
Centralized Ordering New business
models
Customer experience
Unified Processes/ Integrated Data
Analytics capabilities
Personalized Customer experience
Unified Processes/ Integrated Data
On-premise
Online
BURBERRY
ASIAN PAINTS
CAESARS ENTERTAINMENT
Copyright © 2012 MIT CDB and Capgemini Consulting
How to drive digital transformation
Frame the Digital Challenge•Understand the Impact•Assess Digital Maturity•Develop Vision & Align Around It
Focus Investments•Build a Digital Roadmap•Build Investment Case•Set up Governance Model
Sustain the Transformation•Build Capabilities•Align Incentives & Rewards•Measure, Monitor & Iterate
Frame
Focus
Sustain
Engage
Engage the Organization•Signal the Change•Mobilize at Scale•Evolve Culture & Adapt Work Practices
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DIGITAL MATURITY MATTERS
IT MATTERS IN EVERY INDUSTRY
ANY COMPANY CAN BUILD DIGITAL DNA
TAKE ACTION NOW TO CREATE YOUR OWN DIGITAL
ADVANTAGE
Copyright © 2012 MIT CDB and Capgemini Consulting
