When Bain & Company recently surveyed 1,000 companies around the world to gauge their level of digital readiness, two things became abundantly clear: The payoff from digital transformation can be impressively high, but the success rate is regrettably low.
This gap between aspiration and reality may help explain why a surprising number of leadership teams remain tentative about investing in digital technologies and capabilities.
While a strong majority of companies in every industry we surveyed told us that digital investment is among their top priorities, anecdotal evidence suggests that a great many executives are skeptical that they can translate the buzz around digital into meaningful improvements in performance.
What’s clear from the data, however, is that the prize is there for the taking. Digital leaders in every industry outperform their competition by a wide margin. After comparing financial results for five categories of companies based on their degree of digital sophistication, we found that revenues at digital leaders grew more than twice as fast as those at digital laggards.
Profit followed a similar pattern - leaders were nearly twice as likely as laggards to increase profit. These findings leave little doubt that digital transformation can yield significant results.
Capturing those gains is another story. The data shows that digital transformations are significantly harder than conventional change management programs (see Figure 1).
In our survey, just 5% of those companies involved in digital transformation efforts reported that they had achieved or exceeded the expectations they had set for themselves (vs. a success rate of 12% for conventional transformations). A full 71% of these companies settled for dilution of value and mediocre performance.
Download the Paper: Orchestrating a Successful Digital Transformation