Since 2007, the PwCGlobal Digital IQ Survey has shone a light on the digital readiness of the world’s businesses. This year, the report looks at the four kinds of digital businesses companies aspire to be, and evaluates just how close they are to reaching those goals.
Are you doing digital right?
According to the results of this year’s PwC Global Digital IQ Survey, many companies, while aspiring to be digital, are not quite there. Businesses take different paths in their approach, but it is mindset, rather than time or resources, that is proving the stumbling block to success.
Not all businesses are the same, of course, and different aspirations – which survey respondents self-selected – reveal different obstacles. These are apparent in how companies define ‘digital’ and see disruption, and manifest in their approach to experience – both customer and employee – leadership, and skills for the workforce.
The report looks at four categories of aspiration for digital businesses – ‘efficiency seekers,’ ‘modernisers,’ ‘redefiners,’ and ‘industry explorers’ – to identify the problems they face as revealed by the survey’s analysis, and identifies what each should be doing to achieve the success top performers are.
Doing business smarter and faster
In some ways, efficiency seekers are already close to their digital aspirations. They are focused on doing business smarter and faster, and use technology to achieve that. There’s a confidence borne from experience with this group, but it may be misplaced, or at least, over valued. Disruption, like ‘digital’, is an ongoing process, and rarely sticks to a single cycle of upheaval. Though they may have been disrupted before, efficiency seekers still need to shore up their digital game.
This means broadening their definition of digital (37% still equate digital only with IT), involving employees in decisions and breaking down departmental barriers to boost motivation and tap new ways of thinking. Only 55% of this group say their leaders are digitally savvy, despite being digital champions, and that’s a problem – being digitally fit starts at the top before it filters down. And while as might be expected, 70% of this group say they arm their employees with tech and tools to work smarter, emerging technologies, such as AI, are being ignored. Training needs to think of the future, not the now.
Efficiency seekers have been in good stead so far, but a third of the group report flat profit margins, and 13% have seen them decline. To improve those results, efficiency seekers need to level-up, weaving digital throughout every part of the business.
Creating new capabilities for the future
Unlike efficiency seekers, modernisers have a broader idea of what digital means to business – but it still has far to go to be truly digital. Modernisers want to create new capabilities, not just get the best out of their existing set up, and as such, they have invested in recruiting a more digitally-savvy workforce and encourage innovation at all levels. But efforts are immature, and digital strategy is only woven into corporate strategy about half the time. It needs to be more.
This can be seen in the way modernisers look at experience. Seventy-four percent see customer experience as critical to digital transformation, which it is, but only 39% are seeing investments in it pay off. They forget that employee experience is the other half of the experience equation, and so far, modernisers haven’t addressed this. In order to do so, they should seek to improve collaboration, upskill existing staff, and explore flat ways of working. Like efficiency seekers, they too should look to bolstering the digital acumen of senior leadership.
A more mature approach to digital, spread throughout the entire business, will allow moderniser companies to evolve, which will be critical to their success. While new capabilities will bring profit – nearly half say their profit margin has increased 10% in the last three years – smarter capabilities will do more.
Changing the business at its core
As the name might suggest, redefiners understand disruption and have a comprehensive definition of ‘digital’. When it comes to innovation, decision-making and tech integration? They get it. This group can see that disrupting from within, changing and redefining business models, should drive success.
But is it all talk? Despite the right noises, not all redefiners have reached the lofty heights sought. In fact, 69% say that their digital investments are delivering less than expected. This again points to a lack of proper integration, similar to that faced by modernisers. Digital savviness is not universal across staff and leadership, and is left out of the corporate mindset. These companies understand where they need to go, but so far, have failed to actually get there.
Action and mindset must be aligned when it comes to digital and the potential for disruption (alarmingly, only 29% of redefiners see disruption as a serious threat). Top performers in this category are embracing new ways of working and management, as well as utilising cross-functional teams – putting them in a good place to deal with outside threats. All redefiners should follow the their lead if they too want to see returns.
Breaking ground in new markets
Businesses that aspire to break into new markets and industries, industry explorers, have some of the boldest digital aspirations. Not content with improving or disrupting their own businesses, they want to go further, find new lands to conquer in a disruptive environment. Unfortunately, this group still sees digital as being synonymous with IT – and therefore fails to integrate digital thinking across the business, a fact that ironically puts them, out of all groups, at the greatest mercy of outside disruption.
Crucially, industry explorers have so far failed to incorporate digital into their businesses – from leadership (where respondents said that only 22% were digitally savvy, and only 36% of those in charge of digital involved in high-level strategy), to workforce, where only 38% of employees are believed digitally savvy, and all the way through to the customer (industry explorers are the least likely to have effective experience strategies).
At risk of being disrupted before they have the chance to disrupt themselves, industry explorers must take action now. It is unlikely a coincidence that only 31% of this group has seen profit growth in the last three years. Digital must be woven into the broader corporate strategy – from experience, to workforce, to technology and leadership. Only radical intervention will see survival, let alone the breaking of new ground.
What it means
to be digital
Only 8% of the 2200 survey respondents can be classified as top financial performers – businesses that have had three or more years of profit growth, and revenue increases of 5% or more, and an expectation of that growth continuing into the next three years. Across the board, these successfully digital companies embrace a broad definition of what it means to be digital – they definitely don’t see it as IT.
Top financial performer strategies towards attaining their goals – in any of the four aspirational types outlined here – are sophisticated and integrated. Whether looking at the approach to disruption (where 64% believe they face a serious threat), experience (91% have an executive in charge of employee experience), workforce (less than a third feel they need more strategic focus on training, compared to almost half of all others) or leadership (54% say their leadership is digitally savvy), these companies adopt a truly digital mindset and walk the talk.
Companies that are merely pretending to face a digital reality still have time to address their ways, meet their aspirational goals and maximise the potential to drive business. But it’s time to change now.
So, where does your business sit when it comes to digital?
Visit the Digital IQ interactive website to delve deeper into the survey’s findings and explore the common pitfalls, and paths to success, for your company’s digital aspirations.