(lively music)
So I would like to cover four topics today.
Number one, talk about how do we define digital
and how do we define digital champions?
Number two, understand whether to be a digital champion
actually pays off?
Number three, look at the digital maturity,
the state of maturity in Asia and Europe
and also in the U.S.
And then last but not least, talk about the five boosters
that basically digital champions apply
in order to outperform their peers.
So, the first question is
how to define digital and I'm sure if I ask here,
people in the room,
I may get lots of different answers.
We had the same experience at BCG
and after some time we basically agreed,
about two years ago on this framework,
which we also apply with our clients.
So, it is driven by basically six building blocks.
It's the business strategy driven by digital.
It is transforming the core of the company
along the value chain,
go-to-market, operations manufacturing,
support functions, and shared services.
It is about new digital growth
which is investments and adjacent businesses
which are not directly related to the core
and it's about three major capabilities.
Changing ways of working,
you can also call it people and culture.
Leveraging the power of data and technology,
It's about leveraging the power
of data and technology
and last but not least, the partner ecosystem.
A digital mature company is expected to basically
develop digital capabilities and apply digital technologies
across all six building blocks.
If we do a double click on the six building blocks,
we have 36 dimensions behind it
and let me highlight three of those.
One, you can find personalization
in the bucket of digitizing the core
especially in the field go-to-market.
It's personalization.
Personalization is about applying real-time analytics
at the point of sale to create superior customer value,
and you can also apply AI-based technologies
in our breakout session at 2 p.m. in the afternoon,
we will, for example, elaborate on Starbucks,
how they are doing it.
Another example is Agile at Scale.
That was also mentioned earlier this morning.
It's in the part of Changing Ways of Working:
People and Culture.
So in the past, it was always a pain
between business and technology to work together.
Agile ways of working now offer new ways of collaboration
to get to faster outcome and shorter cycles
with higher value and impact.
And then a third example is world-class technology function
in the bucket of data and technology.
I mean many companies still struggle
with an old enterprise IT function
and now basically, it's leveraging the full value
of technology,
really creating a technology enabling,
digital enabling technology function
and this is what a world-class technology function is about.
So with the help of all the global
functional practice areas at BCG,
we have basically defined four maturity stages
for all the 36 dimensions
and have codified it in the so-called
DAI, Digital Acceleration Index Assessment.
And with that you can basically,
based on the input from one executive,
also from a group of decision makers within a company,
determine the current maturity state.
We can also of course ask for the target maturity state
for the importance of the different dimensions.
The output is the so-called DAI.
It's based on a score between zero and 100
and 100 being the highest score, zero being the lowest score
and it's defining what the current maturity state
of the respective company is.
And as you can see, it covers digital broadly end-to-end.
It's not just focusing on specific aspects of digital
but it's really about all the different dimensions
and perspectives that can help to increase
value of the company by using digital.
Now what is the state of digital maturity?
And this is based on the recent survey
of 1,800 companies in Asia and in the U.S. and in Europe.
So three observa⁠-
And then you see basically here,
one point per industry indicating the industry average
that we have measured in the different regions.
And you see also there,
the legend was the explanations of the abbreviations.
So the first finding is that tech and financial institutions
are relatively mature compared to other industries.
They have been dealing for years already
with information processing.
Information is at the center of these companies.
This is also true for the teleco companies
although we see here a difference.
Asia is slightly behind
whereas Europe and U.S. is slightly ahead.
Of course there are always great players
in different markets which are really excelling well,
but on average, we see that in the teleco industry,
Asia is a little bit behind.
We believe it's driven by less regulatory constraints
than in Europe and the U.S.
The second observation is that there are
some following industries,
for example public sector where usually,
you don't have the market pressure
to digitize and innovate so much.
We see also energy and consumer goods
rather at the lower end of the spectrum.
The third observation is,
which is a positive message for you all,
Asia is performing really well.
Yeah so in various of the industries,
Asia is ahead of the pack,
and if you do a double click also in specific industries,
we see that also the variance of the best
and worst performing companies,
smaller than for example in the U.S. and in Europe.
So we expect that more companies in the U.S. and Europe
are expected to fall behind,
less in Asia.
And one key driver of that is,
that you are using here in Asia many platforms
that actually pull in also the small and medium enterprises
to offer their services on a digital platform.
This is all based on the Digital Acceleration Index
and digital champion actually performs
above 67 data, 67 DAI points, a laggard scores below 43.
Now, does it pay off to be a digital champion?
The answer is yes, and we have various,
you know, data examples for that.
I've selected three here.
So the first one is, every year we'll ask:
Did you outperform your peers in 2019?
And more than 60% of the champions said,
yes, we outperformed our peers.
We are doing really well.
Whereas only a quarter,
said it, of the digital laggards.
We did many sectors studies at BCG
and one example is an insurance where we surveyed
more than 50 insurance companies in the world
and we identified that the digital leaders
had a higher customer satisfaction
and could also outperform the laggards
with regards to the decrease and the expense ratio.
So, there's a four percentage-point average advantage
of the digital champions versus the digital laggards.
Another study we did is in the teleco industry.
We had more than 80 teleco companies participating
and we compared the market share development since 2012.
And the outcome was that the digital leaders could actually
increase the market share by seven percentage points,
whereas the laggards were losing 11 percentage points.
So here you can see it's really important
to be at least mid-tier.
If you are among the laggards, there is a problem.
Now, what do the champions do
to outpace and outperform the competitors?
Number one, they invest in digital skills.
They have more than 10% of their workforce
working already in digital roles, which has two advantages.
Number one, they attract digital talent
and they invest to get people from the market,
and also are able to scale up.
And number two, they upskill those people,
and they have people who can translate
their strategy into action.
Number two, they significantly invest into digital.
This is all based on the statistical analysis of
our study from the last three years.
And it's the continued finding.
So, the threshold is here investing more than 5% in digital,
and we see, of course, that in some industries,
this value is much higher.
The third thing is they build digital capabilities,
enabling capabilities, for example,
data and digital platforms, a data lake,
and then also some big data capabilities
as one example to process data and get more value
out of the existing customer and other company data.
Number four, they don't just run pilots
but they are capable of scaling up the pilots,
and also connect them with the core.
That's the fourth key element.
And number five, they focus on new digital growth.
I think one great example is, Amazon.
They used the cloud first internally
and now it has become a double-digit
billion-dollar figure for them every year.
So, it's worthwhile also to look into adjacent businesses.
Now, if we go deeper,
we see that, unfortunately the gap between the champions
and the laggards is widening.
And it's widening quite significantly.
So, the laggards are at risk to fall further behind.
And we see that on the left-hand side
with the digital talent.
So the leaders, the champions already have more than
10% of the workforce working in digital roles
and they also plan to substantially,
basically upskill and hire more people
with digital skills, versus the laggards.
So it's not that the laggards are now catching up,
but the laggards plan to do less in that space
and are further at risk to fall behind.
It's even worse on the technology and IT side.
So here we see that the champions
have an average score of 78 out of zero to 100,
whereas the laggards have a score of 29
and the leaders plan to invest 22%
of their overall digital investment into technology,
whereas the laggards only plan 16% to invest.
And in addition, the laggards invest overall
less than digital.
So, the absolute numbers are dramatically smaller.
And this is a big risk.
So digital will be a diverging force between the leaders
and, or the champions and the laggards.
Another key differentiator is that I elaborated on,
scaling up pilots and putting strategy into action.
We see that there is a huge gap
between the champions and the laggards
in operationalizing the strategy.
So these are all the five building blocks
below the digital strategy,
which is on top of our framework.
So, you see a 27 versus a 77 as the score.
And on the right-hand side you see that
the champions scale up beyond the pilots,
so over 50% already in the phase of realizing
substantial value from pilots and integrating it
in the core business.
Why is it so difficult for laggards to do it?
Number one, it's very difficult to connect
when you have a rather complex application landscape,
new pilots and infrastructure for new pilots
with the core of the technology platform.
Number two, still, many of them work in silos
between business and technology.
And number three, they have big difficulties
to manage the data.
They don't have yet a unified data model,
they don't have a proper data governance in place.
And this is why it's so hard for them
to turn strategy into action.
Even that there is hope, often in the management team,
a strong focus on digital and the great understanding,
we need to do something about it and catch up.
Now you may wonder how the companies are doing
with regard to artificial intelligence.
So 11% of the surveyed companies of the 1,800
regard themselves as being leaders
in artificial intelligence and, of course,
we qualified the question to a large extent,
so that we asked for specific parameters
whether they already apply them.
We find most of these companies,
the 11% in technology and financial institutions.
And in those companies about 10%
of the overall digital workforce already work
on AI-related topics.
And those companies are in most of the cases,
we call it data-centric organizations.
So, 90% of those have a clear data strategy.
87, to be precise, and about 80% have already
data infrastructure in place,
and also set up an agreed upon data governance.
Data governance, out of the 36 dimensions,
is the worst performing dimension of all.
So, this is really also differentiating element
because in many organizations, it's very difficult
to agree on who has access to data.
What is the single source of truth?
What is all unified data model?
And then, which is the foundation
to actually leverage the value of data?
So now I have a couple of questions for you
that were also raised before.
So, what is your digital maturity,
the digital maturity of your specific organization?
What is your target maturity state?
When do you want to achieve it?
How much time do you give yourself?
What are the dimensions which will generate
the largest return on invest for you
because you cannot invest in all dimensions
at the same time?
Do you have transparency about what your competitors
are doing?
And are you fast enough?
Is your initiative portfolio setting the right priorities
to achieve the target state?
Is it aligned with your resources and with your budgets
that you are having?
Do you maybe consider to fund the journey
and also realize some savings along the way
that will help you to fund parts
of the investments into digitization?
(lively music)