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Digitally Mature Firms are 26% More Profitable Than Their Peers

Thursday, August 8, 2013
George Westerman

Here are some more findings from our ongoing study of digital transformation in large traditional companies.  New digital technologies such as social media, mobile, and analytics are getting a lot of attention in the management press.  But, most of the stories we heard seemed to focus on a few sexy companies, most of whom are in the technology and media businesses.  Companies like Apple, Goole, Amazon, etc.

What about the other companies? The big traditional enterprises that that power much of the global economy?  We weren't hearing much about them.  Were they doing nothing interesting?  Or was something else going on? 

That started us on a three-year journey to find out.  We found that majority of companies are already using these technologies, and they're using them in broadly common areas of the business.  But they're getting wildly different results.  Then we used a survey to dig deeper into the difference between top performers and lower performers.

Here are some key points from our recent survey report (attached):

  • Our survey of nearly 400 senior executives shows that digitally mature firms significantly outperform their industry peers
  • Digirati -- the 25% of firms that excel both in digital intensity and transformation management capabilities -- are 26% more profitable, generate 9% more revenue from their physical assets, and achieve 12% higher market valuations than other large firms in their industries.
  • Digital maturity requires buildling two dimensions of capability: digital capability and trasformation management capabillity.  Each of the two capabilities is associated with different types of performance.  Companies that excel in only one of the two capabilities outperform their peers in some areas while lagging in others.  Digirati excel in both and outperform all others.
  • While some industries are more digitally mature than others, every industry we studied has at least one digirati.  This means that, in every industry, at least one competitor is already achieving a digital advantage.  Since it takes several years to achieve digirati status, executives in every industry should start to consider what it will take to get there.

The team has continued to advance the research in the months since we released this report.   

What key questions should we ask as we push the research forward?  Any suggestions?

Download the PDF