Industries are transforming all around us and surprisingly, still, have a long way to go to fully digital. Only Mckinsey & Company and other companies willing to take bold initiative will survive to thrive after digital transformation.
According to McKinsey & Company Research, the top quartile captures disproportionate gains, while Bold Business, tightly integrated digital transformation strategies will be the biggest differentiator between companies that will win and lose, it will also have the biggest payouts and to those that initiate digital transformation disruptions.
As digitization penetrates more fully, it will dampen revenue and profit growth for some, particularly the bottom quartile of companies.
The Gartner IT Glossary defines digital as “the use of digital technologies to change a business model and provide new revenue and value-producing opportunities; it is the process of moving to a digital business.”
The degree of digital within industries ranged from a low of 31% for consumer packaged goods to a high of 60% for media and entertainment
The recent study released by McKinsey & Company discovers that digital has penetrated on average, only 38% across all the key industries. The study discloses some bad news for business—on the way to full digital, the streamlined competition developed through full digital is likely to depress revenue and profit growth across all industries by an estimated 10 to 12%.
But here’s the good news—there will be winners, companies developing winning strategies will thrive and compensate for any negative impact of industry-wide digital transformation.
The winners will be those who take bold action to execute a digital strategy. Results of McKinsey & Company industry research indicate these companies will be three times more likely to generate profit growth than their counterparts. Losers will be the laggards who fail to digitalize fully. Their businesses will stagnate and possibly die.
The McKinsey report presents the results of a multi-dimensional study of the impact of further digital on economic performance along five key dimensions: products and services, marketing and distribution channels, business processes, supply chains, and new entrants at an ecosystem level. Researchers surveyed companies in the following industries: consumer packaged goods, automotive and assembly, financial services, professional services, telecom, travel, transport, and logistics, healthcare systems and services, high tech, retail, and media and entertainment. The degree of digital within the industries ranged from a low of 31% for consumer packaged goods to a high of 60% for media and entertainment.
Findings from the research point to how companies can thrive during and after the digital process. Results of the study identify critical differentiators between winners and losers.
- Are willing to make necessary changes to align a digital strategy to the corporate strategy
- Attend to ROI on digital investments. Bold leaders look at each dimension to determine where investments will have the most Most companies have focused their efforts on marketing and distribution, indeed a critical area. However, a business may be overlooking opportunities to reap benefits from investments in other dimensions, such as supply chains, the area of least investment in most companies.
- Have a homogenous corporate culture that enables more focused and rapid response to industry changes.
- Are market watchers and are quick to develop and execute a strategy to imitate winning tech start-ups.
Those companies that will make the most significant gains will take two bold actions:
- Boldly go where others do not—be the first to invest in overlooked dimensions to make the big profits; and
- Invest adequately across multiple dimensions.
The Mckinsey research makes a case for how bold businesses will win through digital reinvention.