In brief:
- Companies are constantly attempting to reinvent themselves to adapt to modern digital requirements, however successful digital transformation is elusive and requires intentional and effective application.
- 70% of companies fail to achieve their intended objectives and benefits from the digital transformation.
- Up to 75% of untapped potential is to be gained from an effective digital transformation journey.
- 5 Key pillars are identified that set top companies apart. Our proprietary Digital Maturity Assessment tool helps our clients to understand their current digital maturity based on hundreds of data points.
- If you are wondering where your organization lies on the digital maturity spectrum, complete our free survey of a lite version of the DMA. You will receive a report containing your company’s individual digital maturity score on 12 key dimensions and a benchmark to industry peers.
Navigating the digital frontier
The only constant is change, and digital disruption is now the norm that organizations must face. Digital innovation is continuously reshaping industries and changing the way businesses operate. While half a century ago, companies in the S&P 500 on average existed for ~65 years, companies today have an expected lifespan of ~18 years. For example, the shift from traditional taxis into ride hailing services reshaped the industry completely and left traditional taxis feeling the pinch [1].
A survey involving 1300 company leaders worldwide, representing multiple regions, industries, and company sizes, revealed that approximately 90% of companies have embarked on some form of digital transformation (DX) within the last two years [2].
While reaching a desired state of digital maturity may be the goal for some of these companies, the journey is anything but simple. Digital transformation is not a tick box exercise; it is a continuous and multi-faceted process. Moreover, digital maturity varies from company to company and it is shaped by their individual vision, ambition, and potential. Research consistently shows that companies remain to face challenges in achieving their digital transformation objectives, as 7 in 10 digital transformation initiatives fail.
With 70% of digital transformations failing, the question arises: is this journey worth it? In short, yes. Research shows that there is a strong correlation between the degree of digital maturity and financial performance. Organizations with high levels of digital maturity are enjoying revenue growth almost double the size of digitally immature organizations [3].
This can be attributed to a number of benefits that digital maturity offers including having better data to drive decision-making, enhancing customer experience, improving efficiency and productivity, and much more. The digital landscape is no longer a playground for tech enthusiasts; it’s the new frontier where businesses thrive or wither.
What sets top companies apart in digital transformation?
While 90% of companies have embarked on some form of a digital transformation initiative, the reality is that the level of success you achieve from digital transformation is dependent on how well you execute it. Research has shown that firms who undergo digital transformation achieved only 31% of the expected target from a revenue perspective and 25% from a cost saving perspective [4]. This leaves over 75% of untapped potential for companies to unlock by addressing the right approach, priorities and initiatives in their digital transformation journey.
So, what is the criteria for effectively transforming your organization and unlocking the full potential? To answer this question, we analyse the results of an extensive survey Monstarlab recently launched together with Financial Times (FT) Longitude for over 800 companies worldwide [5], combined with empirical data from our extensive experience with global and regional companies across industries who are in the process of digitally transforming their organisation. The survey uncovered multiple observations that drive the difference between in ‘DX pioneers’ versus ‘DX procrastinators’, for which we outline the 5 key insights below.
1. Roadmap towards success – A robust digital strategy
Having a robust digital strategy lays the groundwork for a solid foundation and provides clear direction for the transformation journey. As per the FT Longitude study 99% of pioneers have a clearly defined DX strategy and budget. On the other hand, only 39% of procrastinators have a clearly defined DX strategy and 60% have an assigned DX budget.
2. Tone at the top – Visionary leadership:
Visionary leadership is essential for pushing forward a successful digital strategy, inspiring teams throughout the organization, and fostering a culture of innovation and transformation. According the the FT Longitudinal study, almost 100% of pioneers have stated that members of the C-suite are closely involved in developing and implementing their DX strategy as opposed to only 61% of procrastinators.
3. Progress over perfection – A pervasive culture of innovation and evolution
A pervasive culture of innovation and evolution should permeate throughout the organization. Employees should not only embrace change but thrive on it, recognizing that digital transformation is an ongoing voyage rather than a one-time event. This culture also necessitates an adaptive technology infrastructure that evolves seamlessly with the changing landscape. The FT Longitude study found that 79% of pioneers approach DX as a process of continuous evolution and improvement, while only 34% of procrastinators do the same. Additionally, 97% of pioneers have said that employees actively participate in DX whereas only 21% of procrastinators said the same.
4. Customer is king – Customer-centricity
Focusing on the customer is paramount. Successful companies prioritize customer experience, delving into understanding and anticipating customer needs, and even crafting personalized experiences. The FT Longitude study found that while 98% of pioneers report they carefully monitor customer feedback when new technology is introduced, only 27% of procrastinators reported doing this. Additionally, pioneers are more likely to incorporate customer feedback to improve their products; 100% of pioneers reported that customer data and insights have been a source for improvement and innovation of our products while only 41% of procrastinator have said the same.
5. Knowledge (and data) is power – Data-driven decision-making
By leveraging data, these companies gain a competitive edge, focusing on evolving market trends, process optimization, and extracting actionable insights. The FT Longitude study found that while approximately half of pioneers have stated that they have achieved their transformation goals in capturing and aggregating data from various sources and integrating data across the organization to enhance business insights, while this is done by less than 2% of procrastinators.
Understanding the journey
Those of you who are in the 90% of the companies that are in the process of undergoing a digital transformation, may wonder if you are able to reach the full potential of your journey. Or perhaps more specifically whether you are a “DX Pioneer” or “DX Procrastinator”. Monstarlab’s proprietary Digital Maturity Assessment (DMA) tool is a tried and tested approach that can help companies evaluate where they stand today and outline the pain points and areas for improvement to get to where they want to be. Our DMA evaluates 12 crucial dimensions across four key lenses:
- Purpose: Delving into the company’s overarching goals and philosophical foundation.
- People: Exploring the organization’s culture, the depth of its talent pool, and the effectiveness of its leadership.
- Structure: Evaluating the intricacies of the company’s setup and the efficiency of its processes.
- Technical: Thoroughly examining all facets related to technology, architecture, data management, and security protocols.
Our assessment consists of a rigorous three-pronged approach through stakeholder engagement, document & process analysis and leveraging our extensive database to benchmark and compare. Drawing from hundreds of data points extracted from this process, the assessment places your organization on a scale of 1 to 5 for each dimension, ranging from nascent to world-class.
The beauty lies in flexibility; companies can adapt their aspirations to their priorities, whether it’s leading in governance or prioritizing their technology. Every digital transformation journey is unique to the nature of the organization and its ambitions. You may aim for a level 3 in seven dimensions and a level 4 in the remaining five. The DMA provides you with a concrete and objective image of what different degrees of maturity look like so that you can visualize where you stand and what looks good for your company and its needs.
Our DMA was designed not only to assess the technical capabilities of the organization, but also the ability to overcome typical barriers to digital transformation, i.e. resistance to change and employee pushback. Our DMA also offers a route to success, covering a number of topics including company culture for all job levels at the organization, including digital mindset, adaptability & agility, change management, tech literacy, and more.
The DMA Lite – understand your maturity level in 10 minutes
Navigating the dynamic digital landscape requires significant intentional preparation. As we reflect on the pillars that set top companies apart—robust digital strategy, visionary leadership, an innovative culture, customer-centricity, and data-driven decision-making—we recognize that their value is limited to the organization’s ability to objectively assess its implementation of these pillars. The DMA stands ready to assist; it’s a mirror reflecting the current state, a compass guiding towards aspirations, and a toolkit addressing barriers and roadblocks. The Digital Maturity Assessment is not just a tool; it is a strategic companion.
At Monstarlab, we specialize in digital consulting, and support all kinds and all sizes of companies in tackling the most common challenges in digital transformation. Because we are strong believers in the cause, we created a free, streamlined version of the digital maturity assessment. The DMA Lite is 10-minute survey on where you stand on the digital maturity scale today. We will generate a custom and insightful report, showing your company’s individual digital maturity score as well as compared against industry averages and industry pioneers.
Click here to take the DMA-lite survey
Meet our Experts:
Vinh Vuong
Strategy VP, MENA
Monstarlab
vinh.vuong@monstar-lab.com
Peter Abdelkodos
Strategy Principal, MENA
Monstarlab
peter.abdelkodos@monstar-lab.com
Related content:
Monstarlab and FT Longitude Digital Transformation Report 2023
About Monstarlab
Monstarlab is a digital transformation partner focused on accelerating growth for ambitious clients. We achieve this through our human-centred design and engineering expertise, our open partnership approach and our extensive network of global talent.
©2023 Monstarlab. All Rights Reserved
References:
[1] X. Li, J. Xu, M. Du, D. Liu, M. Kwan, Understanding the spatiotemporal variation of ride-hailing orders under different travel distances, Travel Behaviour and Society
[2] L. LaBerge, K. Smaje, R. Zemmel, Six signature moves led by the C-suite can build organizations that will outperform in the age of digital and AI,McKinsey Quarterly
[3] State of Digital Transformation, A Valoir Report
[4] L. LaBerge, K. Smaje, R. Zemmel, Three new mandates for capturing a digital transformation’s full value, McKinsey & Company
[5] Monstarlab and FT Longitude Digital Transformation Report 2023
