• The top 5% of companies identified in this year’s Digital IQ Survey report higher profit margins, happy staff and don’t balk at the changes required to remain at their digital best.
  • By taking control of change and focusing on resilience these ‘Transcenders’ are reaping benefits that remain out of reach for their competitors.
  • In an uncertain future, a strong vision and fluid capabilities allow the top companies to invest in the right places and keep their people skilled-up to weather change.

It’s time to rise above the masses and become a transcender — doing so will allow your company to secure its future, transform and keep digital pace amid economic uncertainty. That’s the message that this year’s 12th Global Digital IQ Survey has uncovered after surveying 2,380 senior executives across 76 territories

In assessing what it took for business to get payoffs from digital transformation, and what their leaders did right to get that value, the survey found that only 5 percent of companies are doing what it takes to win with digital — from growth to profit, innovation to people, customer experience and more.

This top 5 percent are what we’ve called ‘Transcenders’: companies that don’t dabble when it comes to digital, instead taking its challenges face on.

Here are the four ways they do it.

1. Talk is cheap, it’s time
to demand change

Of the top 5 percent in this year’s Digital IQ survey, 84 percent said that they have a leadership strategy that requires change in the form of collaboration and cross-functional work. Rather than just talking about the need to transform, Transcender leaders make it happen through action, encouraging idea generation from all staff, regardless of their seniority (91 percent), capturing those ideas — and acting on them — (92 percent, as opposed to just 70 percent of non-Transcenders), and facilitating collaboration across departments (86 percent).

Doing so allows transcendent companies to avoid getting stuck continuing focusing solely on what they are good at and to adapt to fluctuations in the digital landscape surrounding them. For example, Microsoft, a company that initially built itself around its Windows operating system, made the choice to diversify its work, acquiring Skype and LinkedIn and investing in tablet production and internal cultural change.123 This decision turned them into a company focused on learning and thus open to innovation, rather than stuck ‘knowing everything’ with no impetus for change.

Acting on ideas from everyone, knowing what’s working and changing what’s not — whether technology, culture, processes, products or people’s skills — leads to significant payoffs: 96 percent of Transcenders surveyed said they have a clear direction for digital success. With many companies struggling to understand which way to turn when it comes to transformation, such a high degree of certainty is formidable.

2. Invest in
preparation

Part of making change happen is ensuring that the underlying structures will support it, and Transcenders invest substantially more, at 33 percent, in the technology, processes, operating model and ways of working that they need to achieve success. Importantly, the digital investments that they make are to help them grow, not just to cut costs by excising expensive legacy setups. This focus on digital ability allows employees at 84 percent of these  companies to spend more time innovating.

They also invest holistically, not just upgrading or spending money on certain areas, but purposefully approaching the infrastructure build required to transform and succeed for years to come. Indeed, 96 percent of the top companies say they have a long-term view of the transformation ahead, with a clear direction and knowledge, therefore, of where to invest to achieve that vision. Only 74 percent of non-Transcender companies can say the same.

Amazon personifies this mentality as a company that has stayed true to its vision despite the long period of time that it has taken for it to pay off. In the past two decades it spent many years struggling to make profit. But holding firm allowed them to invest in appropriate areas (such as web services, where they now account for 40 percent of the global cloud market) and in the last quarter of 2019, they posted US$9.5 billion profit .4 This trend is echoed by Transcender survey respondents, who reported 17 percent higher profit margin growth than their counterparts.

3. Power to
your people

It should hopefully come as no surprise to most that people are a critical component to being able to digitally transcend.  With the flux around technology and the competitive digital landscape, it can be hard to know who to hire to get to what seems like an infinite number of possible futures. But like with investment in tech, Transcenders spend more time on their people to ensure that whatever the future, they will be set up to succeed.

Whether upskilling or recruiting, the top 5 percent spend more on their staff and employee experience, allowing them to attract and retain the best talent. This means not just throwing money at endless training, but ensuring that training sticks, drives business and motivates employees. Sixty three percent of Transcenders say they have upended their training processes and seen results. Eighty-nine percent say they don’t face pushback when it comes to digital efforts, 91 percent say their workers are aware of company transformation efforts (compared to just 69 percent of others), adoption of new tech and programs is widespread and employees are digitally savvy (89 percent compared to just 63 percent of non-Transcender companies).

With 79 percent CEOs in our 22nd CEO Survey saying they are worried about the availability of key skills, the calibre of people and their knowledge, these statistics should not be downplayed. Giving people the tools and capabilities that they need, and empowering their contribution to the company, are key. Nestlé, for instance, incentivises employees with staff-driven accelerators, crowdsourcing ideas among employees for further development.5

4. The constancy
of change

If there’s one thing that Transcenders truly understand it’s that change is the new constant. Transformation is no longer a three year initiative, it’s ongoing and will never end. This chaotic environment is not one that people naturally find comforting, so ensuring company culture supports disruption — be it a merger or acquisition, business model flip or leadership change — is crucial to allow the business to come out stronger on the other side.

Sixty-seven percent of the Digital IQ survey Transcenders say they have been through a major disruption in the last two years. That they’ve endured this and still maintained their top company position is not insignificant. Resilience for these organisations means embracing digital holistically — where it intersects innovation, business, experience and tech (a BXT approach). Investing and leading in this way enables companies to adapt when needed, hold strong on their vision and persist in achieving it.

This understanding, that digital transformation has no neatly-wrapped end point, is an ethos that 62 percent of Transcenders believe in. It allows them to reframe as needed, with the operationalisation and perspective to back it up. Even despite the world we live in, 98 percent of Transcenders don’t worry about business extinction, allowing 87 percent of them the space to consistently drive innovation.

Netflix is a company that has weathered extreme changes over the years. It has seen DVDs, the backbone of its business, phased out and replaced with streaming services and an entire, competitive, streaming landscape. Pursuing these new opportunities alongside its original business allowed them to pivot as challenges have come, to the point that it is now a content-producer in its own right.

Digital IQ graphic

Uncertainty
is certain

This year’s Digital IQ Survey shows that companies, and more pointedly, the truly successful ones, understand the world that they now operate in, even if that means accepting that they may never truly know what’s next. But by focusing on four key areas that they can control — their actions, investments, people power and resilience — they are able to face whatever comes their way.

With significant payoffs for embracing this way of thinking about digital disruption, it will surely only be a matter of time before the remaining 95 percent emulate their actions. Will your company be one of them?


Visit the PwC 2020 Digital IQ Survey to find out about the top 5 percent Transcendent companies, and get further insights into achieving your own successful digital transformation.