Digital Transformation Conversations

Digital Transformation Conversations

Debunking the Myths of Digital Transformation



Senior executives in every industry - from media to electronics to paint manufacturing – face a bewildering array of new digital opportunities.

They are paying attention, but they have few signposts to guide them. Moreover, they are also faced with a barrage of advice – sometimes conflicting and often wrong – about moving their business into the digital world. In our three years researching digital transformation with the MIT Center for Digital Business, we discovered that many commonly held perceptions about digital transformation are actually myths.  These myths can be dangerously misleading and lead to expensive mistakes for organizations as they plot their course in the new digital economy. It is time to debunk them!

Myth 1: Digital concerns technology or B2C companies only.

Not so. Our research shows that big traditional companies, those that power the world economies, spend billions on digital technologies. Those companies that are using technology better than their competitors are gaining huge benefits. Although, digital transformation is moving more rapidly in some industries than others, all industries are concerned. From Burberry in the fast moving B2C fashion industry to Codelco in the B2B mining industry or even public sector departments. No firm is immune from digital transformation.

Myth 2: Digital is primarily about customer experience and marketing.

Wrong. Huge opportunities exist also in efficiency, productivity and employee leverage. And those can provide as big, if not bigger, business cases as digital applications at the front end of the business. P&G's successful digital transformation journey builds well beyond brands and customer interactions. Digital technologies have been used in how P&G creates molecules in their R&D labs, to using data modeling and simulation mechanisms to improve product development and manufacturing. Digitally transforming operations matter.

Myth 3: There is no business case for digital transformation.

Really? Our research shows that digital leaders, those companies that have mastered digital transformation, are 26% more profitable than their average industry competitors. They enjoy a 12% higher market valuation and generate 9% more revenue with their existing physical assets. The digital advantage is real!

Myth 4: Digital transformation happens bottom-up.

Not. Digital transformation must be led from the top of the organization. Companies that adopt the "let a thousand flower bloom" approach to digital transformation usually end up with just that – a thousand flowers. A Pfizer senior executive points out: "we have many different brands in many markets, so when it comes to digital opportunities, we can have one thousand flowers blooming – and that's not really scalable to any of our stakeholders". Leadership matters.

Myth 5: Digital transformation will happen despite my IT.

Unlikely. Many executives in our research claimed that their IT was a hindrance in their transformation and some chose to drive transformation without the help of their IT leaders. And they were wrong. Digital leaders like Caesars, Burberry, and Nike recognize the power of a strong IT foundation – both people and technology. Digital leaders have the essential foundation of well-structured systems, unified data, and a strong IT/business partnership. Other companies must work hard to get there.

Myth 6: We have time to digitally transform in our industry, let's wait and see.

Dangerous. In our research we found that digital leaders exist in all industries with no exceptions. These leaders are outperforming their peers already and seizing a 26% profitability advantage year on year.  Becoming a digital leader does not happen overnight. Burberry started its journey in 2006 and spent the next 4-5 years implementing its transformation. You need to think now about how to address this challenge?

Digital transformation is causing a tectonic shift in how companies are structured and led, and how they perform and compete. The data are clear: digitization is increasing the pace of change throughout the economy, even in sleepy mainstream industries. Competitive advantage is becoming more fleeting, leaders are pulling away from laggards, and "winner takes all" dynamics are becoming more common. These shifts are broad and deep and they're just getting under way. Now is the time for executives to debunk the myths of digital transformation and get their organizations on the right path.

If you'd like to know more about the research that underpins our myth-debunking, please take a look at our paper: "The Digital Advantage: How digital leadersoutperform their peers in every industry."

About the author

Pierre-Yves Cros
Pierre-Yves Cros
Pierre-Yves Cros, Capgemini Chief Development Officer

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