Your company’s customer value creation and competitiveness call for nothing less than digital mastery

Companies that don’t get digital transformation and the strategic use of digital technologies right, are likely to fail or fall behind their competitors’ performance. Those that achieve digital mastery can outperform and outcompete their field. Today and in a few upcoming blog posts, we take a look at what this means practically and you should act on it.

Few digital masters and many also-rans

On an uncharted journey, it can be helpful to check your insights and learning against those of other people. Digital business transformation is a case in point. It’s hard to find useful insight on this topic that doesn’t come from somebody who wants to sell solutions or services. That’s why it was a treat for me to read a book from Harvard Business Review Press called Leading Digital: Turning Technology into Business Transformation, by George Westerman, Didier Bonnet, and Andrew McAfee.

The authors performed research in large companies in manufacturing and other industries, not enterprises that create software or digital hardware products. They introduce the category of digital masters to distinguish companies that experiment with technology to varying degrees of success from those that get it right. Digital masters are companies that “use digital technologies to drive significantly higher levels of profit, productivity, and performance.”

Currently, few firms are digital masters. Many struggle to keep up with the changes in business models and customer requirements unfolding around them. However, companies which have accomplished digital mastery outperform their field. They are 26 percent more profitable than their average competitors and generate 9 percent more revenue with their capacity.

A need for strategic, visionary leadership

Digital business initiatives require a compelling, shared vision, along with a strong alliance of business and technical stakeholders. Digital transformation has less to do with acquiring more, newer technology than with the strategic use of digitally powered services, processes, and technologies. Leadership and a sense of purpose are critical in pursuing digital mastery. Digital masters understand that they need to build digital leadership as well as digital capabilities.

Digital leadership sets the right, strategic direction, motivates people to participate, and provides the governance and optimization of transformational efforts. Because you typically can’t revolutionize your business from the bottom up, top-down leadership is necessary to move companies along the road to digital mastery. Execs coordinate and validate the company’s transformational activities, keep their momentum going, and ensure completion.

Many avenues lead to digital mastery

Digital masters enjoy both mature digital leadership and capabilities. Digital beginners are still at the starting points as regards both of these areas.

Sometimes, companies embark on digital transformation without evenly weighting leadership and capabilities. They may rate high in capabilities but low in terms of leadership. They might own advanced digital tools and run digitally enhanced processes, but lack a governing vision. Their initiatives are not always sustainable.

Others are strong in terms of leadership, but behind in capabilities. Vision and governance may be well-articulated and effective, but these companies fall behind in taking advantage of innovative digital capabilities.

Many of our manufacturing customers are clearly doing very well in both digital leadership and technological capabilities – they are well on their way to digital transformation.

Operational areas for transformation

Digital capabilities and digital leadership impact and transform three areas of a business that are essential in any company’s digital initiative – the customer experience, operational processes, and business models. At a high level, this is how we think of them at To-Increase:

  • The transformative, digital customer experience bridges physical and digital channels. Companies use digital technologies and tools to connect more closely with customers, using analytics and data-enabled insight to understand and improve the customer experience.
  • The operational processes to enable digital mastery rely greatly on integration, automation, and collaboration both internally and across organizational boundaries. Data analytics and evidence-based decision-making keep process improvements and changes grounded in reality.
  • Digital processes and organizational change to strengthen the customer focus promote new, digital business models and practices. Digitally enabled services and digitally enhanced products help us meet customer requirements profitably. We incorporate and integrate the entire value chain to create the value we aim to deliver to customers.

In the next few blog posts, we’ll discuss the strategy and tactics of digital mastery in more detail. Feel free to send me a note a cbosch@to-increase.com with your ideas and questions.