A company’s level of digital maturity is one of the most significant indicators of growth and financial success, according to a new study from Deloitte. And this is only going to become more so as we move into a post-COVID era.
Findings from the Digital Transformation 2020 survey show that companies identified by their executives as well along the road to digital transformation were three times more likely to achieve revenue growth in the last year. This may not seem particularly surprising given the boom we have seen in artificial intelligence, data analytics, and connected technology – all enthusiastically co-opted by industry to drive bottom-line growth.
However, a deeper dive into the report’s insights shows that growth is particularly apparent at organisations whose digital strategies centre on innovation and developing new models of business. In straightforward terms, those that don’t just use data and digital technology to do things differently – but also to do different things.
The questioning was conducted before the onset of the world-changing events we’re currently living through with Covid-19. To me, though, the insights take on a new relevance at a time when so many companies - entire industries, in fact - are forced to re-think the most fundamental aspects of their business models, from the ground up.
The report highlights the trend of large enterprises establishing "digital-first" subsidiaries – examples given include Telefonica's Gif Gaf sim-only phone service, and Goldman Sach’s online savings account provider, Marcus. These largely autonomous (from their parent companies) units are designed to be “digital native” from day one, not anchored by legacy infrastructure issues, and so able to compete in an agile way with more nimble start-ups and would-be disruptors.
There are certainly lessons to be learnt here, even for much smaller organisations, finding themselves in the position of having to rapidly leverage digital technology to stay afloat.
Ragu Gurumurthy, chief innovation and digital officer at Deloitte, tells me, "A lot of people are telling me they have seen more innovation in the previous two months than in the whole of the previous two years."
The report focuses on seven pivots – asking execs to rate the progress their organisation was making towards each fundamental of digital transformation. They are:
Respondents were asked to rate a number of benefits that they were seeing through their work on each pivot, including revenue growth, efficiency, quality of products and services, customer satisfaction, and employee engagement.
They were also asked to evaluate the extent that each pivot was enabling the organisation to develop its focus on growth and innovation.
Gurumurthy tells me, "What I find most interesting – and what I find relevant for the business community in a post-COVID world - is that, though there’ a consensus that digital is critical, is the question ‘do we have data? Is this hype or is this for real?’ – those are the questions I would be asking as an executive.
"And fundamentally, this report provides data for the prevailing hypothesis that being digital is helpful in terms of growth and helpful for increasing margins.” The results, he continues, are just as relevant, perhaps more so, than when the survey was carried out in the pre-COVID days.
Key findings and statistics include that companies with a high level of digital maturity are two to three times more likely to achieve benefits and likely to be more focused on innovation and growth. Additionally, 45% of high-maturity companies achieved net revenue growth above industry averages, compared to 15% of companies not rated as highly mature.
More mature companies are also significantly more likely to be offering “connected” products and services – services that can be engaged with by customers in real-time via mobile apps or the web. These services may use smart devices, including mobile phones but, increasingly, any number of IoT-connected objects, to provide increased value to the customer through data-driven insights.
The report also throws up further evidence that investing in growth and innovation-led strategies is offering increasingly good payoffs. “I find it interesting,” Gurumurthy says, “Companies find that generating growth and innovation leads to better stock market performance than companies that use technology purely on the cost-saving side … [they] start off saying 'let me increase efficiency and reduce cost,' but as they get better, they quickly see this is not simply about increasing performance, this is about doing things differently."
All this sets out some useful lessons that should be taken on board by anyone putting together a business strategy aimed at increasing resilience, throughout the difficult days ahead.
Within organisations that have successfully adapted to the digitisation of their core services with an eye towards efficiency and growth, services are less likely to be severely disrupted by widespread societal changes.
This gives them breathing space and freedom to think, "If we were born again, digitally-native, can we create, as an experiment … a separate digital business platform … and if it works, can we move the whole business to the platform?" Gurumurthy tells me.
Other benefits of higher digital maturity include improvements to societal functions and responsibility – with 65% of respondents from high-maturity organisations stating that technological measures are used to improve workforce diversity, and 67% stating they help the organisation reduce consumption of natural resources or carbon emissions.
You can find the Deloitte Digital Transformation Study 2020 here
Bernard Marr is an internationally bestselling author, futurist, keynote speaker, and strategic advisor to companies and governments. He advises and coaches many of the world’s best-known organisations on strategy, digital transformation and business performance. LinkedIn has recently ranked Bernard as one of the top 5 business influencers in the world and the No 1 influencer in the UK. He has authored 16 best-selling books, is a frequent contributor to the World Economic Forum and writes a regular column for Forbes. Every day Bernard actively engages his almost 2 million social media followers and shares content that reaches millions of readers.