Business leaders are fully aware that we are facing a new era of digital consumption, one that COVID-19 has accelerated rapidly. If the last few years have shown us anything, it is that companies must be ready and move fast to keep pace with change. As a result, many marketing teams have become familiar with a new buzzword: Digital Transformation.

A company’s ability to quickly adopt digital solutions is what lets it capture the value of digital transformation.

Since 2018, BCG has been working with Google to explore digital transformation and how it has evolved from a relatively simple concept into a business imperative. Recently, they made a joint effort to better understand why some companies are able to generate great value from digital solutions, and why so many others continue to fall behind.

The approach was based on studying the digital competence and maturity of 2,000 global companies, and we found that the value companies get from their digital solutions is closely tied to their ability to scale those solutions at high speed. Making change happen at scale is what turns experimental digital programs into high-value drivers. Companies that can do this faster than the rest of the market have a considerable advantage.

That became an important factor in the study, because it helped set the “digital leaders” apart from everyone else. As a result, the findings show that digital leaders increase revenue and reduce costs three times more than other companies.

Looking more closely at digital leaders, they were able to identify three key factors that allowed them to scale their digital solutions successfully:

1. Executive alignment

Companies succeed when digital transformation is not just one executive’s job, but when every member of senior leadership lines up behind a shared strategy and action plan. Once they have set their direction, executives must work together to push the whole organization to carry out the vision, from the top down.

According to the research, 72% of digital leaders say that ongoing collaboration within senior leadership is essential, and 82% of respondents say that the entire senior leadership team is aligned on the digital vision, investment and other resources to drive the agenda together.

To pull this off, leaders need to adopt agile ways of working. They can’t work in isolation if they plan to cascade strategies and goals down to local business units. Flexible planning and budgeting processes are vital. In addition, the entire executive team needs to get more involved in technology, data privacy and analytics in order to stay true to the digital transformation plan.

2. Building capabilities

Once the leadership team is aligned, digital leaders invest in whatever helps their companies get value from digital. To find out effectively what that means, they need to make use of first-party data about their customers and their own businesses.

To gain insights from data, the whole organization must have the same access to high-quality information. More than 90% of digital leaders have built the ability to connect digital solutions to their technology ecosystems through APIs and microservices. Emphasizing sound data governance processes promotes a steady supply of high-quality information that teams can use appropriately and consistently.

Digital leaders also focus on creating agile work environments, powered by productivity apps and AI-driven analytics, which attract high-performing employees and help with recruiting. Encouraging a skilled workforce, and a more inclusive and diverse workplace, also enables digital leaders to build business models that are more resilient over the long term.

3. An always-on mindset

Rather than treating digital transformation as a one-time project, digital leaders move forward with an adaptive, always-on mindset to improve and scale as the landscape changes, and they prove their ROI (return on investment). Just as technology, markets and consumer behavior constantly evolve, so will your digital transformation strategy. A cultural reset is needed to get comfortable with constant readjustments.

Digital leaders continuously evaluate and learn, invest in flexible planning and budgeting, and build cross-functional teams, starting with the senior leadership team. The research also makes clear that digital leaders have built these behaviors into their company culture. As executives align to invest in building digital foundations, they begin to get good at using internal data as a decision-making tool for operational challenges.

This adaptive, always-on mindset also boosts companies’ ability to reimagine customer experiences. By working across functions, digital leaders can better determine which customer-focused opportunities to scale quickly and which unsuccessful or slow initiatives to drop.

It’s clear that digital transformation delivers broad value to digital leaders. We hope every company can capture similar value if they are willing to commit to change. By embracing the necessary success factors (an aligned leadership team, investment focused on capabilities, and an always-on approach), any organization can become a digital leader.

Expand your business transformation by exploring the full BCG report.

Source: Think with Google.