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The Digital Advantage

How digital leaders outperform their peers in every industry: a resaerch by Capgemini Consulting and the MIT Center for Digital Business.

Laurent Leloup
Laurent Leloup
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.1 There are more than 6 billion mobile phones.2 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 (See About the Research), 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.

What is Digital Maturity?

Some companies are what we call the “Digirati.” They have the digital maturity not only to build digital innovations, but also to drive enterprise-wide transformation. And they benefit from their actions. Digirati have significantly higher financial performance than their less digitally-mature competitors.

Digital maturity is a combination of two separate but related dimensions (See figure 1). The first, digital intensity, is investment in technology-enabled initiatives to change how the company operates – its customer engagements, internal operations, and even business models. Burberry (See page 5) used technology to improve the in-store experience and increase operational excellence. Codelco (See page 5) is automating mining operations to improve efficiency and safety while creating new business opportunities.

Companies in all industries are investing in interesting digital initiatives. However, in many firms, these investments are uncoordinated and sometimes duplicative.

Firms maturing in the second dimension, transformation management intensity, are creating the leadership capabilities necessary to drive digital transformation in the organization. Transformation intensity consists of the vision to shape a new future, governance and engagement to steer the course, and IT/business relationships to implement technology-based change. Volvo developed a vision and governance capabilities before it began to implement new digital services in its cars.3 Nike built a digital division called Nike Digital Sport to coordinate and extend the successful activities it had built separately in social media, digital product design, custom manufacturing, and other areas (See page 19). The elements of transformation management intensity work together – through a combination of top-down leadership and bottom-up innovation – to drive ongoing digital transformation. However, in many companies, these elements are overly slow or conservative, preventing the company from investing in innovative opportunities.

Download the full research below (PDF 24 pages)

Laurent Leloup

Vendredi 30 Novembre 2012

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